Limitation under IBC: statutory suspension under SICA and OTS acknowledgements extended time for insolvency proceedings.

Limitation for a Section 7 IBC application was held to exclude the period during which SICA proceedings kept the recovery remedy statutorily suspended, because the right to enforce the recovery certificate revived only after that suspension ended. Repeated OTS proposals and part-payments by the corporate debtor were also treated as acknowledgement of a subsisting debt under Section 18 of the Limitation Act, since an acknowledgement need only show a present debtor-creditor relationship and must be within limitation. On both grounds, the time-bar objection failed and admission of the insolvency application was sustained.

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Issues: (i) Whether the period during which proceedings under the Sick Industrial Companies (Special Provisions) Act, 1985 remained pending and the remedy to enforce the recovery certificate stood suspended could be excluded while computing limitation for the Section 7 application under the Insolvency and Bankruptcy Code, 2016. (ii) Whether the corporate debtor's repeated OTS proposals and part-payments amounted to acknowledgement of debt so as to extend limitation under Section 18 of the Limitation Act, 1963.

Issue (i): Whether the period during which proceedings under the Sick Industrial Companies (Special Provisions) Act, 1985 remained pending and the remedy to enforce the recovery certificate stood suspended could be excluded while computing limitation for the Section 7 application under the Insolvency and Bankruptcy Code, 2016.

Analysis: Section 22(1) of the Sick Industrial Companies (Special Provisions) Act, 1985 created a statutory bar against recovery proceedings during the pendency of the sick-company proceedings, and Section 22(5) specifically excluded the period during which the right or remedy remained suspended. The recovery certificate could not be treated as freely enforceable until the suspension ceased, and the later stage of abatement after repeal of the statute was treated as the point when the right to enforce effectively revived. The period covered by the statutory suspension was therefore not counted against limitation.

Conclusion: The suspended period was excluded, and the limitation plea based on the recovery certificate date failed.

Issue (ii): Whether the corporate debtor's repeated OTS proposals and part-payments amounted to acknowledgement of debt so as to extend limitation under Section 18 of the Limitation Act, 1963.

Analysis: The correspondence from the corporate debtor consistently referred to the outstanding liability, proposed settlement terms, and recorded part-payments. An acknowledgement under Section 18 does not require an unconditional promise to pay; it is sufficient if the writing shows a present subsisting liability and a debtor-creditor relationship, and it must be made within the period of limitation. The series of OTS letters and payments constituted such acknowledgement and supplied continuing limitation support for the Section 7 application.

Conclusion: The OTS correspondence and part-payments amounted to valid acknowledgement of debt within limitation.

Final Conclusion: The appeal was held to be time-barred contention untenable on both the statutory suspension issue and the acknowledgement issue, and the admission of the insolvency application was sustained.

Ratio Decidendi: Where a creditor's remedy remains statutorily suspended under SICA, that period is excluded in computing limitation, and written OTS correspondence or part-payments evidencing a subsisting debt can amount to acknowledgement under Section 18 of the Limitation Act, 1963 even if the settlement proposals are conditional.

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