Acknowledgement of liability and prima facie proof of default can preserve a Section 7 insolvency application from limitation objections.

A written acknowledgement of liability within the limitation period can extend time under Section 18 of the Limitation Act, and filing on the next working day after court closure may be protected by Section 4. The text also treats balance-sheet entries, the 09.06.2016 communication, and related written material as prima facie evidence of financial debt and default for a Section 7 insolvency application. It further states that Section 7(3) requires prima facie disclosure of debt and default at admission, not strict proof, and that a new limitation objection raised only in written submissions is not part of the pleadings and cannot defeat the application.

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Issues: (i) Whether the insolvency application under Section 7 of the Insolvency and Bankruptcy Code, 2016 was barred by limitation in view of the acknowledgement of liability dated 09.06.2016 and the effect of the court closure on the filing date; (ii) Whether the communication of 09.06.2016 and the corporate debtor's books and written materials established debt and default; (iii) Whether Section 7(3) of the Insolvency and Bankruptcy Code, 2016 required strict proof of default at the admission stage or only prima facie disclosure; (iv) Whether a plea first taken in written submissions could defeat the claim on limitation.

Issue (i): Whether the insolvency application under Section 7 of the Insolvency and Bankruptcy Code, 2016 was barred by limitation in view of the acknowledgement of liability dated 09.06.2016 and the effect of the court closure on the filing date.

Analysis: The acknowledgement of liability dated 09.06.2016 was treated as an admitted written acknowledgement, attracting a fresh period of limitation under Section 18 of the Limitation Act, 1963. The filing on 10.06.2019 was also held to be saved by Section 4 of the Limitation Act, 1963 because the limitation period was affected by the intervening court closure on the preceding weekend. The limitation objection had not been effectively raised in the original pleadings and could not be sustained on the facts as accepted on record.

Conclusion: The application was not barred by limitation and the finding against the appellant was set aside.

Issue (ii): Whether the communication of 09.06.2016 and the corporate debtor's books and written materials established debt and default.

Analysis: The communication of 09.06.2016, the balance-sheet material, and the written submissions of the corporate debtor were read together as admissions of an existing unsecured liability. The plea that the acknowledgement was made "inadvertently" was not accepted because execution of the document and the underlying liability were not effectively denied. The record was treated as sufficient to show an admitted financial debt and default.

Conclusion: Debt and default were held to be established in favour of the appellant.

Issue (iii): Whether Section 7(3) of the Insolvency and Bankruptcy Code, 2016 required strict proof of default at the admission stage or only prima facie disclosure.

Analysis: Section 7(3) was construed as an enabling provision requiring the financial creditor to place prima facie material showing the existence of debt and default, not strict proof at the threshold stage. The provision was held not to authorise rejection of the application merely because the tribunal preferred a narrower reading of the supporting record.

Conclusion: Section 7(3) did not justify rejection of the application on the reasoning adopted by the adjudicating authority.

Issue (iv): Whether a plea first taken in written submissions could defeat the claim on limitation.

Analysis: Written submissions were held not to be pleadings within the meaning of the NCLT Rules, 2016. A new limitation plea introduced for the first time in written submissions, without having been taken in the original counter, could not be used to non-suit the appellant, especially when it would remain unrebutted as a matter of procedure.

Conclusion: The belated limitation plea in written submissions was not accepted.

Final Conclusion: The impugned order was set aside, the insolvency application was directed to proceed, and the corporate debtor was to be dealt with in accordance with the insolvency resolution framework including moratorium.

Ratio Decidendi: A written acknowledgement of liability within the limitation period, read with the effect of court closure under Section 4 of the Limitation Act, 1963, can save a Section 7 insolvency from limitation, and Section 7(3) requires only prima facie disclosure of debt and default at the admission stage.

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