Acknowledgment of liability extends limitation for section 7 insolvency proceedings where it is made before expiry of the original period.

For a section 7 insolvency application, limitation runs from the date of default, treated here as the date of NPA. Section 18 of the Limitation Act, 1963 applies to proceedings under the Insolvency and Bankruptcy Code, 2016 through section 238A, so a written acknowledgment of subsisting liability made before expiry of the original limitation period triggers a fresh period of limitation. The settlement communications and acknowledgments were accepted as valid acknowledgments extending time, and the application was therefore within limitation and maintainable.

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Issues: Whether the section 7 application was barred by limitation, and whether the subsequent acknowledgments of liability and settlement proposals extended the period of limitation so as to permit initiation of insolvency proceedings.

Analysis: The limitation period for a section 7 application was held to run from the date of default, which in the facts was treated as the date of NPA. The Court further held that section 18 of the Limitation Act, 1963 applies to proceedings under the Insolvency and Bankruptcy Code, 2016 by virtue of section 238A, and that a written acknowledgment of subsisting liability made before expiry of the original period gives rise to a fresh period of limitation. The various settlement communications and acknowledgments were accepted as extending limitation, and the filing date was found to be within the extended period.

Conclusion: The limitation objection failed, and the section 7 application was held to be maintainable and within time.

Ratio Decidendi: For a section 7 insolvency application, a written acknowledgment of liability made before expiry of the limitation period gives rise to a fresh period of limitation, and section 18 of the Limitation Act, 1963 applies to proceedings under the Insolvency and Bankruptcy Code, 2016.

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