Limitation for Section 7 insolvency claims runs from default, and disputed balance sheets or later letters do not revive time-barred debt.

For a Section 7 insolvency application, limitation is computed from the date of default, here treated as the NPA date, and the three-year period under Article 137 began from that point. Exclusion of time under Section 14 of the Limitation Act was not available because the statutory conditions were not satisfied, and the periods spent before BIFR and in DRT proceedings did not extend limitation on the facts. Balance sheets did not amount to an unequivocal acknowledgment under Section 18 because the liability was disputed in the directors' report and related notes. A later letter sent after expiry of the original limitation period also could not revive the claim, leaving the debt time-barred and the insolvency petition not maintainable.

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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 alleged acknowledgments or exclusion of time under the Limitation Act, 1963 saved the claim.

Analysis: The default was taken to have occurred on 20.11.2007, when the account was treated as an NPA and action under Section 13(2) of the SARFAESI Act, 2002 was issued. Applying Article 137 of the Limitation Act, 1963, the three-year period began from that date. The period spent before BIFR, the pendency of proceedings before DRT, and the invocation of Section 14 of the Limitation Act, 1963 were held not to extend limitation on the facts, because the requisite conditions for exclusion of time were not satisfied. The balance sheets did not amount to an unequivocal acknowledgment within Section 18 of the Limitation Act, 1963, since the liability was disputed in the directors' report and related notes. The later letter of 11.11.2016 also did not revive limitation, as it came after expiry of the original limitation period.

Conclusion: The application was barred by limitation and the alleged debt, though asserted, was not enforceable in law.

Final Conclusion: The insolvency petition was not maintainable on limitation grounds, and the connected application was also dismissed.

Ratio Decidendi: For a Section 7 proceeding, limitation runs from the date of default and can be extended only by a legally valid acknowledgment or by satisfying the strict requirements for exclusion of time under the Limitation Act, 1963; disputed balance-sheet entries and post-expiry correspondence do not revive a time-barred claim.

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