Natural justice and limitation in insolvency: prior appearance, part-payments, and a recovery certificate kept the section 7 petition alive.

Prior appearance, requests for time, participation in hearings, and a filed reply defeated the plea that the corporate debtor was denied a fair hearing before admission of the section 7 petition, so the natural justice objection failed. Limitation was also not a bar because the debt record showed subsequent part-payments, including a last payment in June 2018, and the recovery certificate provided a fresh basis to pursue recovery; applying Section 19 of the Limitation Act, the Tribunal held the insolvency application remained within time. The admission order under section 7 was therefore sustained and the challenge failed on both grounds.

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Issues: (i) Whether the corporate debtor was denied a fair opportunity of hearing before admission of the section 7 application. (ii) Whether the section 7 application was barred by limitation despite the recovery certificate and subsequent part-payments.

Issue (i): Whether the corporate debtor was denied a fair opportunity of hearing before admission of the section 7 application.

Analysis: The record showed that the corporate debtor had appeared in the proceedings, sought time to file reply, participated in further dates, and later sought time for an amicable settlement. The reply filed by the corporate debtor answered the main company petition and admitted the borrowing and substantial repayments. The absence of representation on later dates did not establish denial of notice or opportunity, particularly when the proceedings had been communicated and the party had earlier entered appearance.

Conclusion: No violation of natural justice was established, and the objection failed.

Issue (ii): Whether the section 7 application was barred by limitation despite the recovery certificate and subsequent part-payments.

Analysis: The debt defaulted in 2013, but the record showed multiple repayments over the following years, including a last payment in June 2018. The Financial Creditor also held a recovery certificate issued under the Maharashtra Cooperative Societies Act, which gave a fresh basis to pursue recovery. Applying the Limitation Act to insolvency proceedings, the Tribunal held that part-payments attracted Section 19 and that the recovery certificate supported a fresh right to proceed within limitation.

Conclusion: The application was within limitation and not time-barred.

Final Conclusion: The admission order under section 7 was sustained, and the appeal challenging it failed on both grounds.

Ratio Decidendi: In insolvency proceedings, prior appearance, communicated hearing dates, and a filed reply defeat a plea of denial of natural justice, and part-payments together with a recovery certificate may extend or refresh limitation so that a section 7 application remains maintainable.

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