Limitation under the Insolvency Code runs from default, and unexplained delay barred condonation for the insolvency application.

Applications under Section 9 of the Insolvency and Bankruptcy Code are governed by Article 137 of the Limitation Act, so limitation runs from the date default gives rise to the right to apply. The Tribunal applied settled precedent that the Limitation Act applies to insolvency proceedings from the inception of the Code and that the Code cannot revive time-barred debts. It also held that Section 5 of the Limitation Act does not provide a general power to extend limitation for initiating such proceedings, and the applicant failed to explain the 230-day delay with sufficient particulars or establish sufficient cause. The condonation request was rejected and the insolvency application dismissed.

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Issues: Whether an application for condonation of delay under Section 5 of the Limitation Act, 1963 was maintainable and whether sufficient cause was shown to condone the 230-day delay in filing the insolvency application under Section 9 of the Insolvency and Bankruptcy Code, 2016.

Analysis: The Tribunal held that applications under Section 9 of the Insolvency and Bankruptcy Code, 2016 are governed by Article 137 of the Limitation Act, 1963 and that limitation runs from the date the right to apply accrues, i.e. from default. It relied on settled precedent that the Limitation Act applies to insolvency applications from the inception of the Code and that the Code cannot revive time-barred debts. The Tribunal further reasoned that Section 5 of the Limitation Act does not furnish a general right to extend limitation for initiating such proceedings, and in any event the applicant failed to explain the delay with particulars showing how 230 days was computed or to establish sufficient cause.

Conclusion: The request for condonation of delay was rejected and the application was dismissed.

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