Limitation barred the insolvency petition where default was stale and no valid acknowledgement extended time.

Limitation governed the maintainability of the section 7 Insolvency and Bankruptcy Code application because the relevant date was the date of default. The account had been classified as non-performing asset in 2004, the recall notice was issued in 2007, and the application was filed in 2018; on those facts, the debt was stale and time-barred. Article 137 of the Limitation Act applied, and there was no effective acknowledgement to extend limitation under section 18. The admission order was therefore unsustainable and the application was barred by limitation.

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Issues: Whether the application under section 7 of the Insolvency and Bankruptcy Code, 2016 was barred by limitation because the default and declaration of non-performing asset had occurred more than three years before the filing of the application.

Analysis: The relevant date for computing limitation was treated as the date of default. The account was declared non-performing asset in 2004 and the recall notice was issued in 2007, while the section 7 application was filed in 2018. The Tribunal held that proceedings under the Code cannot be initiated on a stale or time-barred debt and that Article 137 of the Limitation Act, 1963 applied. On the facts found, there was no effective acknowledgement extending limitation so as to save the application under section 18 of the Limitation Act, 1963.

Conclusion: The section 7 application was barred by limitation and the admission order was unsustainable.

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