Section 7 insolvency petition validated by authorisation, extended limitation, and proof of financial debt and default.

An authorisation letter and the financial creditor's internal signing powers were treated as sufficient to validate a section 7 application filed by an Assistant General Manager. Limitation was found to continue because a payment was made within three years of the NPA date and later balance sheets contained acknowledgements of liability, extending time to file. Loan documents, revival and supplementary papers, balance confirmations, and later financial records established financial debt and continuing default. On that basis, the section 7 threshold was satisfied and the application was admitted, leading to commencement of CIRP, 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 validly instituted by an authorised officer of the financial creditor. (ii) Whether the petition was within limitation in view of the payment made by the corporate debtor and acknowledgements in the balance sheets. (iii) Whether debt and default were established so as to warrant admission of the application under section 7.

Issue (i): Whether the application under section 7 of the Insolvency and Bankruptcy Code, 2016 was validly instituted by an authorised officer of the financial creditor.

Analysis: The petition was filed on the basis of an authority letter in favour of the signatory. The record showed that the signatory was an Assistant General Manager of the financial creditor, and the bank had already authorised officers having signing powers to sign pleadings and file CIRP applications. The material also showed that officers of the relevant grade were competent to execute such documents.

Conclusion: The application was validly filed by a duly authorised officer.

Issue (ii): Whether the petition was within limitation in view of the payment made by the corporate debtor and acknowledgements in the balance sheets.

Analysis: The corporate debtor relied on the date of NPA to contend that limitation had expired. The record showed a payment made within three years of the NPA date, which gave rise to a fresh period of limitation. The balance sheets for later financial years also contained acknowledgements of liability, which extended limitation. On that basis, the filing date was held to be within time.

Conclusion: The petition was within limitation.

Issue (iii): Whether debt and default were established so as to warrant admission of the application under section 7.

Analysis: The documents on record, including loan documents, revival and supplementary documents, balance confirmations, and later financial records, established the existence of a financial debt and continuing default. The offer for one-time settlement also indicated that the borrowing and default were not in dispute. The threshold requirement for admission was satisfied.

Conclusion: Debt and default were proved and the section 7 application was liable to be admitted.

Final Conclusion: The financial creditor succeeded in establishing authorisation, limitation, and default, resulting in commencement of corporate insolvency resolution process and the consequential moratorium and appointment of an interim resolution professional.

Ratio Decidendi: A subsequent payment within the limitation period and an express acknowledgement of liability in balance sheets are sufficient to extend limitation, and once debt and default are established, a properly authorised section 7 application must be admitted.

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