Acknowledgment of liability extends limitation and proved financial default led to admission under insolvency law.

Acknowledgment of liability within the limitation period extended time for filing the Section 7 IBC application, because the corporate debtor's one-time settlement proposal and upfront payment were treated as acknowledgment after the account was classified as a non-performing asset, so the application was within time. Financial debt and default were also established through the loan documents, non-regularisation of the account, demand notice, continued non-payment, and a complete application exceeding the threshold; accordingly, the petition was admitted, the corporate insolvency resolution process commenced, moratorium followed, and the proposed interim resolution professional was appointed.

---

---

Issues: (i) Whether the application under Section 7 of the Insolvency and Bankruptcy Code, 2016 was within limitation; (ii) Whether default in repayment of the financial debt was established so as to warrant admission of the petition and commencement of corporate insolvency resolution process.

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

Analysis: The date of default was taken as the date on which the account was classified as a non-performing asset. The corporate debtor had subsequently offered one-time settlement and made an upfront payment, which was treated as an acknowledgment of liability for the purpose of limitation. On that basis, the filing was held to be within time.

Conclusion: The application was within limitation.

Issue (ii): Whether default in repayment of the financial debt was established so as to warrant admission of the petition and commencement of corporate insolvency resolution process.

Analysis: The record showed sanction of financial facilities, execution of loan and security documents, non-regularisation of the account, classification as non-performing asset, service of demand notice, and continued failure to repay. The application was found complete, the default amount exceeded the threshold, and no impediment was found in appointing the proposed interim resolution professional. The statutory consequences of admission, including moratorium and appointment of the interim resolution professional, were directed to follow.

Conclusion: Default was proved and the petition was admitted.

Final Conclusion: Corporate insolvency resolution process was commenced against the corporate debtor, moratorium was ordered, and the proposed interim resolution professional was appointed to take charge of the insolvency process.

Ratio Decidendi: An acknowledgment of liability within the limitation period extends the time for filing a Section 7 application, and once financial debt and default are established in a complete application, the adjudicating authority must admit the petition and trigger the statutory insolvency framework.

---