Limitation for insolvency claims turns on written acknowledgment; silence or non-reply does not extend time under the Limitation Act.

An operational creditor's section 9 application under the Insolvency and Bankruptcy Code was held time-barred because limitation under Article 137 of the Limitation Act runs from default, and the application was filed after the three-year period had expired. The debtor's e-mail and debit note correspondence did not amount to a written acknowledgment of liability signed by the corporate debtor, so Section 18 could not extend limitation. Silence or non-reply to a demand notice was also insufficient to imply acknowledgment. No application for condonation of delay under Section 5 was filed, leaving no basis to excuse the delay.

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Issues: (i) Whether the section 9 application under the Insolvency and Bankruptcy Code, 2016 was barred by limitation. (ii) Whether the e-mail and debit note communications constituted acknowledgment of liability so as to extend limitation or justify condonation of delay.

Issue (i): Whether the section 9 application under the Insolvency and Bankruptcy Code, 2016 was barred by limitation.

Analysis: The limitation period for an operational creditor's application is governed by Article 137 of the Limitation Act, 1963, and runs from the date of default. The record showed that the invoices and default related to supplies made between April 2015 and March 2016, while the application was filed on 4.12.2018. On the finding of the last payment date, the three-year period expired before the filing of the application. No application for condonation of delay under Section 5 of the Limitation Act, 1963 was filed.

Conclusion: The application was barred by limitation and the dismissal of the section 9 petition was / sustainable in law, against the assessee-appellant and in favour of the respondent.

Issue (ii): Whether the e-mail and debit note communications constituted acknowledgment of liability so as to extend limitation or justify condonation of delay.

Analysis: A fresh period of limitation under Section 18 of the Limitation Act, 1963 arises only from an acknowledgment of liability in writing signed by the party against whom the right is claimed. The operational creditor's e-mail and debit note did not amount to a written acknowledgment by the corporate debtor, and mere silence or non-reply to the e-mail or demand notice did not amount to deemed acknowledgment. The appellant also did not seek leave to file a condonation application, so no extension of limitation could be granted on that basis.

Conclusion: There was no acknowledgment extending limitation and no basis to condone the delay, against the appellant.

Final Conclusion: The appeal failed because the section 9 application was time-barred and the alleged correspondence did not extend limitation.

Ratio Decidendi: Under the Insolvency and Bankruptcy Code, 2016, an operational creditor's application must be filed within the limitation period prescribed by Article 137 of the Limitation Act, 1963, and limitation is extended only by a written acknowledgment of liability signed by the debtor under Section 18 of the Limitation Act, 1963; silence or non-reply does not amount to acknowledgment, and delay cannot be condoned without an application under Section 5 of the Limitation Act, 1963.

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