Limitation in Section 7 insolvency claims bars stale petitions, while home-buyer filings may fail if used for compensation.

An application under Section 7 of the Insolvency and Bankruptcy Code was treated as subject to Article 137 of the Limitation Act, so the three-year period ran from the pleaded date of default; on the facts noted, the petition was treated as time-barred and not admissible. The note also records that a home-buyer-led Section 7 petition may be scrutinised closely where the flat is ready for possession, a completion certificate has been obtained, and the surrounding facts indicate a claim for further compensation rather than genuine insolvency resolution. On that basis, the application was considered unsuitable for admission on merits and the claimant was left to pursue compensation before the appropriate forum.

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Issues: (i) Whether the petition under Section 7 of the Insolvency and Bankruptcy Code, 2016 was barred by limitation. (ii) Whether, on the facts, the petition deserved admission in light of the petitioner's status as a home buyer and the allegation that the process was being used to seek compensation rather than resolution of insolvency.

Issue (i): Whether the petition under Section 7 of the Insolvency and Bankruptcy Code, 2016 was barred by limitation.

Analysis: The date of default pleaded in the petition was 01.04.2014, while the petition was filed on 03.07.2019. The Tribunal applied the settled principle that Article 137 of the Limitation Act governs applications under the Code and that the limitation period is three years from the date of default.

Conclusion: The petition was barred by limitation and could not be admitted.

Issue (ii): Whether, on the facts, the petition deserved admission in light of the petitioner's status as a home buyer and the allegation that the process was being used to seek compensation rather than resolution of insolvency.

Analysis: The Tribunal noted that the flat was ready for possession, completion certificate had been obtained, the petitioner had already received partial compensation, and the surrounding facts indicated that the petitioner was seeking additional compensation rather than genuine insolvency resolution. Relying on the principles governing home-buyer claims under Section 7 and the wider scrutiny permitted in such matters, the Tribunal treated the petition as unsuitable for admission.

Conclusion: The petition was not fit for admission on merits.

Final Conclusion: The insolvency application failed both on limitation and on merits, and the petitioner was left to pursue any compensation claim before the appropriate forum.

Ratio Decidendi: An application under Section 7 of the Insolvency and Bankruptcy Code, 2016 must be filed within the three-year limitation period under Article 137 of the Limitation Act, and a home-buyer application may be rejected where the facts show that the process is being invoked for compensation or other collateral purposes rather than for genuine insolvency resolution.

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