Section 7 insolvency limitation runs from default date, and proved default leads to admission of a complete application.

Under Section 7 of the Insolvency and Bankruptcy Code, limitation runs from the date of default, with Article 137 of the Limitation Act applying. On the stated facts, the application was filed within three years of the relevant default dates, so the limitation objection failed. The record also showed an admitted borrowing relationship, an equitable mortgage, and non-repayment after an initial period of servicing. The text states that once default is established in a complete Section 7 application, admission follows, and the process was commenced with moratorium and appointment of an Interim Resolution Professional.

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Issues: (i) Whether the application under Section 7 of the Insolvency and Bankruptcy Code, 2016 was barred by limitation. (ii) Whether the financial creditor had established a default warranting admission of the application and commencement of the Corporate Insolvency Resolution Process.

Issue (i): Whether the application under Section 7 of the Insolvency and Bankruptcy Code, 2016 was barred by limitation.

Analysis: The relevant date for limitation in an application under Section 7 is the date of default, and Article 137 of the Limitation Act, 1963 applies. On the facts, the loan account was treated as non-performing on two dates, namely 05.12.2017 and 04.04.2018, and the application was filed on 04.12.2020. Even on either date of default, the application was within the three-year period. The plea of limitation therefore could not succeed.

Conclusion: The objection of limitation was rejected and the application was held to be within time.

Issue (ii): Whether the financial creditor had established a default warranting admission of the application and commencement of the Corporate Insolvency Resolution Process.

Analysis: The record showed an admitted borrowing relationship, creation of security by equitable mortgage, and default in repayment after an initial period of regular servicing. The Tribunal found that the application was complete and that default had occurred. Once default is established in a complete application under Section 7, admission follows under the Code.

Conclusion: The application was admitted, moratorium was ordered, and an Interim Resolution Professional was appointed.

Final Conclusion: The insolvency process against the corporate debtor was directed to commence, with the consequential moratorium and appointment of the interim resolution professional in place.

Ratio Decidendi: For a Section 7 application, limitation runs from the date of default, and where the application is filed within three years of the default and default is otherwise established, the adjudicating authority must admit the application if it is otherwise complete.

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