Limitation under Section 7 insolvency proceedings defeated reliance on later entries and unavailable Section 14 exclusion.

Disbursement of financial debt was held proved where a NeSL certificate and bank statements showed release of funds, and the corporate debtor had not disputed disbursement before the Adjudicating Authority. The Section 7 application was nevertheless found time-barred because default occurred on 19.09.2015 and the application was filed on 10.12.2019, beyond three years; later account entries did not extend limitation on the facts. Benefit of Section 14 of the Limitation Act was rejected because the pending recovery proceedings were not shown to suffer from want of jurisdiction or a comparable defect. The rejection of the Section 7 application was therefore upheld.

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Issues: (i) Whether disbursement of financial debt was proved for admitting the Section 7 application; (ii) Whether the Section 7 application was barred by limitation and whether benefit of Section 14 of the Limitation Act, 1963 was available on the basis of the pending recovery proceedings.

Issue (i): Whether disbursement of financial debt was proved for admitting the Section 7 application.

Analysis: The record contained a NeSL certificate and bank statements showing disbursement. The corporate debtor did not appear before the Adjudicating Authority and did not dispute the disbursement. In those circumstances, the finding that disbursement was not proved could not be sustained.

Conclusion: This issue was decided in favour of the appellant.

Issue (ii): Whether the Section 7 application was barred by limitation and whether benefit of Section 14 of the Limitation Act, 1963 was available on the basis of the pending recovery proceedings.

Analysis: The default date was 19.09.2015 and the Section 7 application was filed on 10.12.2019, beyond three years. The later account entries did not extend limitation on the facts. The pending proceedings under Section 19 of the Recovery of Debts and Bankruptcy Act, 1993 were not shown to suffer from want of jurisdiction or a defect of the kind required for exclusion under Section 14 of the Limitation Act, 1963. The reliance on the cited Supreme Court decision was held inapplicable to the present facts.

Conclusion: This issue was decided against the appellant.

Final Conclusion: The rejection of the Section 7 application was upheld, and the appeal failed.

Ratio Decidendi: Benefit of Section 14 of the Limitation Act, 1963 is not available for pendency of proceedings under another forum unless the earlier proceedings were prosecuted in circumstances attracting exclusion for want of jurisdiction or a similar defect, and limitation for a Section 7 application cannot be extended on unsupported account entries.

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