Limitation for insolvency applications runs from accrual of the right to apply, and withdrawn arbitration alone does not bar relief.

An application for initiation of corporate insolvency resolution process under section 9 was held not to be barred by limitation, because Article 137 of the Limitation Act applied and the right to apply was treated as accruing from the date the Code came into force. The earlier commercial dispute did not, by itself, make the claim time-barred within the statutory three-year period. The prior withdrawal of arbitration, sought with liberty to pursue fresh interim relief and leaving no live arbitral dispute, also did not justify rejection of the insolvency application. The dismissal order was set aside and the matter remitted for admission on notice and hearing.

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Issues: (i) Whether an application under section 9 of the Insolvency and Bankruptcy Code, 2016 was barred by limitation; (ii) Whether the earlier withdrawal of the arbitration proceeding without dispute on the claim precluded rejection of the insolvency application.

Issue (i): Whether an application under section 9 of the Insolvency and Bankruptcy Code, 2016 was barred by limitation.

Analysis: The filing of an application for initiation of corporate insolvency resolution process is governed, if at all, by Article 137 of the Limitation Act, 1963. The right to apply under the Insolvency and Bankruptcy Code, 2016 accrues from the date the Code came into force, and the claim could not be treated as time-barred merely because the underlying commercial dispute arose earlier. The Tribunal also noted that limitation does not defeat a claim where the application is filed within the statutory three-year period counted from accrual of the right to apply.

Conclusion: The application was not barred by limitation, and the finding of the Adjudicating Authority on this ground was incorrect.

Issue (ii): Whether the earlier withdrawal of the arbitration proceeding without dispute on the claim precluded rejection of the insolvency application.

Analysis: The record showed that the appellant had sought withdrawal of the arbitration proceeding with liberty to institute fresh proceedings for interim relief, and there was no live arbitral dispute pending. In those circumstances, the earlier arbitration step did not justify rejection of the insolvency application.

Conclusion: The earlier arbitration proceeding did not bar the insolvency application.

Final Conclusion: The impugned order dismissing the section 9 application was set aside, and the matter was remitted for admission after notice and hearing, with direction to admit the application if otherwise complete or permit removal of defects if incomplete.

Ratio Decidendi: An application for initiation of corporate insolvency resolution process cannot be rejected as time-barred where it is filed within three years of the right to apply accruing under Article 137 of the Limitation Act, 1963, and an earlier withdrawn arbitration proceeding does not by itself defeat the insolvency claim.

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