Limitation under IBC can be extended by written acknowledgment or part-payment before expiry, saving a Section 7 petition.

Limitation for a Section 7 IBC application is governed by the Limitation Act, 1963 through Section 238A, with Article 137 prescribing three years from the date the right to apply accrues. A written acknowledgment of liability before expiry of that period attracts Section 18 and starts a fresh limitation period, while part-payment made before expiry attracts Section 19 with the same effect. On the stated facts, the acknowledgment dated 21.06.2017 and later part-payments in 2019 extended limitation beyond the original default date, so the insolvency petition was treated as within time and the limitation defence failed.

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Issues: Whether the application under Section 7 of the Insolvency and Bankruptcy Code, 2016 was barred by limitation, or whether acknowledgment of liability and part-payment extended the period of limitation.

Analysis: The period of limitation for proceedings under the Insolvency and Bankruptcy Code is governed by the Limitation Act, 1963 through Section 238A of the Code. For an application under Section 7, Article 137 applies, prescribing three years from the date when the right to apply accrues. However, an acknowledgment of liability made in writing before expiry of the limitation period attracts Section 18 and starts a fresh period of limitation from the date of acknowledgment. Similarly, part-payment made before expiry of the prescribed period attracts Section 19 and gives rise to a fresh period of limitation from the date of payment. On the facts, the acknowledgment dated 21.06.2017 and the subsequent part-payments made in 2019 were within the relevant period and therefore extended limitation beyond the original default date.

Conclusion: The application under Section 7 was not barred by limitation and the limitation defence failed.

Final Conclusion: The appeal was rejected on the ground that the insolvency petition was within limitation in view of valid acknowledgment and part-payment.

Ratio Decidendi: In insolvency proceedings, a timely written acknowledgment of liability or part-payment made before expiry of limitation gives rise to a fresh period of limitation under the Limitation Act, 1963, and such events can save a Section 7 application from being time-barred.

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