Limitation for Section 7 insolvency applications runs from default date; later recovery steps and late acknowledgments do not revive it.

For Section 7 insolvency applications, limitation is governed by Article 137 of the Limitation Act, 1963 and begins from the date of default. The article states that classification of the account as an NPA did not change the admitted default date for insolvency purposes, and later recovery proceedings or a decree did not shift or revive that date. It also notes that an acknowledgment extends limitation only if made within the prescribed period; acknowledgments relied on after expiry did not save the application. Article 62 was held inapplicable because the proceeding was an application, not a suit, and the Section 7 application was therefore time-barred.

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Issues: Whether the application under Section 7 of the Insolvency and Bankruptcy Code, 2016 was barred by limitation, and whether subsequent recovery proceedings, decree, or acknowledgments of liability shifted or extended the date of default.

Analysis: The applicable limitation period for an application under Section 7 is governed by Article 137 of the Limitation Act, 1963, and time begins to run from the date of default. The account was classified as Non-Performing Asset on the admitted date of default, and the filing of recovery proceedings or obtaining a decree did not alter that date for purposes of insolvency commencement. An acknowledgment to extend limitation must be made within the prescribed period; acknowledgments relied on here did not save the application from being time-barred. The reasoning also excludes the application of Article 62, since the proceeding was an application and not a suit.

Conclusion: The application under Section 7 was barred by limitation, and the challenge to the admission order succeeded.

Final Conclusion: The insolvency commencement order and all consequential actions were set aside, and the Section 7 application was dismissed as time-barred.

Ratio Decidendi: For Section 7 proceedings, limitation runs from the date of default under Article 137 of the Limitation Act, 1963, and neither a later recovery decree nor an acknowledgment made after expiry of limitation shifts or revives that default for commencing insolvency.

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