Limitation under insolvency law: a section 7 petition remained timely under article 137 after recovery proceedings and default were established.

An application under section 7 of the Insolvency and Bankruptcy Code, 2016 was held to be within limitation because the secured debt had already been pursued in recovery proceedings, the Debt Recovery Tribunal had passed a recovery order on 17 August 2018, and the debt was treated as due and payable from that date. Applying article 137 of the Limitation Act, 1963, the petition filed on 25 March 2019 fell within the three-year period. The existence of default was established, and the debtor's explanation for non-payment was held irrelevant to admission under section 7. The limitation defence therefore failed and CIRP was commenced.

---

---

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

Analysis: The debt was secured, the original lender had initiated recovery proceedings within time before the Debt Recovery Tribunal, and the debt was later transferred to the petitioner. The Debt Recovery Tribunal passed an order of recovery on 17 August 2018. On that basis, the debt was treated as due and payable from that date. Since the section 7 petition was filed on 25 March 2019, it was within three years under article 137 of the Limitation Act, 1963. The existence of default was also established, and the Adjudicating Authority held that the reasons for the corporate debtor's inability to pay were not relevant to admission under section 7.

Conclusion: The limitation defence failed and the application under section 7 was admissible; the petition was admitted and CIRP commenced.

Ratio Decidendi: For a section 7 application, limitation is governed by article 137 of the Limitation Act, 1963, and once default is established and the debt is shown to have become due and payable within the limitation period, the petition is maintainable notwithstanding the debtor's explanation for non-payment.

---