Limitation for Section 7 insolvency applications runs from default, and a parallel civil suit does not make the debt contingent.

Pendency of a separate civil suit does not, by itself, make a financial debt contingent or prevent a Section 7 insolvency application where the record shows disbursal, repeated acknowledgments, demand notice and non-payment. The limitation period for a Section 7 application runs from the date of default, and Article 137 of the Limitation Act applies through Section 238-A of the Insolvency and Bankruptcy Code. On the stated facts, default was treated as occurring when payment was not made after demand, so the application filed later was time-barred.

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Issues: (i) Whether pendency of a civil suit made the financial debt contingent so as to justify rejection of the application under Section 7 of the Insolvency and Bankruptcy Code, 2016. (ii) Whether the application under Section 7 was barred by limitation.

Issue (i): Whether pendency of a civil suit made the financial debt contingent so as to justify rejection of the application under Section 7 of the Insolvency and Bankruptcy Code, 2016.

Analysis: The record showed disbursal of loan, repeated acknowledgments of liability, a demand notice, and continued non-payment. On the materials before it, the debt was not treated as dependent on the outcome of the civil suit. The pendency of separate civil proceedings did not, by itself, negate the existence of a debt or default for the purposes of insolvency proceedings under Section 7.

Conclusion: The rejection of the application on the ground that the debt was contingent upon the civil suit was not sustained.

Issue (ii): Whether the application under Section 7 was barred by limitation.

Analysis: The default was taken to have occurred when the demand notice was served and the borrower failed to repay within the stipulated period, making 25.11.2007 the date of default. In view of Section 238-A of the Insolvency and Bankruptcy Code, 2016, Article 137 of the Limitation Act, 1963 applied, and the application filed on 17.04.2018 was beyond three years from the date of default.

Conclusion: The application under Section 7 was barred by limitation.

Final Conclusion: The appeal failed because the insolvency application was time-barred, even though the Tribunal did not agree with the Adjudicating Authority's reasoning that the debt was not due.

Ratio Decidendi: An application under Section 7 of the Insolvency and Bankruptcy Code, 2016 must be filed within the limitation period computed from the date of default, and pendency of parallel civil proceedings does not by itself prevent the debt from being treated as due and payable for insolvency purposes.

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