Acknowledgment of liability extends limitation, and proper service supports ex parte insolvency admission when debt and default are proved.

Repeated acknowledgments of liability through restructuring requests and one-time settlement proposals extended limitation under section 18, so the section 7 application was not time-barred. Substituted service, followed by appearance of counsel and further opportunity to file a reply, was sufficient to justify proceeding ex parte, so there was no breach of natural justice. Disbursal, account classification as NPA, recall and SARFAESI notices, and the debtor's own settlement material established debt and default, making admission of the insolvency application sustainable.

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Issues: (i) Whether the section 7 application was barred by limitation; (ii) Whether the ex parte procedure violated natural justice; (iii) Whether debt and default were proved for admission of the insolvency application.

Issue (i): Whether the section 7 application was barred by limitation.

Analysis: The loan account had been classified as non-performing asset in 2015, but the record contained repeated acknowledgments of liability and requests for restructuring, including letters and one time settlement proposals. These acknowledgments fell within the scope of limitation law and extended the period for filing the insolvency application. The pendency of proceedings in relation to the original financial creditor and the consequential benefit of the limitation suspension order were also taken into account.

Conclusion: The application was not time-barred and the finding on limitation was upheld in favour of the respondent.

Issue (ii): Whether the ex parte procedure violated natural justice.

Analysis: Notice was served by substituted service after the original notice returned unserved. Counsel thereafter appeared for the corporate debtor and sought time to file reply, but no reply was filed despite further opportunity. The tribunal therefore had sufficient basis to proceed ex parte, and the absence of the managing director during part of the later period did not undermine the earlier opportunities already afforded.

Conclusion: There was no violation of natural justice.

Issue (iii): Whether debt and default were proved for admission of the insolvency application.

Analysis: The disbursal of the loan was undisputed. Default was supported by the classification of the account as NPA, recall and SARFAESI notices, and repeated restructuring and settlement proposals from the corporate debtor, which constituted clear acknowledgments of liability. The materials on record supported the creditor's case on debt and default.

Conclusion: Debt and default were established and admission of the section 7 application was justified.

Final Conclusion: The insolvency admission order was found to be sustainable, and no ground for interference was made out.

Ratio Decidendi: Repeated acknowledgments of liability, including restructuring and settlement proposals, extend limitation under section 18, and where notice is duly served and adequate opportunity to respond is given, an ex parte insolvency admission will not be interfered with if debt and default are otherwise established.

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