Limitation for Insolvency Applications: Section 7 claims must be filed within three years of default, or face rejection

Article 137 of the Limitation Act, 1963 applies to an application under section 7 of the Insolvency and Bankruptcy Code, so the filing must be made within three years from the date the right to apply accrues, ordinarily the date of default. If the application is filed after that period, section 3 of the Limitation Act requires rejection unless delay is validly condoned on the facts. The text also notes that alleged acknowledgments in balance-sheets do not override the limitation bar, and a tribunal cannot admit a time-barred insolvency application in disregard of that mandate. On the stated facts, the admission order and consequential liquidation order could not stand.

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Issues: Whether an application under section 7 of the Insolvency and Bankruptcy Code, 2016 was barred by limitation and whether the Tribunal had jurisdiction to admit it despite the claimed acknowledgments in balance-sheets and the availability of an appellate remedy.

Analysis: Article 137 of the Limitation Act, 1963 governs an application under section 7 of the Insolvency and Bankruptcy Code, 2016, so the application must be filed within three years from the date when the right to apply accrues, namely the date of default. Where default had occurred more than three years before filing, the application is time-barred unless delay is condoned on facts. Section 3 of the Limitation Act, 1963 mandates dismissal of a barred application. On the facts, the account had been declared non-performing asset years earlier, no condonation of delay was recorded, and the Tribunal could not admit a time-barred application merely by relying on alleged acknowledgments without giving legal effect to the limitation bar.

Conclusion: The application under section 7 was barred by limitation and the Tribunal lacked jurisdiction to admit it; the challenge succeeded.

Final Conclusion: The impugned admission order was set aside, and the consequential liquidation order could not stand.

Ratio Decidendi: A section 7 insolvency application that is filed beyond the limitation period prescribed by article 137 of the Limitation Act, 1963 is liable to be rejected under section 3 of that Act unless delay is validly condoned, and a tribunal acting contrary to that mandate commits a jurisdictional error.

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