Limitation under insolvency law bars stale debt claims absent timely written acknowledgment or a valid extension of time.

An application under Section 7 of the Insolvency and Bankruptcy Code, 2016 is governed by Article 137 of the Limitation Act, 1963, so the three-year period runs from the date of default. Recovery proceedings, compromise terms, assignment, and an amended recovery certificate did not extend limitation because there was no valid acknowledgment in writing by the corporate debtor within time. Section 18 of the Limitation Act was therefore not attracted, and Section 14 was inapplicable because the earlier proceedings were not shown to suffer from want of jurisdiction. A time-barred debt cannot be revived for insolvency purposes merely by invoking the Code as a recovery tool.

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Issues: Whether the Section 7 application was barred by limitation and whether the insolvency process could be invoked on the basis of the alleged debt and recovery proceedings.

Analysis: The relevant default was traced to the declaration of the account as non-performing asset in 1993, and the subsequent recovery steps, including the DRT proceedings, compromise terms, assignment, and amended recovery certificate, did not extend limitation in the absence of a valid acknowledgment in writing by the corporate debtor within time. The residuary Article 137 of the Limitation Act, 1963 governed the application under Section 7 of the Insolvency and Bankruptcy Code, 2016, and the period of three years ran from the date of default. The documents relied upon did not amount to an acknowledgment of liability by the corporate debtor for the benefit of Section 18 of the Limitation Act, 1963, and Section 14 of the Limitation Act, 1963 was inapplicable because the earlier proceedings were not shown to have suffered from want of jurisdiction. The Code could not be used as a debt recovery mechanism where the claim itself was time-barred.

Conclusion: The Section 7 application was held to be barred by limitation and not maintainable, and the appeal failed.

Ratio Decidendi: An application under Section 7 of the Insolvency and Bankruptcy Code, 2016 is subject to Article 137 of the Limitation Act, 1963, and a stale debt cannot be revived for insolvency purposes in the absence of a valid, timely acknowledgment in writing or other legally sustainable extension of limitation.

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