Limitation for Section 7 insolvency runs from default date, and a decree or recovery certificate does not extend time.

Limitation for a Section 7 insolvency application runs from the date of default under Article 137 of the Limitation Act, and a later recovery certificate or decree does not create a fresh default or extend time. Recovery proceedings before the DRT do not alter the limitation position unless a valid acknowledgment is established. The general definition of creditor, including a decree-holder, does not by itself permit initiation of Section 7 proceedings on the basis of a decree or recovery certificate. Insolvency under the IBC cannot be used as a substitute for execution or recovery of a decree.

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Issues: (i) Whether limitation for an application under Section 7 of the Insolvency and Bankruptcy Code, 2016 runs from the date of default or can be extended to the date of a recovery certificate or decree; (ii) Whether the definition of creditor, including a decree-holder, permits initiation of Section 7 proceedings on the basis of a recovery certificate or decree.

Issue (i): Whether limitation for an application under Section 7 of the Insolvency and Bankruptcy Code, 2016 runs from the date of default or can be extended to the date of a recovery certificate or decree.

Analysis: Article 137 of the Limitation Act, 1963 governs applications under Section 7 of the Insolvency and Bankruptcy Code, 2016, and the period begins when default occurs. A subsequent recovery certificate or decree does not create a fresh date of default or shift forward the original date of default. The existence of recovery proceedings before the Debt Recovery Tribunal does not alter the limitation analysis for insolvency proceedings, and the bar of limitation is determined with reference to the original default and any legally valid acknowledgment, if established.

Conclusion: The application under Section 7 was barred by limitation, and the recovery certificate did not save limitation.

Issue (ii): Whether the definition of creditor, including a decree-holder, permits initiation of Section 7 proceedings on the basis of a recovery certificate or decree.

Analysis: The definition of creditor in Section 3(10) is a general definition within Part I of the Insolvency and Bankruptcy Code, 2016, but Section 7 in Part II specifically concerns financial creditors. The inclusion of a decree-holder in the general definition does not mean that a decree or recovery certificate can be enforced by filing a Section 7 application. Insolvency proceedings cannot be used as a substitute for execution or recovery of a decree.

Conclusion: A decree-holder or recovery certificate holder cannot invoke Section 7 on that basis alone.

Final Conclusion: The admission order was set aside, the Section 7 application was dismissed as time-barred, and the corporate insolvency resolution process actions taken pursuant to the impugned order were undone.

Ratio Decidendi: For Section 7 of the Insolvency and Bankruptcy Code, 2016, limitation runs from the date of default under Article 137 of the Limitation Act, 1963, and a subsequent recovery certificate or decree does not postpone or renew that date; insolvency proceedings cannot be used as a mode of execution for a decree.

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