Pre-suspension default controls Section 10A despite a mistaken Form I date and failed One-Time Settlement in CIRP applications.
Section 10A does not bar a Section 7 CIRP application where the actual default occurred before the suspension period, even if Form I mistakenly records a later date arising from non-payment under a One-Time Settlement. Failure of the settlement restores the original debt position rather than creating a fresh default. A default-date error and other procedural defects may be rectified where cure does not affect merits or jurisdiction, and supporting documents may be placed on record. At admission, the enquiry remains confined to financial debt, default and application completeness; unsupported assertions of solvency or commercial viability do not displace CIRP admission. A reasoned admission order should record the material establishing debt and qualifying default.
Issues: (i) Whether the Section 7 application was barred under Section 10A because Form I stated default as 01.11.2020, and whether the date could be corrected to 06.03.2018; (ii) Whether curable defects in the Section 7 application made it non-maintainable; (iii) Whether the corporate debtor's asserted viability warranted refusal of CIRP admission; (iv) Whether the admission order was non-reasoned.
Issue (i): Whether the Section 7 application was barred under Section 10A because Form I stated default as 01.11.2020, and whether the date could be corrected to 06.03.2018.
Analysis: Section 7 requires establishment of financial debt and default, while Section 10A bars applications founded on defaults occurring during the specified suspension period. The stated date of 01.11.2020 represented non-payment of an instalment under the One-Time Settlement, which did not reschedule or create a fresh default in respect of the original debt. Failure of the settlement restored the original position. The debt recovery certificate dated 06.03.2018 was the relevant date of default, and written acknowledgments of debt rendered the application timely. The erroneous entry in Form I was a rectifiable procedural error.
Conclusion: The application was not barred by Section 10A, and correction of the date of default to 06.03.2018 was permissible. Against the Appellant.
Issue (ii): Whether curable defects in the Section 7 application made it non-maintainable.
Analysis: Procedural defects that are capable of rectification do not require rejection unless the governing statute mandates that consequence, the defect remains unrectified despite opportunity, or rectification affects merits or jurisdiction. The defects in the application were capable of cure, and additional documents could validly be taken on record.
Conclusion: The curable defects did not render the Section 7 application non-maintainable. Against the Appellant.
Issue (iii): Whether the corporate debtor's asserted viability warranted refusal of CIRP admission.
Analysis: The admission-stage enquiry under Section 7 is confined to the existence of debt and default and the completeness of the application. No credible material established that the corporate debtor was solvent or commercially viable. Its prior inability to meet obligations, implement the settlement, or secure investment distinguished the matter from a case involving recoverable receivables that could realistically discharge the debt.
Conclusion: The asserted commercial viability did not warrant refusal of CIRP admission. Against the Appellant.
Issue (iv): Whether the admission order was non-reasoned.
Analysis: The admission order recorded the lending documents, restructuring, NPA classification, recovery proceedings, debt recovery certificate, failed settlement, acknowledgments, and the existence of default exceeding the statutory threshold. It provided reasons for admitting the Section 7 application.
Conclusion: The admission order was reasoned and valid. Against the Appellant.
Final Conclusion: The admission of the corporate debtor into CIRP stands sustained because financial debt and a qualifying pre-suspension default were established, notwithstanding the rectifiable Form I error and the unsupported claim of viability.
Ratio Decidendi: A failed One-Time Settlement does not create a fresh date of default or displace an earlier established default; consequently, a curable erroneous default entry in a Section 7 application cannot invoke the Section 10A bar where the actual default preceded the suspension period.