Limitation for Section 7 insolvency applications excludes pending recovery proceedings as a basis to revive stale claims.

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, 1963. Where the corporate debtor's account had already become non-performing and the debt had been assigned after default, prior recovery steps and an execution of a recovery certificate did not preserve the right to commence CIRP. Pending recovery or execution proceedings do not extend limitation or convert insolvency proceedings into a recovery mechanism. On that basis, the Section 7 application was treated as time-barred and initiation of CIRP was not maintainable.

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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 pendency of recovery and execution proceedings preserved the right to initiate CIRP.

Analysis: The Corporate Debtor's account had been classified as NPA long before the filing of the Section 7 application. The financial debt had been assigned to the appellant after the default had already occurred, and recovery proceedings had commenced years earlier, culminating in a recovery certificate that remained under execution. Article 137 of the Limitation Act, 1963 governs applications under Section 7 of the Insolvency and Bankruptcy Code, 2016, and the three-year period had expired well before the application was filed. The existence of continuing recovery and execution proceedings did not permit use of the insolvency process as a recovery mechanism.

Conclusion: The Section 7 application was barred by limitation and initiation of CIRP was not maintainable. The issue was decided against the appellant.

Final Conclusion: The appeal failed, and the dismissal left the appellant free to continue the execution and recovery proceedings already pending before the competent forum.

Ratio Decidendi: An application under Section 7 of the Insolvency and Bankruptcy Code, 2016 must be filed within the limitation period prescribed by Article 137 of the Limitation Act, 1963, and pending recovery or execution proceedings do not extend that period or convert insolvency into a recovery remedy.

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