Limitation under insolvency law: acknowledgment of debt and BIFR pendency extended time, allowing admission of the section 7 petition.

A section 7 application under the Insolvency and Bankruptcy Code was examined on limitation under article 137 of the Limitation Act. The corporate debtor's one-time settlement proposal and later reply to the statutory demand notice were treated as acknowledgment of liability for section 18 purposes, extending limitation. The period spent in BIFR proceedings was also excluded while computing limitation. On that basis, the petition filed after 01.12.2016 was found to be within time, the limitation objection failed, and the section 7 petition was admitted to commence CIRP.

---

---

Issues: Whether the section 7 application was within limitation in view of the corporate debtor's acknowledgment of liability through the one-time settlement record and the period spent in BIFR proceedings, and whether the corporate insolvency resolution process could be admitted on that basis.

Analysis: The application under section 7 of the Insolvency and Bankruptcy Code, 2016 was examined with reference to article 137 of the Limitation Act, 1963. The corporate debtor had ed the settlement proposal and later reiterated its liability in its reply to the statutory demand notice, which was treated as a valid acknowledgment of debt for the purposes of section 18 of the Limitation Act, 1963. The matter had also remained pending before BIFR under the Sick Industrial Companies (Special Provisions) Act, 1985 until repeal of that regime, and the period of such pendency was held liable to be excluded while computing limitation. On that basis, the petition filed after 01.12.2016 was held to be within time.

Conclusion: The limitation objection failed, the debt and default were treated as sufficiently acknowledged, and the section 7 petition was admitted to initiate CIRP.

---