Limitation under IBC Section 7 bars revival of a time-barred debt; later acknowledgement cannot extend expired limitation.

An application under Section 7 of the Insolvency and Bankruptcy Code, 2016 was held barred by limitation because default occurred on 31 December 2007 and the petition was filed only on 26 February 2019. The Tribunal applied Article 137 of the Limitation Act, 1963 and reiterated that limitation runs from the date of first default, with extension available only in the manner permitted by the Limitation Act. An alleged acknowledgement in 2017 could not revive a claim already time-barred. The admission order was therefore unsustainable.

---

---

Issues: Whether the application under Section 7 of the Insolvency and Bankruptcy Code, 2016 was barred by limitation, and whether the alleged acknowledgement in 2017 extended limitation.

Analysis: The date of default was recorded as 31 December 2007, and the insolvency application was filed on 26 February 2019. The claim had therefore been brought well beyond three years from the first default. The Tribunal applied the settled position that applications under Section 7 of the Insolvency and Bankruptcy Code, 2016 are governed by Article 137 of the Limitation Act, 1963, and that the right to sue accrues when default first occurs. It further held that limitation can be extended only in the manner contemplated by the Limitation Act, 1963. The memorandum executed in 2017 could not revive a claim already barred by limitation because the acknowledgement was made after expiry of the limitation period.

Conclusion: The application under Section 7 was time-barred, and the admission order was unsustainable. The issue was decided in favour of the appellant and against the financial creditor.

Ratio Decidendi: A Section 7 insolvency application is maintainable only if the debt is not barred by limitation, and a belated acknowledgement made after expiry of the limitation period does not revive a time-barred claim.

---