Acknowledgment of liability extends limitation and Section 10A does not bar a pre-existing insolvency default.

Multiple hearings and permission to file reply and written submissions showed that the corporate debtor was not denied a fair opportunity before the Adjudicating Authority, so that objection failed. The record also supported financial debt and default: appropriation of pledged FDRs did not regularise the account because replenishment was not made, and OTS and restructuring communications acknowledging NPA status amounted to admission of liability and default. Those written acknowledgments, made within three years of default, extended limitation under Section 18 of the Limitation Act, making the Section 7 application timely. Section 10A did not apply because the default arose before the protected period commenced.

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Issues: (i) whether the corporate debtor was denied a fair opportunity before the Adjudicating Authority; (ii) whether the debt and default were established, including the effect of FDR appropriation and OTS communications; (iii) whether the Section 7 application was within limitation by reason of acknowledgment; and (iv) whether Section 10A of the Insolvency and Bankruptcy Code, 2016 barred the application.

Issue (i): whether the corporate debtor was denied a fair opportunity before the Adjudicating Authority.

Analysis: The record showed multiple hearings, permission to file reply and written synopsis, presence of counsel on successive dates, and filing of written submissions even after the matter was reserved. The plea that the order was passed without considering the corporate debtor's case was therefore unsupported.

Conclusion: The contention of denial of opportunity was rejected.

Issue (ii): whether the debt and default were established, including the effect of FDR appropriation and OTS communications.

Analysis: The loan account was not treated as regularised merely because amounts were appropriated from pledged FDRs, since replenishment was called for and not made. The corporate debtor's subsequent OTS and restructuring communications, including statements acknowledging the NPA status and proposing settlement, constituted admission of liability and default.

Conclusion: Existence of financial debt and default was upheld.

Issue (iii): whether the Section 7 application was within limitation by reason of acknowledgment.

Analysis: The OTS proposals and restructuring communications were within three years of the default and amounted to acknowledgment in writing, thereby extending limitation under Section 18 of the Limitation Act, 1963. The application filed thereafter was consequently within time.

Conclusion: The application was held to be within limitation.

Issue (iv): whether Section 10A of the Insolvency and Bankruptcy Code, 2016 barred the application.

Analysis: The default was found to have occurred prior to the commencement of the Section 10A period. The statutory bar applies to defaults occurring during the protected period and not to a pre-existing default continuing thereafter.

Conclusion: Section 10A did not bar the proceedings.

Final Conclusion: The admission of the Section 7 application was sustained and the appeal was dismissed, with no ground found to interfere with the initiation of CIRP.

Ratio Decidendi: A written acknowledgment of liability within the limitation period extends the time for a Section 7 proceeding, and Section 10A does not protect a default that arose before the commencement of the embargo period.

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