Acknowledgment of liability extends limitation for a Section 7 insolvency application when made before expiry of the limitation period.

Limitation for a Section 7 IBC application runs from the date of default reflected by the non-performing asset classification, and a written acknowledgment of subsisting liability made before expiry of limitation renews time under Section 18 of the Limitation Act. Here, the debtor's acknowledgments dated 13 April 2015 and 1 June 2016, including a one-time settlement proposal, were treated as valid acknowledgments in writing that extended limitation. On that basis, the application filed on 29 September 2018 was within time and the limitation objection failed.

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Issues: Whether the application under Section 7 of the Insolvency and Bankruptcy Code, 2016 was barred by limitation, and whether the written acknowledgments and one-time settlement proposals extended limitation under Section 18 of the Limitation Act, 1963.

Analysis: The account was classified as non-performing asset on 29 January 2013, and limitation for a Section 7 application was governed by Article 137 of the Limitation Act, 1963. The period could be extended only by a valid acknowledgment in writing made before expiry of the limitation period. The corporate debtor executed an acknowledgment on 13 April 2015 and again submitted an acknowledgment-cum-one-time settlement proposal on 1 June 2016. These writings amounted to acknowledgment of a subsisting liability and triggered a fresh period of limitation under Section 18 of the Limitation Act, 1963. The application filed on 29 September 2018 was therefore within time.

Conclusion: The limitation objection failed and the Section 7 application was held to be within limitation.

Ratio Decidendi: For a Section 7 application, limitation runs from the date of default reflected by the non-performing asset classification, and a written acknowledgment of liability made before expiry of limitation renews the period under Section 18 of the Limitation Act, 1963.

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