Limitation under insolvency law can be extended by balance sheet acknowledgments and settlement proposals in section 7 proceedings.

Limitation under the insolvency code applies to section 7 petitions, and default is assessed from the date the account is classified as NPA. A time-barred claim is not revived merely by invoking insolvency, and a continuing damage argument does not by itself create a continuing wrong where the injury is complete. Later balance sheets may operate as acknowledgments of liability, and one-time settlement proposals may also extend limitation where made within the limitation period, making the application timely on the stated facts.

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Issues: Whether the section 7 petition was barred by limitation and whether the acknowledgments in balance sheets and one-time settlement proposals extended the period of limitation so as to justify admission of the insolvency application.

Analysis: The default was taken to have occurred on the date on which the account was declared NPA. The limitation defence was tested against the settled position that applications under the insolvency code are governed by the Limitation Act and that a time-barred claim cannot be revived merely by the insolvency process. The plea that default was a continuing wrong was rejected because the existence of continuing damage does not by itself create a continuing wrong where the injury is complete. The balance sheets for the later financial years were treated as acknowledgments of liability, and the one-time settlement proposals were also treated as acknowledgments extending limitation. On that basis, the petition was held to be within limitation.

Conclusion: The limitation objection failed, the debt and default were held to be established, and the insolvency petition was admitted.

Final Conclusion: The application under section 7 proceeded to admission and CIRP was directed to commence against the corporate debtor.

Ratio Decidendi: A duly recorded acknowledgment of liability in a balance sheet or settlement proposal within the limitation period extends limitation for a section 7 insolvency application, and such acknowledgment can render the application timely notwithstanding an earlier default date.

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