Limitation for Section 9 IBC applications runs from default; a time-barred operational creditor petition without condonation fails.

An operational creditor's Section 9 IBC application was held to be time-barred because Article 137 of the Limitation Act applies to insolvency applications and the three-year period runs from the date the right to apply accrues. The invoices dated November 2013 to February 2014 and the claimed due date in March 2014 meant limitation expired well before the petition was filed in January 2020. No condonation of delay was sought, so the debt and default could not be acted upon to initiate corporate insolvency resolution proceedings, and the application was rejected at the threshold without examination on merits.

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Issues: Whether the petition under Section 9 of the Insolvency and Bankruptcy Code, 2016 was barred by limitation.

Analysis: The operational creditor's invoices related to November 2013 to February 2014, and the claimed due date was in March 2014. Under the Limitation Act, 1963, Article 137 applies to applications under the Insolvency and Bankruptcy Code, 2016, giving a three-year period from the date when the right to apply accrues. The petition was filed in January 2020, well after expiry of the limitation period, and no application for condonation of delay was filed. On these facts, the debt and default could not be acted upon for initiation of the corporate insolvency resolution process.

Conclusion: The petition was barred by limitation and could not be entertained.

Final Conclusion: The insolvency application was rejected at the threshold without examination on merits, as the claim was time-barred.

Ratio Decidendi: An application for initiation of corporate insolvency resolution process by an operational creditor must be filed within the limitation period computed from the date of default, and a time-barred petition without condonation is liable to be dismissed.

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