Section 7 insolvency claim fails where MoUs lack authority, the debt is time-barred, and no default is proved.

A Section 7 insolvency application failed because the Memorandums of Understanding were not shown to have been executed with proper authority on behalf of the Corporate Debtor and therefore did not bind it. The underlying claim had also become time-barred, and a later cheque did not revive the barred liability in the absence of a valid acknowledgment of a subsisting debt. The MoUs reflected unfinished reciprocal obligations rather than a concluded transaction creating an immediately enforceable financial debt, so no default was established for CIRP purposes. The insolvency petition was therefore rejected on limitation and on merits.

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Issues: (i) Whether the application under Section 7 was within limitation and whether the Memorandums of Understanding were executed with proper authorization and bound the Corporate Debtor. (ii) Whether a financial debt was due and payable and whether the Corporate Debtor had committed default.

Issue (i): Whether the application under Section 7 was within limitation and whether the Memorandums of Understanding were executed with proper authorization and bound the Corporate Debtor.

Analysis: The application was tested on the basis of the MoUs and the cheque relied upon as an acknowledgment. The MoUs did not show that the signatory acted on behalf of the Corporate Debtor, and no material of due authorization was produced. The documents therefore did not bind the Corporate Debtor. On limitation, the claim founded on the MoUs had become time-barred before filing. A later cheque could not revive a barred claim unless it was shown to relate to an enforceable subsisting liability within the limitation period. The requirements of acknowledgment under limitation law were not satisfied on the facts found.

Conclusion: The application was barred by limitation and the MoUs were not binding on the Corporate Debtor.

Issue (ii): Whether a financial debt was due and payable and whether the Corporate Debtor had committed default.

Analysis: The MoUs disclosed unfinished reciprocal obligations and did not establish a concluded transaction giving rise to an immediately enforceable debt against the Corporate Debtor. Since the contractual framework itself contemplated further steps before recovery, the date of default had not arisen in the manner required for insolvency proceedings. In the absence of a binding debt and a completed default, the ingredients for initiation of corporate insolvency resolution process were not made out.

Conclusion: No enforceable financial debt and no default were proved against the Corporate Debtor.

Final Conclusion: The insolvency petition failed on both limitation and merits, and the request to commence CIRP was rejected.

Ratio Decidendi: For a Section 7 petition, the applicant must establish a binding and enforceable debt, a subsisting default, and timely initiation within limitation; a document executed without proven authority and a later cheque cannot sustain insolvency proceedings where the underlying claim is already time-barred and the transaction remains unconcluded.

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