Limitation for Section 7 insolvency turns on default and acknowledgment of debt, with part payment extending time.

For a Section 7 insolvency application, limitation is assessed from the date of default, not merely from the account being classified as NPA. A valid acknowledgment of debt or part payment made before expiry of limitation extends time under Section 18 of the Limitation Act, 1963. On the record, restructuring documents, part payment, and further correspondence acknowledging liability kept the application within time. The materials also established financial debt and default, so the admission of the insolvency petition was upheld and the limitation objection failed.

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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 admitted debt and default justified admission of the insolvency petition.

Analysis: The record showed restructuring of the loan, subsequent fresh documents, a part payment made by the corporate debtor, and further correspondence acknowledging liability. The date of declaration of the account as NPA was not treated as the sole trigger for limitation; instead, the relevant inquiry was the date of default and whether there was an acknowledgment of debt before expiry of the limitation period. The part payment and other acknowledgments were treated as extending limitation under Section 18 of the Limitation Act, 1963, and the application was found to be within time. The materials also supported the existence of financial debt and default, and no illegality was found in the admission order.

Conclusion: The limitation objection failed, and the admission of the Section 7 application was upheld.

Ratio Decidendi: For a Section 7 insolvency application, limitation runs from default and is extended by a valid acknowledgment of debt or part payment made before expiry of the limitation period.

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