Limitation under IBC Section 7 extends from recovery certificate and valid debt acknowledgment, keeping insolvency remedy alive.

Limitation for a Section 7 IBC application was examined with reference to Sections 18 and 19 of the Limitation Act, Section 5 of the Limitation Act, and Section 238-A of the IBC. Subsequent acknowledgments of liability, restructuring efforts, a one-time settlement offer, and DRT recovery proceedings were treated as relevant to determine whether the debt remained live. The recovery certificate was treated as giving rise to a fresh cause of action, and a financial creditor may invoke Section 7 within three years of that certificate or judgment/decree. On that basis, the application was not barred by limitation.

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Issues: Whether the application under Section 7 of the Insolvency and Bankruptcy Code, 2016 was barred by limitation, and whether the recovery certificate and acknowledgments extended the limitation period.

Analysis: The application had been dismissed only on limitation. The limitation issue was examined in the light of Sections 18 and 19 of the Limitation Act, 1963, Section 5 of the Limitation Act, 1963, and Section 238-A of the Insolvency and Bankruptcy Code, 2016. The existence of subsequent acknowledgment of liability, the restructuring attempts, the offer of one-time settlement, and the recovery proceedings before the Debt Recovery Tribunal were treated as legally relevant to determine whether the claim remained live. The issuance of the recovery certificate was held to constitute a fresh cause of action for initiating proceedings under Section 7 within three years of that certificate.

Conclusion: The application under Section 7 was not barred by limitation and the appeal was allowed.

Ratio Decidendi: A financial creditor may invoke Section 7 of the Insolvency and Bankruptcy Code, 2016 within three years of a recovery certificate or judgment/decree, and limitation may also be extended by a valid acknowledgment of debt made before expiry of the original limitation period.

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