Limitation for insolvency claims runs from default; later assignment and internal records cannot revive a time-barred debt.

Limitation for a section 7 insolvency application runs from the date of default under article 137 of the Limitation Act, and an assignee cannot revive a time-barred debt by later taking up the account. A valid written acknowledgment signed by the corporate debtor before expiry of limitation is required to extend time under section 18; account statements and internal records are insufficient. Section 22 of the Limitation Act, which concerns continuing breaches and torts, does not govern computation of limitation for insolvency proceedings. On these grounds, the admission order was set aside and the insolvency process against the corporate debtor was terminated as time-barred.

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Issues: (i) Whether the application under section 7 of the Insolvency and Bankruptcy Code, 2016 was barred by limitation under article 137 of the Limitation Act, 1963. (ii) Whether any acknowledgment in writing extended limitation under section 18 of the Limitation Act, 1963. (iii) Whether section 22 of the Limitation Act, 1963 could be invoked to compute limitation for the section 7 application.

Issue (i): Whether the application under section 7 of the Insolvency and Bankruptcy Code, 2016 was barred by limitation under article 137 of the Limitation Act, 1963.

Analysis: The period of limitation for a section 7 application runs from the date of default, and article 137 applies to such applications. The admitted material showed that default had occurred long before the application was filed, and the debt had become time-barred more than three years before the filing date. The assignment of debt did not revive a stale claim, and the commencement of insolvency proceedings could not be linked to the date of assignment or to the date on which the account was later taken up by the assignee.

Conclusion: The application under section 7 was barred by limitation and the finding is in favour of the appellants.

Issue (ii): Whether any acknowledgment in writing extended limitation under section 18 of the Limitation Act, 1963.

Analysis: Extension of limitation required a written acknowledgment signed by the corporate debtor before expiry of the prescribed period. No such acknowledgment was shown to have been made in favour of the financial creditor or its assignor within limitation. Account statements and internal records were insufficient to constitute the statutory acknowledgment contemplated by section 18.

Conclusion: No acknowledgment extending limitation was proved, and this issue is decided in favour of the appellants.

Issue (iii): Whether section 22 of the Limitation Act, 1963 could be invoked to compute limitation for the section 7 application.

Analysis: Section 22 concerns continuing breaches and continuing torts, and does not govern the computation of limitation for an insolvency application under section 7 of the Insolvency and Bankruptcy Code, 2016. The relevant trigger remained the date of default, not a continuing wrong theory.

Conclusion: Section 22 was held inapplicable, and the contention based on it failed.

Final Conclusion: The admission order was set aside, the insolvency process against the corporate debtor was terminated, and the appeal succeeded on the ground that the section 7 application was time-barred.

Ratio Decidendi: For a section 7 application under the Insolvency and Bankruptcy Code, 2016, limitation runs from the date of default under article 137 of the Limitation Act, 1963, and the period can be extended only by a valid acknowledgment in writing made before expiry of limitation; a continuing wrong theory under section 22 of the Limitation Act, 1963 does not govern such proceedings.

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