Limitation in insolvency claims may not defeat a continuing debt where liability and interest accrue periodically.

Limitation does not automatically bar a Section 7 insolvency application where the claim is continuing and interest or liability accrues periodically. The NCLAT relied on its earlier view that the Limitation Act, 1963 does not prevent initiation of corporate insolvency proceedings in the manner urged, and that stale claims may instead be assessed through delay, laches, and whether a continuing cause of action exists. It also noted that Article 137 of the Limitation Act was relevant to the right to apply under the Insolvency and Bankruptcy Code, which arose only on commencement of the Code. The limitation objection was rejected and the admission order was upheld.

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

Analysis: The appeal challenged admission of the corporate insolvency application on the ground of limitation. The Tribunal relied on its earlier view that the Limitation Act, 1963 does not bar initiation of corporate insolvency proceedings in the manner suggested, and in any event stale claims may be examined with reference to delay, laches, and whether there is a continuing cause of action. It further noted that where interest accrues periodically and the liability continues, the claim cannot be treated as time-barred merely on the basis of passage of time. It also referred to Article 137 of the Limitation Act, 1963 and held that the right to apply under the insolvency code arose only upon commencement of the code.

Conclusion: The limitation objection was rejected and the admission order was upheld.

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