Limitation for section 7 insolvency claims runs under Article 137; prior recovery steps and late acknowledgement do not revive it.

An application under section 7 of the Insolvency and Bankruptcy Code, 2016 was held to be governed by Article 137 of the Limitation Act, 1963, so the three-year limitation period ran from the date of default. On the facts stated, the default occurred in June 2015 and the application filed in January 2019 was time-barred. Prior SARFAESI and recovery proceedings did not attract section 14 because they were not proceedings in a wrong forum without jurisdiction, and the one-time settlement proposal did not constitute a valid acknowledgement within limitation under section 18. The admission order was set aside and the section 7 application was dismissed.

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Issues: (i) Whether the application under section 7 of the Insolvency and Bankruptcy Code, 2016 was barred by limitation under Article 137 of the Limitation Act, 1963; (ii) Whether the respondent bank could exclude time by invoking section 14 of the Limitation Act, 1963 or rely upon the alleged acknowledgement to extend limitation under section 18 of the Limitation Act, 1963.

Issue (i): Whether the application under section 7 of the Insolvency and Bankruptcy Code, 2016 was barred by limitation under Article 137 of the Limitation Act, 1963.

Analysis: The default was held to have occurred in June 2015 and the account was classified as non-performing asset on 30.09.2015. The section 7 application was filed on 30.01.2019, beyond three years from the date of default. The Tribunal held that the residuary Article 137 governs an application under section 7 of the Insolvency and Bankruptcy Code, 2016 and that the claim had become time-barred.

Conclusion: The application under section 7 of the Insolvency and Bankruptcy Code, 2016 was barred by limitation.

Issue (ii): Whether the respondent bank could exclude time by invoking section 14 of the Limitation Act, 1963 or rely upon the alleged acknowledgement to extend limitation under section 18 of the Limitation Act, 1963.

Analysis: The prior SARFAESI and recovery proceedings were not treated as proceedings prosecuted in a wrong forum without jurisdiction, and therefore section 14 did not apply. The one-time settlement proposal dated 12.12.2018 was also held not to revive limitation because it was outside the limitation period and did not amount to a valid acknowledgement within time for an existing liability. The Tribunal further held that the plea of continuous cause of action did not save the application.

Conclusion: The respondent bank could not derive benefit under sections 14 or 18 of the Limitation Act, 1963, and the application remained time-barred.

Final Conclusion: The impugned admission order was set aside, the section 7 application was dismissed, and the corporate debtor was released from the corporate insolvency resolution process.

Ratio Decidendi: A section 7 application under the Insolvency and Bankruptcy Code, 2016 is governed by Article 137 of the Limitation Act, 1963, and neither unrelated prior recovery proceedings nor an acknowledgement made after expiry of limitation can revive a time-barred claim.

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