Limitation for insolvency claims runs from default date, and third-party sale proceeds do not extend time under debtor part-payment rules.

Limitation for a section 7 Insolvency and Bankruptcy Code application runs from the date of default under Article 137 of the Limitation Act, 1963, and a part-payment extends time only if made by the corporate debtor before expiry of limitation under section 19. Here, default was recorded on 31.08.2012 and the application was filed on 26.10.2018, so the claim was time-barred. The alleged payment on 18.03.2016 was not accepted as debtor-made part-payment because it represented sale proceeds deposited through the consortium bank from the corporate debtor's property. The insolvency application was therefore held barred by limitation and not maintainable.

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Issues: Whether the application under section 7 of the Insolvency and Bankruptcy Code, 2016 was barred by limitation.

Analysis: The default was recorded as having occurred on 31.08.2012, while the section 7 application was filed on 26.10.2018. Article 137 of the Limitation Act, 1963 applies to applications under the Code, and the period of three years runs from the date of default. The claimed payment on 18.03.2016 was not accepted as a part-payment by the corporate debtor before expiry of limitation under section 19 of the Limitation Act, 1963, as the entry reflected proceeds deposited through the consortium bank from sale of the corporate debtor's property. That amount therefore did not extend limitation.

Conclusion: The application was held to be barred by limitation and was liable to be dismissed.

Final Conclusion: The insolvency proceeding could not be admitted because the debt claim was time-barred, notwithstanding the application being otherwise complete.

Ratio Decidendi: For an application under section 7 of the Insolvency and Bankruptcy Code, 2016, limitation begins on the date of default under Article 137 of the Limitation Act, 1963, and only a payment made by the debtor before expiry of the prescribed period can extend limitation under section 19 of the Limitation Act, 1963.

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