Limitation and debt acknowledgment under insolvency law supported admission, while compulsory one-time settlement appropriation was refused.

Limitation under Section 7 IBC was saved because the period during which the remedy remained suspended under Section 22(5) of SICA had to be excluded, and the corporate debtor's written acknowledgment of liability further extended limitation under Section 18 of the Limitation Act. The record also established financial debt and default through the debtor's own correspondence seeking settlement, so admission of the insolvency petition followed once the statutory threshold was met. A direction compelling appropriation of no-lien account funds towards a proposed one-time settlement was refused, as the tribunal could not force acceptance of the settlement proposal. The Section 7 petition was admitted and the debtor's application dismissed.

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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 record established the existence of financial debt and default so as to warrant admission of the insolvency petition. (iii) Whether the corporate debtor was entitled to directions for appropriation of the no-lien account amounts towards the proposed one-time settlement.

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

Analysis: The account was declared non-performing asset in 1999, but the corporate debtor had been referred to BIFR and proceedings remained pending for a substantial period. The period during which the remedy remained suspended under Section 22(5) of the Sick Industrial Companies (Special Provisions) Act, 1985 had to be excluded while computing limitation. In addition, the corporate debtor's letter dated 14.03.2017 expressly acknowledged the outstanding liability and sought revival of the earlier settlement, attracting Section 18 of the Limitation Act, 1963 and extending limitation.

Conclusion: The application was not barred by limitation and the issue was decided against the corporate debtor.

Issue (ii): Whether the record established the existence of financial debt and default so as to warrant admission of the insolvency petition.

Analysis: The corporate debtor's own correspondence acknowledged the overdue term loan and sought settlement of the dues, and later proposed an enhanced one-time settlement. Such correspondence established both the subsisting financial debt and default. For a financial creditor's application under Section 7 of the Insolvency and Bankruptcy Code, 2016, once existence of debt and default above the statutory threshold is shown, admission follows and defenses in the nature of dispute or set-off do not defeat the application.

Conclusion: Existence of financial debt and default was proved, and the issue was decided in favour of the financial creditor.

Issue (iii): Whether the corporate debtor was entitled to directions for appropriation of the no-lien account amounts towards the proposed one-time settlement.

Analysis: The request sought a direction compelling the financial creditor to accept the settlement proposal and appropriate the funds lying in no-lien accounts. The adjudicating authority found that it could not compel a financial creditor to accept an OTS or direct appropriation in the manner sought. The relief was therefore not available in these proceedings.

Conclusion: The request for appropriation directions was rejected and the issue was decided against the corporate debtor.

Final Conclusion: The insolvency petition was admitted under Section 7 of the Insolvency and Bankruptcy Code, 2016, the interlocutory application filed by the corporate debtor was dismissed, and moratorium under the Code followed together with appointment of the interim resolution professional.

Ratio Decidendi: For limitation, the suspended period under SICA must be excluded and an express acknowledgment of liability extends limitation; for a Section 7 application, proof of financial debt and default is sufficient for admission, and the tribunal cannot compel acceptance of a one-time settlement.

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