Section 7 insolvency application upheld where default, financial debt, and limitation were established despite a section 10A objection.

A section 7 Insolvency and Bankruptcy Code application was held not barred by section 10A because the relevant default is non-payment of the debt, not the date of NPA classification. The information utility record was treated as corroborative evidence of debt and default, and the financial debt was found to be disbursed against consideration for the time value of money. Non-repayment of principal and interest established default, the application was found complete and within limitation, and the statutory threshold for initiation of CIRP was satisfied. The application was therefore admitted, moratorium was declared, and an interim resolution professional was appointed.

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Issues: Whether the application under section 7 of the Insolvency and Bankruptcy Code, 2016 was barred by section 10A and whether the record disclosed a financial debt and default warranting admission of the application.

Analysis: The objection based on section 10A was rejected on the footing that the relevant default for a section 7 proceeding is the default in payment of the debt, not merely the date of classification of the account as NPA. The information utility record was relied upon as corroborative material showing the status of default, and the record of debt and default was found sufficient. The financial debt was held to have been disbursed against consideration for the time value of money, and the failure to repay the principal and interest established default. The application was also found to be complete and within limitation, and the statutory threshold for initiation of CIRP was held to be satisfied.

Conclusion: The section 7 application was maintainable and was admitted, with moratorium declared and an interim resolution professional appointed.

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