Default under insolvency law runs from non-payment when due, and acknowledgment can extend limitation for section 7 applications.

For a section 7 insolvency application, default occurs when the debt becomes due and payable and is not determined merely by classification of the account as a non-performing asset. The Tribunal found that restructuring arrangements, recall notice, bank records, credit reports and the corporate debtor's financial statements established financial debt and default on the record. It also applied acknowledgment of liability under section 18 of the Limitation Act, 1963, to hold that limitation was extended and the application remained within time. On that basis, the existence of debt and default was upheld and the admission of the insolvency application was sustained.

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Issues: Whether the section 7 application was barred by limitation on the basis that the date of non-performing asset should be treated as the date of default, and whether the materials placed by the financial creditor established debt and default so as to justify admission of the insolvency application.

Analysis: The restructuring arrangements, subsequent recall notice, bank records, credit information reports, and the corporate debtor's financial statements were treated as evidence of financial debt and default. The date of default under the Insolvency and Bankruptcy Code is the date of non-payment when the debt becomes due and payable, and not necessarily the date on which the account is classified as an NPA. The Tribunal also applied the principle that an acknowledgment of liability can extend limitation under section 18 of the Limitation Act, 1963, and found that the application was supported by sufficient material within limitation. The Tribunal accepted that the existence of debt and default was established on the record and that the Adjudicating Authority had correctly admitted the application.

Conclusion: The limitation objection failed, the existence of debt and default was upheld, and the insolvency admission order was sustained.

Ratio Decidendi: For a section 7 insolvency application, the trigger is actual default in payment when the debt becomes due and payable, NPA classification is not ative of default, and acknowledgment of liability can give rise to a fresh period of limitation under section 18 of the Limitation Act, 1963.

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