Limitation for Section 7 insolvency claims runs from default; later settlement proposals do not extend time.

An application under Section 7 of the Insolvency and Bankruptcy Code, 2016 is assessed under Article 137 of the Limitation Act, 1963 from the date of default. A revival letter may extend limitation only to the extent permitted by law, but a later one-time settlement proposal does not by itself shift the default date or extend limitation. The adjudicating authority must examine limitation even if not specifically pleaded by the respondent. A continuing cause of action was rejected, and the debt was treated as time-barred on the material placed on record, so the Section 7 application could not be admitted.

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Issues: Whether an application under Section 7 of the Insolvency and Bankruptcy Code, 2016 was barred by limitation, and whether an OTS proposal or alleged continuing cause of action extended the limitation period.

Analysis: The application was filed long after the dates of default. The revival letter of 01.06.2012 could extend limitation only for the period permitted by law, but the subsequent one-time settlement proposal did not extend or shift the date of default. Limitation under Section 7 is governed by Article 137 of the Limitation Act, 1963, and the tribunal is required to examine limitation even if the respondent does not specifically plead it. The contention of a continuing cause of action was rejected, and the debt was found to be beyond the permissible limitation period on the materials placed on record.

Conclusion: The application under Section 7 was barred by limitation and could not be admitted.

Ratio Decidendi: For an application under Section 7 of the Insolvency and Bankruptcy Code, 2016, limitation begins from the date of default, a later OTS proposal does not by itself extend limitation, and the adjudicating authority must refuse admission where the debt is time-barred.

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