Limitation under insolvency law excludes BIFR pendency, and runs from SICA repeal for a Section 7 application.

For limitation under the Insolvency and Bankruptcy Code, the period during which a corporate debtor's reference remained pending before the BIFR under the SICA was excluded, because pendency of the reference suspended the remedy for limitation purposes. The relevant default date was the invocation of the corporate guarantee, not the earlier declaration of the borrower's account as NPA. As the BIFR reference continued until repeal of the SICA, limitation began to run from the repeal date, and the Section 7 application filed within three years was not time-barred; the rejection of the insolvency application on limitation was set aside.

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Issues: (i) Whether the period during which the corporate debtor was before the BIFR under the SICA was liable to be excluded while computing limitation for a petition under Section 7 of the Insolvency and Bankruptcy Code, 2016. (ii) Whether the petition under Section 7 was within limitation in view of the date of invocation of the corporate guarantee and the repeal of the SICA.

Issue (i): Whether the period during which the corporate debtor was before the BIFR under the SICA was liable to be excluded while computing limitation for a petition under Section 7 of the Insolvency and Bankruptcy Code, 2016.

Analysis: The corporate debtor had filed a reference before the BIFR, which was registered and remained pending until the repeal of the SICA. The Court held that the benefit of exclusion of time under Section 22(5) of the SICA is not confined only to creditors who obtained BIFR consent, and that the pendency of the reference suspends the remedy for purposes of limitation. The appellant had also taken steps before the BIFR by filing an intervention application. The fact that the foreign suit was pursued did not disentitle the appellant from claiming exclusion of the relevant period.

Conclusion: The period spent during the pendency of the BIFR reference was to be excluded while computing limitation.

Issue (ii): Whether the petition under Section 7 was within limitation in view of the date of invocation of the corporate guarantee and the repeal of the SICA.

Analysis: The Court held that the relevant date of default was the date of invocation of the corporate guarantee, not the earlier date on which the borrower's account was declared NPA. Since the reference before the BIFR remained pending until the repeal of the SICA, limitation started running from the date of repeal, and the period of three years had not expired when the Section 7 application was filed. The petition was therefore not barred by limitation.

Conclusion: The Section 7 application was within limitation.

Final Conclusion: The impugned order rejecting the insolvency application on limitation was set aside and the appeal succeeded.

Ratio Decidendi: For limitation purposes under the Insolvency and Bankruptcy Code, the period during which proceedings remain pending before the BIFR under the SICA is excluded, and where the SICA has been repealed, limitation begins to run from the date of repeal.

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