Limitation in Section 7 IBC matters must consider acknowledgments, written promises to repay, and additional material before rejection.

For a Section 7 IBC application, limitation is governed by Article 137 of the Limitation Act from the date of default, but the adjudicating forum must consider any valid written acknowledgment within limitation and any additional material bearing on delay. A written and signed promise to pay a time-barred debt may independently attract Section 25(3) of the Contract Act, distinct from acknowledgment under Section 18 of the Limitation Act. The SC set aside the closure of CIRP proceedings and remanded the matter for fresh consideration after examining additional pleadings, affidavits, documents, and the alleged settlement.

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Issues: (i) Whether the application under Section 7 of the Insolvency and Bankruptcy Code, 2016 was barred by limitation. (ii) Whether the alleged settlement and written promise to repay could attract Section 25(3) of the Indian Contract Act, 1872 or otherwise extend limitation. (iii) Whether the matter required fresh consideration by the Adjudicating Authority after permitting additional pleadings and documents.

Issue (i): Whether the application under Section 7 of the Insolvency and Bankruptcy Code, 2016 was barred by limitation.

Analysis: The period of limitation for an application under Section 7 is governed by Article 137 of the Limitation Act, 1963 and runs from the date of default. An acknowledgment of liability under Section 18 of the Limitation Act, 1963 must be in writing, signed, and made within the limitation period. On the facts, the Court found that the NCLAT proceeded on the basis that there was no acknowledgment within limitation, but the record also raised issues as to the alleged settlement and whether additional material could show sufficient cause or an extension of limitation.

Conclusion: The finding of limitation could not be treated as finally conclusive against the appellant.

Issue (ii): Whether the alleged settlement and written promise to repay could attract Section 25(3) of the Indian Contract Act, 1872 or otherwise extend limitation.

Analysis: A written and signed promise to pay a debt barred by limitation can constitute a valid enforceable contract under Section 25(3) of the Indian Contract Act, 1872. The Court noted that the alleged terms of settlement of December 2018 were not examined by the NCLAT, and if such an agreement existed, its legal effect had to be considered independently. The distinction between acknowledgment under Section 18 of the Limitation Act, 1963 and a promise under Section 25(3) was also material.

Conclusion: The question whether Section 25(3) applied remained open and required examination.

Issue (iii): Whether the matter required fresh consideration by the Adjudicating Authority after permitting additional pleadings and documents.

Analysis: Section 7(5)(b) of the Insolvency and Bankruptcy Code, 2016 contemplates notice before rejection, and the statutory scheme permits relevant documents to be placed before final disposal. The Court held that the NCLAT erred in closing the CIRP proceedings without giving the financial creditor an opportunity to explain delay and without considering additional affidavits and documents. The matter therefore warranted remand for reconsideration in accordance with law.

Conclusion: Fresh consideration by the Adjudicating Authority was required.

Final Conclusion: The impugned appellate decision was set aside to the extent it closed the CIRP proceedings, and the application was directed to be reconsidered afresh on the basis of additional material and the applicable limitation principles.

Ratio Decidendi: For applications under Section 7 of the Insolvency and Bankruptcy Code, 2016, limitation is governed by Article 137 of the Limitation Act, 1963, but the adjudicating forum must consider acknowledgments, possible written promises to pay a barred debt, and any additional material that may bear on limitation before finally rejecting the application.

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