Acknowledgement of liability through settlement proposals and part payments sustained Section 7 insolvency admission; counsel-change challenge also failed.

One-time settlement proposals, part payments and admitted correspondence were treated as acknowledgement of liability, supporting debt and default for sustaining the Section 7 insolvency application; the corporate debtor had not genuinely denied the outstanding debt, only the quantum, and the limitation objection failed in light of the acknowledged liability and excluded period. The challenge to rejection of the counsel-change application also failed because the corporate debtor was already represented, had filed a reply through existing counsel, and showed no valid procedural basis to displace that representation. The insolvency admission and refusal of interlocutory relief were therefore left undisturbed.

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Issues: (i) Whether the Section 7 application was rightly admitted on the basis of debt, default and acknowledgement of liability through one-time settlement proposals and part payments; (ii) Whether the application seeking change of counsel for the corporate debtor was rightly rejected.

Issue (i): Whether the Section 7 application was rightly admitted on the basis of debt, default and acknowledgement of liability through one-time settlement proposals and part payments?

Analysis: The admitted loan transaction, the repayment history, the corporate debtor's correspondence, the one-time settlement proposals and the part payments were treated as clear indicators of acknowledgement of liability. The record also showed that the corporate debtor never really denied the outstanding debt, but only disputed the quantum claimed. On the facts, the finding of debt and default was supported, and the limitation objection did not survive in view of the acknowledged liability and the period exclusion applied by the Adjudicating Authority.

Conclusion: The admission of the Section 7 application was upheld against the appellant.

Issue (ii): Whether the application seeking change of counsel for the corporate debtor was rightly rejected?

Analysis: The corporate debtor was already represented in the Section 7 proceedings, had filed a reply through existing counsel, and no valid basis was shown to displace the counsel already on record. The Adjudicating Authority also found that there was no jurisdictional basis to entertain the counsel-dispute application in the manner sought. The rejection of the interlocutory application was therefore justified.

Conclusion: The rejection of the application to replace the existing counsel was affirmed against the appellant.

Final Conclusion: The appeal failed on merits, and the insolvency admission as well as the rejection of the interlocutory relief were left undisturbed, with the corporate insolvency process directed to proceed in accordance with law.

Ratio Decidendi: One-time settlement proposals, part payments and admitted correspondence can amount to acknowledgement of liability for purposes of sustaining a Section 7 insolvency application, and a represented corporate debtor cannot displace existing counsel in the absence of a valid procedural basis.

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