Limitation for Section 7 insolvency claims extends through written acknowledgment, keeping the application within time.

A Section 7 insolvency application is tested against the date of default under Article 137 of the Limitation Act, and a written acknowledgment signed before expiry of the current limitation period starts a fresh limitation period under Section 18. On the facts described, the account was treated as NPA on 15.01.2013, followed by acknowledgments on 05.02.2013 and 03.02.2016, so the limitation period was extended. The procedural objection that the acknowledgments were not relied on earlier was not accepted because their genuineness was not disputed. The application was therefore within limitation and the plea of time bar failed.

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Issues: Whether the application under Section 7 of the Insolvency and Bankruptcy Code, 2016 was barred by limitation in view of the date of default and whether subsequent written acknowledgments extended the limitation period.

Analysis: Limitation for a Section 7 application is computed with reference to the date of default and, in the context of such an application, Article 137 of the Limitation Act, 1963 applies. The record showed a notice treating the account as NPA on 15.01.2013, followed by a written acknowledgment by the corporate debtor on 05.02.2013 and another letter on 03.02.2016 within three years of the earlier acknowledgment. Under Section 18 of the Limitation Act, 1963, each written acknowledgment signed before expiry of the then current limitation period gives rise to a fresh period of limitation. The challenge that the acknowledgment documents were not relied upon before the adjudicating authority was not accepted, since the genuineness of the letters was not disputed and the Court declined to decide the matter on that procedural objection. The order below was not sustained on Article 62, but on the effect of the acknowledgments under Section 18.

Conclusion: The Section 7 application was within limitation and the plea of time bar failed.

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