Section 7 insolvency admission upheld where limitation, authorisation, and proof of financial debt and default were established.

A Section 7 insolvency application under the Insolvency and Bankruptcy Code was found to be within limitation because the date of default was taken from the NPA classification and the filing fell within the three-year period under Article 137 of the Limitation Act, as applied by Section 238A. The application was also held to have been filed by a duly authorised person, since the record contained a prior power of attorney and a later authorisation empowering the signatory to initiate and prosecute proceedings. On the documents, financial debt, default, and the creditor-debtor relationship were established through loan disbursal, non-payment, and unsuccessful restructuring, so the requirements for admission were satisfied and CIRP was admitted 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 application had been filed by a competent and duly authorised person; (iii) Whether a creditor-debtor relationship and financial debt/default were established so as to justify admission of the application.

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

Analysis: The relevant date of default was taken as the date of NPA classification shown in the application. Section 238A of the Insolvency and Bankruptcy Code, 2016 makes the Limitation Act, 1963 applicable to proceedings before the Adjudicating Authority, and Article 137 of the Limitation Act, 1963 prescribes a three-year period from the date when the right to apply accrues. On the facts placed before it, the application was filed within the prescribed period. The objection based on limitation was therefore not accepted.

Conclusion: The application was held to be within limitation.

Issue (ii): Whether the application had been filed by a competent and duly authorised person.

Analysis: The record contained a prior power of attorney and a later authorisation in favour of the signatory to initiate and prosecute proceedings before judicial and quasi-judicial fora. The objection that the authorisation was ineffective was rejected, as the authorising documents were sufficient to show competence to file the application on behalf of the financial creditor.

Conclusion: The filing was held to be by a duly authorised person.

Issue (iii): Whether a creditor-debtor relationship and financial debt/default were established so as to justify admission of the application.

Analysis: The materials showed disbursal of loan facilities, non-payment, classification of the account as NPA, and unsuccessful restructuring efforts. The corporate debtor did not demonstrate repayment of the amounts received. On this basis, the existence of financial debt, default, and the creditor-debtor relationship was held to be established.

Conclusion: The requirements for admission under Section 7 of the Insolvency and Bankruptcy Code, 2016 were satisfied.

Final Conclusion: The application for initiation of corporate insolvency resolution process was admitted, moratorium was declared, and an interim resolution professional was appointed to carry forward the insolvency process.

Ratio Decidendi: A Section 7 application is maintainable where default and debt are shown within limitation, and a duly authorised signatory files the petition on behalf of the financial creditor; upon establishment of financial debt and default, admission of CIRP follows and moratorium ensues.

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