Limitation under IBC bars stale Section 9 claims where the three-year period runs from accrual of the right to apply.

An application under Section 9 of the Insolvency and Bankruptcy Code was held time-barred because Article 137 of the Limitation Act, read with Section 238-A of the Code, applies to Sections 7 and 9 proceedings and the three-year period runs from accrual of the right to apply. The invoice was raised in 2014, but the demand notice was issued only in 2019, leaving an unexplained gap of more than five years. The debtor's reply to the demand notice did not create a fresh cause of action for limitation purposes. The claim was therefore treated as stale and the application was liable to be dismissed.

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Issues: Whether the application under Section 9 of the Insolvency and Bankruptcy Code, 2016 was barred by limitation.

Analysis: The invoice was raised on 13.03.2014 and the demand notice was issued only on 27.03.2019, leaving an unexplained gap of more than five years. The reply to the demand notice did not create a fresh cause of action for limitation purposes. In proceedings under Sections 7 and 9 of the Insolvency and Bankruptcy Code, 2016, Article 137 of the Limitation Act, 1963 applies, and the period of three years runs from the date when the right to apply accrues. Section 238-A of the Insolvency and Bankruptcy Code, 2016 makes the Limitation Act applicable to such proceedings. On the facts, the claim had become stale and the application was filed beyond the prescribed period.

Conclusion: The application was barred by limitation and was liable to be dismissed.

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