Section 7 insolvency default can be evidenced by NPA classification; later recall notice and partial payments do not cure it.

For a Section 7 CIRP application, proof of financial debt and default was sufficient where the record showed a debt above the statutory threshold and supporting default history; exact mathematical precision in quantifying default was not required once the threshold was met. Classification of the loan account as NPA after sustained non-payment was treated as the relevant default date, while later partial payments and a subsequent recall notice did not displace the continuing default. Because the default pre-dated the Section 10A suspension period, the Section 10A bar did not apply and the admission of insolvency proceedings was upheld.

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Issues: (i) whether the Adjudicating Authority was in admitting the financial creditor's application for initiation of CIRP; (ii) whether the date of NPA classification on 27 September 2019 or the loan recall notice date could be treated as the date of default, and whether Section 10A of the Insolvency and Bankruptcy Code, 2016 barred the proceedings.

Issue (i): whether the Adjudicating Authority was in admitting the financial creditor's application for initiation of CIRP.

Analysis: The record showed the existence of a financial debt well above the statutory threshold and evidence of default. The Tribunal held that, for a Section 7 application, it is sufficient to establish debt and default and there is no requirement to determine the exact amount of default with mathematical precision if the threshold is otherwise met. The default was supported by the account history and record of default placed with the application.

Conclusion: The admission of the Section 7 application was upheld and is in favour of the respondent.

Issue (ii): whether the date of NPA classification on 27 September 2019 or the loan recall notice date could be treated as the date of default, and whether Section 10A of the Insolvency and Bankruptcy Code, 2016 barred the proceedings.

Analysis: A loan account classified as NPA after 90 days of non-payment reflects a continuing default, and the declaration of NPA can constitute the relevant date of default for the purposes of the Code. Partial payments made thereafter did not regularize the account or erase the default. The recall notice was treated as an additional demand and not the point at which default first arose. On that footing, the default pre-dated the Section 10A suspension period and the bar under Section 10A was not attracted.

Conclusion: 27 September 2019 was correctly treated as the date of default and the Section 10A plea failed.

Final Conclusion: The appeal failed in entirety, the admission order was affirmed, and the insolvency process against the corporate debtor remained undisturbed.

Ratio Decidendi: For Section 7 proceedings, classification of the loan account as NPA after sustained non-payment may validly evidence the date of default, and subsequent partial payments or a later recall notice do not displace a continuing default or attract Section 10A where the default commenced earlier.

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