Limitation in insolvency proceedings must be tested against continuing acknowledgements and enforceability of debt, not stale claims alone.

A Section 7 Insolvency and Bankruptcy Code application was held to be within limitation because the debt remained legally enforceable on the record. Loan and mortgage documents, balance-sheet acknowledgements, and pending recovery proceedings supported continuing liability, and the existence of prior recovery litigation and security in favour of lenders showed the claim had not become stale. Balance-sheet entries could not be disregarded merely because they also referred to disputes. The impugned order rejecting the petition as time-barred was unsustainable, and the Section 7 application was directed to be restored for admission.

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Issues: Whether the application under Section 7 of the Insolvency and Bankruptcy Code, 2016 was barred by limitation and whether the debt could be treated as unenforceable in law.

Analysis: The claim was supported by loan documents, mortgage documents, acknowledgement entries in the corporate debtor's balance sheets, and pending recovery proceedings taken by the original lenders. The existence of litigation under the earlier recovery framework and the security created in favour of the lenders showed that the debt had not become stale in the manner alleged. The entries in the balance sheet could not be ignored merely because they also referred to pending disputes. For insolvency purposes, the relevant question was whether the debt remained legally enforceable, and the record disclosed sufficient material to show that it did.

Conclusion: The application was not barred by limitation and could not have been rejected as time-barred. The impugned order was unsustainable and the Section 7 application was directed to be restored for admission.

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