Limitation for section 7 insolvency claims may extend through balance-sheet acknowledgments and part-payment, restoring the petition.

Limitation for a section 7 IBC application is governed by article 137 of the Limitation Act, but it may be extended by a valid written acknowledgment under section 18 or part-payment under section 19 made before expiry. On the stated facts, successive balance-sheet entries and an admitted cheque payment were treated as relevant acknowledgments, and the earlier winding-up proceedings were also considered in the limitation analysis. The assignee was further recognised as a financial creditor competent to maintain the section 7 application. The impugned order was therefore set aside and the section 7 proceeding restored.

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Issues: (i) Whether the section 7 application was barred by limitation notwithstanding the earlier winding-up proceedings, the subsequent withdrawal before the High Court, and the entries in the corporate debtor's balance sheets and part-payment; (ii) Whether the appellant was a financial creditor competent to maintain the section 7 application.

Issue (i): Whether the section 7 application was barred by limitation notwithstanding the earlier winding-up proceedings, the subsequent withdrawal before the High Court, and the entries in the corporate debtor's balance sheets and part-payment.

Analysis: The limitation period for an application under section 7 of the Insolvency and Bankruptcy Code, 2016 is governed by section 238-A of that Code read with article 137 of the Limitation Act, 1963. The date of default remains the foundational trigger, but the period may be extended where there is a valid acknowledgment in writing before expiry of limitation under section 18 of the Limitation Act, 1963, or payment on account of debt under section 19 of the Limitation Act, 1963. The record showed acknowledgments in the corporate debtor's balance sheets for successive years and an admitted part-payment by cheque, both of which were treated as relevant to limitation. The earlier winding-up proceedings, filed within time and later withdrawn, were also considered in the backdrop of the transfer provisions under section 434 of the Companies Act, 2013 and Rule 5 of the Companies (Transfer of Pending Proceedings) Rules, 2016. On these facts, the claim could not be treated as time-barred.

Conclusion: The section 7 application was within limitation and the dismissal on limitation grounds was unsustainable, in favour of the appellant.

Issue (ii): Whether the appellant was a financial creditor competent to maintain the section 7 application.

Analysis: The assignment deed described the assignee as Phoenix ARC Private Limited acting in its capacity as trustee of the relevant trust. The Tribunal found no defect in the application on this ground and held that the appellant, as assignee of the original financial creditor, answered the description of a financial creditor for the purposes of section 7 of the Insolvency and Bankruptcy Code, 2016.

Conclusion: The appellant was held to be a financial creditor competent to maintain the application, in favour of the appellant.

Final Conclusion: The impugned order was set aside, the section 7 proceeding was restored, and the matter was directed to proceed in accordance with the Insolvency and Bankruptcy Code, 2016.

Ratio Decidendi: For an application under section 7 of the Insolvency and Bankruptcy Code, 2016, limitation is governed by article 137 of the Limitation Act, 1963, but it can be extended by a valid acknowledgment of liability or part-payment made before expiry of limitation; entries in balance sheets and related corporate records may constitute such acknowledgment depending on their contents.

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