Limitation for section 7 insolvency starts from default; SARFAESI recovery steps do not extend time or exclude delay.

For a section 7 IBC application, limitation runs from the date of default, and article 137 applies. The mere pendency of recovery proceedings, a decree, or SARFAESI enforcement does not postpone default or extend limitation. Proceedings under section 13(2) or section 13(4) of SARFAESI are not civil proceedings before a court of first instance, appeal, or revision, so they do not attract exclusion of time under section 14(2) of the Limitation Act. That exclusion is confined to due-diligent, good-faith prosecution of another civil proceeding against the same party for the same relief before a forum lacking jurisdiction or suffering a like defect.

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Issues: Whether the application under section 7 of the Insolvency and Bankruptcy Code, 2016 was barred by limitation and whether proceedings under SARFAESI or other recovery measures could shift the date of default or attract exclusion of time under section 14(2) of the Limitation Act, 1963.

Analysis: For applications under section 7, article 137 of the Limitation Act applies and time begins to run from the date of default. The mere filing of recovery proceedings, the existence of a decree, or pendency of other enforcement action does not extend limitation or defer the date of default. Proceedings under section 13(2) or section 13(4) of the SARFAESI Act are not civil proceedings before a court of first instance, appeal, or revision, and therefore do not qualify for exclusion of time under section 14(2). The benefit of section 14(2) is available only where the applicant has prosecuted, with due diligence and in good faith, another civil proceeding against the same party for the same relief before a forum unable to entertain it for want of jurisdiction or a like defect.

Conclusion: The section 7 application was barred by limitation. SARFAESI action and the other recovery proceedings did not save limitation or shift the date of default.

Final Conclusion: The appeal succeeds, the admission order under section 7 is set aside, and the insolvency proceedings against the corporate debtor do not survive.

Ratio Decidendi: For a section 7 insolvency application, limitation runs from the date of default as reflected by NPA classification, and enforcement or recovery proceedings under SARFAESI do not exclude time under section 14(2) or postpone that default.

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