Limitation for Insolvency Applications: MSME award did not extend the three-year period under Article 137

An insolvency application under section 9 of the Insolvency and Bankruptcy Code, 2016 was analysed against Article 137 of the Limitation Act, 1963, which provides a three-year period from the date the right to apply accrues. The claim was based on an MSME Council award dated 20.02.2016, but the application was filed on 13.08.2019, beyond the limitation period. The absence of any challenge to the award did not extend or revive limitation for insolvency proceedings. On that reasoning, the application was held to be barred by limitation and not entertainable.

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Issues: Whether the application under section 9 of the Insolvency and Bankruptcy Code, 2016 was barred by limitation on the basis of the MSME Council award dated 20.02.2016.

Analysis: The application was founded on the award passed by the MSME Council. For an application under sections 7 or 9 of the Insolvency and Bankruptcy Code, 2016, the governing limitation is Article 137 of the Limitation Act, 1963, which prescribes a three-year period from the date when the right to apply accrues. The award was passed on 20.02.2016, while the insolvency application was filed on 13.08.2019, i.e. after expiry of three years. The fact that no challenge to the award had been preferred did not extend the limitation period for initiating insolvency proceedings.

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

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