Limitation in insolvency proceedings extends through written acknowledgment; DRT recovery action does not stop time.

A Section 7 insolvency application is computed from the date of default, ordinarily linked to classification of the account as non-performing asset. Pendency of recovery proceedings before the Debt Recovery Tribunal does not suspend limitation for insolvency proceedings because it is a separate and independent remedy. Limitation may, however, be extended by a written acknowledgment of debt under Section 18 of the Limitation Act, 1963. Letters seeking one-time settlement were treated as valid acknowledgment of liability, and that acknowledgment by the principal borrower also bound the corporate guarantor because the guarantor's liability is coextensive. The Section 7 application was therefore within limitation and the delay objection was rejected.

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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 pendency of recovery proceedings before the Debt Recovery Tribunal or the borrower's letters seeking one-time settlement extended limitation for the corporate guarantor.

Analysis: The limitation period for a Section 7 application was held to run from the date of default, ordinarily reckoned from declaration of the account as non-performing asset, and the filing of recovery proceedings before the Debt Recovery Tribunal was treated as a separate and independent remedy that did not suspend limitation for proceedings under the Insolvency and Bankruptcy Code, 2016. The application would still be within time if limitation was extended by acknowledgment of debt under Section 18 of the Limitation Act, 1963. The borrower's letters seeking one-time settlement were held to amount to acknowledgment of liability within the meaning of Section 18. It was further held that such acknowledgment by the principal borrower binds the corporate guarantor because the guarantor's liability is coextensive with that of the principal borrower.

Conclusion: The Section 7 application was held to be within limitation and the objection based on delay was rejected.

Final Conclusion: The admission order was sustained and the appeal failed.

Ratio Decidendi: A recovery proceeding under another statute does not arrest limitation for a Section 7 insolvency application, but a valid written acknowledgment of debt within the limitation period extends time, and such acknowledgment by the principal borrower also extends limitation against a coextensive corporate guarantor.

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