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Issues: (i) Whether the application under Section 7 of the Insolvency and Bankruptcy Code, 2016 was barred by limitation under Article 137 of the Limitation Act, 1963; (ii) Whether the challenge to the financial creditor's assignment deed affected the maintainability of the insolvency application.
Issue (i): Whether the application under Section 7 of the Insolvency and Bankruptcy Code, 2016 was barred by limitation under Article 137 of the Limitation Act, 1963.
Analysis: The limitation plea was rejected because the assignment in favour of the financial creditor was dated 28.03.2014 and was treated as having revived after the order of the Gujarat High Court. In addition, the corporate debtor had submitted settlement proposals in February, April and June 2015, which supported the subsistence of the debt and negatived the plea that the claim was time-barred.
Conclusion: The application under Section 7 was not barred by limitation and the contention based on Article 137 failed.
Issue (ii): Whether the challenge to the financial creditor's assignment deed affected the maintainability of the insolvency application.
Analysis: The objection based on the earlier finding of the Debt Recovery Tribunal was not accepted, as that order had been set aside and quashed by the Gujarat High Court. On that basis, the assignment deed could not be treated as disabling the financial creditor from maintaining the Section 7 proceedings.
Conclusion: The assignment-based objection to maintainability failed.
Final Conclusion: The insolvency application was held maintainable and within limitation, so the appeal failed and the order admitting the Section 7 application was sustained.
Ratio Decidendi: An application under Section 7 of the Insolvency and Bankruptcy Code, 2016 is governed by Article 137 of the Limitation Act, 1963, and it is not barred where the debt is supported by subsequent settlement proposals or other circumstances showing that limitation has not expired.
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