Limitation for insolvency claims under Section 7 follows Article 137, and stale defaults may render the application time-barred.

An application under Section 7 of the Insolvency and Bankruptcy Code is subject to Article 137 of the Limitation Act, with limitation running from the date of default. Where the default is more than three years old, the application is barred unless delay can be condoned on the facts under Section 5 of the Limitation Act. On the admitted chronology described, the claim was beyond time, and the application was dismissed as hopelessly time-barred.

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Issues: Whether the application under Section 7 of the Insolvency and Bankruptcy Code, 2016 was barred by limitation.

Analysis: The application was filed on the basis of a default and a recovery process that had already culminated in a final order and recovery certificate many years earlier. Limitation under Article 137 of the Limitation Act, 1963 applies to proceedings under Sections 7 and 9 of the Code from the inception of the Code, and the right to sue accrues when default occurs. Where the default is more than three years old, the application is barred unless delay is capable of being condoned under Section 5 of the Limitation Act, 1963 on the facts of the case. On the admitted chronology, the claim was beyond the prescribed period.

Conclusion: The application was held to be hopelessly time-barred and was dismissed.

Ratio Decidendi: An application under Section 7 of the Insolvency and Bankruptcy Code, 2016 is governed by Article 137 of the Limitation Act, 1963, and if the default occurred more than three years before filing, the application is barred unless delay is condonable under Section 5 of the Limitation Act, 1963.

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