Limitation for Section 7 insolvency begins on contractual breach; later exercise of a voiding option does not extend time.

A Section 7 insolvency application was held time-barred because Article 137 of the Limitation Act applied and limitation ran from the date of contractual breach. The agreement imposed a maximum contractual period of 36 months and treated failure to launch the scheme within 180 days as default, making the transaction voidable at the promisee's option under Section 55 of the Contract Act. The right to sue arose when the breach occurred, and limitation could not be extended merely because the creditor exercised the option to void the agreement later. Filing in November 2020 was therefore beyond the prescribed period and the application could not be maintained.

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Issues: Whether the Section 7 application was barred by limitation in view of the date on which the right to sue accrued under the Memorandum of Understanding and the effect of the contractual option to void the transaction.

Analysis: The agreement fixed a maximum contractual period of 36 months and also contemplated default if the scheme was not launched within 180 days. On breach of these stipulations, the contract became voidable at the option of the promisee under Section 55 of the Contract Act, 1872. Article 137 of the Limitation Act, 1963 governed the application under Section 7 of the Insolvency and Bankruptcy Code, 2016. The right to sue arose when the contractual breach occurred, and limitation could not be postponed merely because the creditor chose to exercise the contractual option to void the agreement much later. The filing in November 2020 was therefore beyond the prescribed period.

Conclusion: The Section 7 application was time-barred and could not be maintained.

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