Limitation under the Insolvency Code bars stale debt claims unless acknowledgment or part payment occurs within time.

An application under Section 9 of the Insolvency and Bankruptcy Code is subject to the three-year limitation period under Article 137 of the Limitation Act from the date of default. Acknowledgment of debt under Section 18 and part payment under Section 19 extend limitation only if made before expiry of the prescribed period. Where the balance confirmation and alleged part payment occur after limitation has already run, they cannot revive the claim. Limitation is mandatory under Section 3 of the Limitation Act and must be examined by the Adjudicating Authority when considering admission of an insolvency application.

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Issues: Whether the application under Section 9 of the Insolvency and Bankruptcy Code, 2016 was barred by limitation and whether the alleged acknowledgment of debt and part payment extended the limitation period.

Analysis: The debt arose from an invoice dated 13 December 2011, and the default was treated as having occurred on 12 January 2012. Under Article 137 of the Limitation Act, 1963, an application under the Code must be filed within three years from default unless the period is validly extended. Acknowledgment under Section 18 of the Limitation Act, 1963 extends limitation only if made before expiry of the prescribed period. Likewise, part payment under Section 19 of the Limitation Act, 1963 must occur before expiry of limitation to give rise to a fresh period. The balance confirmation dated 1 April 2017 and the alleged part payment dated 30 May 2015 were both outside the limitation period, and therefore could not revive the claim. The Adjudicating Authority ought to have examined limitation, as Section 3 of the Limitation Act, 1963 makes limitation mandatory.

Conclusion: The insolvency application was time-barred, and the admission order could not stand.

Final Conclusion: The admission of the corporate insolvency resolution process application was set aside, and the appeal succeeded on the ground of limitation.

Ratio Decidendi: An application under Section 9 of the Insolvency and Bankruptcy Code, 2016 cannot be maintained on a debt that is barred by limitation, and acknowledgment or part payment extends limitation only if made within the subsisting limitation period.

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