Limitation for Insolvency Applications under Section 7 Runs from Default and Bars Late Filing

An application under Section 7 of the Insolvency and Bankruptcy Code is governed by Article 137 of the Limitation Act, which fixes a three-year period from the date the right to apply accrues, ordinarily the date of default. On the stated facts, the last relevant payment was made on 29.12.2015 and the application was filed in August 2019, so it fell outside the limitation period. The application was therefore barred by limitation and could not be entertained, subject only to any legally permissible condonation.

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Issues: Whether the application under Section 7 of the Insolvency and Bankruptcy Code, 2016 was barred by limitation.

Analysis: Article 137 of the Limitation Act, 1963 governs applications under Sections 7 and 9 of the Insolvency and Bankruptcy Code, 2016 from the inception of the Code. The limitation period is three years from the date when the right to apply accrues, which in such matters is the date of default. On the facts, the last relevant payment was made on 29.12.2015 and the application was filed in August 2019, beyond the three-year period.

Conclusion: The application was barred by limitation and could not be entertained.

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 is maintainable only if filed within three years from default, subject to legally permissible condonation.

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