Limitation for insolvency claims: a Section 7 petition filed beyond three years from default cannot be revived by disputed acknowledgment.

An application under Section 7 of the Insolvency and Bankruptcy Code, 2016 is subject to Article 137 of the Limitation Act, 1963, so it must be filed within three years from the date of default. Section 238A is clarificatory and applies the limitation regime to insolvency proceedings from the outset. On the stated facts, the default was recorded on 10 June 2014 but the application was filed on 19 September 2018, making it time-barred. The alleged one-time settlement communications did not amount to a fresh default or valid acknowledgment sufficient to revive the claim under Section 18 of the Limitation Act.

---

---

Issues: Whether the application under Section 7 of the Insolvency and Bankruptcy Code, 2016 was barred by limitation and whether the alleged acknowledgment in the one-time settlement proposal extended the period of limitation.

Analysis: The application under Section 7 is governed by Article 137 of the Limitation Act, 1963, carrying a three-year period from the date of default. Section 238A of the Insolvency and Bankruptcy Code, 2016 is clarificatory, and the limitation regime applies to insolvency proceedings from inception. The date of default recorded in the application was 10 June 2014, while the Section 7 application was filed only on 19 September 2018. The alleged one-time settlement communications did not justify treating the same debt as giving rise to a fresh default for insolvency purposes, and recourse to Section 18 of the Limitation Act, 1963 was not available to revive an otherwise time-barred insolvency petition.

Conclusion: The application under Section 7 was barred by limitation and the contention based on acknowledgment failed.

Final Conclusion: The appeal was rejected because the insolvency application had been instituted beyond the prescribed limitation period and no extension of limitation was available on the facts.

Ratio Decidendi: An application under Section 7 of the Insolvency and Bankruptcy Code, 2016 must be filed within three years from the date of default under Article 137 of the Limitation Act, 1963, and an asserted acknowledgment cannot create a second default or revive a time-barred insolvency claim absent a valid basis under the Limitation Act, 1963.

---