Limitation under IBC section 7: a belated acknowledgment cannot revive an already time-barred insolvency claim.

A section 7 insolvency application was found time-barred because the default date was 30.06.2014 and Article 137 of the Limitation Act gave only three years to initiate proceedings from accrual of the right to apply. The record showed no acknowledgment of debt within the limitation period, so section 18 of the Limitation Act could not extend time. A later one-time settlement proposal was held insufficient to revive an already expired limitation period. On that basis, the insolvency petition was not maintainable and could not be admitted.

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

Analysis: The date of default was taken as 30.06.2014. Applying the settled position that applications under the Code are governed by Article 137 of the Limitation Act, 1963, the period available for initiating proceedings is three years from the date when the right to apply accrues. The material on record did not show any acknowledgment of debt within the limitation period so as to extend time under section 18 of the Limitation Act, 1963. The one-time settlement proposal relied upon was much later and could not revive an already expired limitation period. The subsequent proceedings and the cited authorities did not alter the conclusion that the claim had become time-barred before filing of the petition.

Conclusion: The petition was held to be barred by limitation and was not maintainable.

Final Conclusion: The insolvency application could not be admitted because the claim was time-barred and no legally effective acknowledgment extended the limitation period.

Ratio Decidendi: An application under section 7 of the Insolvency and Bankruptcy Code, 2016 must be filed within the limitation period prescribed by Article 137 of the Limitation Act, 1963, and an acknowledgment made after expiry of that period does not revive the claim.

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