Limitation under insolvency law turns on Article 137, acknowledgments, and prior recovery proceedings in a section 7 application.

A section 7 Insolvency and Bankruptcy Code application was examined on limitation, with Article 137 of the Limitation Act treated as governing the period for filing. The majority accepted loan documents, account statements, consent terms, balance-sheet disclosures, and other conduct as evidence of debt and default, and considered the time spent in DRT and DRAT proceedings relevant to saving limitation on the facts. The dissent took the view that limitation ran from default or NPA and that recovery proceedings did not extend time. The discussion concludes that the application was complete, within limitation, and fit for admission where debt, default, and legally relevant acknowledgments are established.

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Issues: Whether the application under section 7 of the Insolvency and Bankruptcy Code, 2016 was barred by limitation, and whether the prior DRT and DRAT proceedings and subsequent acknowledgments saved limitation so as to justify admission of the corporate insolvency resolution process.

Analysis: The majority held that the financial creditor had produced loan documents, account statements, and material showing default. It accepted that the corporate debtor had availed the facilities, that default had occurred, and that the petition was filed within limitation because the period spent in proceedings before the DRT and DRAT could be excluded in the facts of the case. The majority also relied on the consent terms and the later conduct of the corporate debtor, including balance-sheet disclosures, to hold that the debt and default were established and that the section 7 application was complete. The dissenting member took the view that limitation ran from the date of default or NPA, that Article 137 governed, and that pendency of recovery proceedings did not extend limitation.

Conclusion: The section 7 application was held to be within limitation and maintainable, and the corporate insolvency resolution process was admitted in favour of the financial creditor.

Ratio Decidendi: For a section 7 insolvency application, the limitation period is governed by Article 137 of the Limitation Act, but the application may still be admitted where the debt and default are established and the tribunal finds that limitation is saved on the facts by legally relevant proceedings or acknowledgments.

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