Limitation under the Insolvency Code: a recovery certificate cannot revive a time-barred Section 7 application without valid acknowledgment.

An application under Section 7 of the Insolvency and Bankruptcy Code, 2016 was held barred by limitation where the debt had become time-barred and no valid acknowledgment of debt within the limitation period was shown. The NCLAT applied Article 137 of the Limitation Act, 1963 and held that the default date remains the relevant starting point for limitation; a subsequent recovery order or recovery certificate issued by the Debt Recovery Tribunal does not extend or shift that date. On the facts, the account had been declared NPA long before filing, so the admission order was set aside and the application was not maintainable.

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Issues: Whether an application under Section 7 of the Insolvency and Bankruptcy Code, 2016 filed after the debt had become time-barred could be saved by the absence of acknowledgment of debt within limitation or by a subsequent recovery order passed by the Debt Recovery Tribunal.

Analysis: An application under Section 7 is maintainable only on occurrence of default, and the period of limitation is governed by Article 137 of the Limitation Act, 1963. If default occurred more than three years before filing, the application is barred unless the limitation period is extended by a valid acknowledgment of debt within the statutory period. On the facts, the account had been declared NPA before 2001 and no acknowledgment within three years was shown. The subsequent order and recovery certificate issued by the Debt Recovery Tribunal could not shift forward the date of default for computing limitation.

Conclusion: The application under Section 7 was barred by limitation and was not maintainable; the admission order was set aside and the appeal succeeded.

Ratio Decidendi: For purposes of Section 7 of the Insolvency and Bankruptcy Code, 2016, a recovery decree or certificate does not extend or shift the date of default, and limitation can be extended only by a valid acknowledgment within the limitation period.

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