Limitation for insolvency claims: post-expiry acknowledgements cannot revive time-barred debt, and Section 25(3) requires proper pleading.

An application under Section 7 of the Insolvency and Bankruptcy Code is governed by Article 137 of the Limitation Act. Where the default relied on arose from the financial creditor's facilities, a later decree in favour of another creditor could only give a fresh three-year period from the decree date. A decree dated 10 April 2000 therefore expired on 9 April 2003, and acknowledgements or one-time settlement proposals made after that expiry could not revive limitation under Section 18 of the Limitation Act. The plea based on Section 25(3) of the Indian Contract Act was not entertained because it lacked a proper foundation in the pleadings and appeal grounds.

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Issues: Whether the application under Section 7 of the Insolvency and Bankruptcy Code, 2016 was barred by limitation.

Analysis: The limitation for an application under Section 7 is governed by Article 137 of the Limitation Act, 1963. The default relied upon in the application was the default arising from the financial facilities granted by the applicant financial creditor, and not the default involved in the decree obtained by another creditor. The decree dated 10 April 2000 gave a fresh period of limitation of three years, which expired on 9 April 2003. The subsequent acknowledgements and one-time settlement proposals were all after expiry of that period and therefore could not extend limitation under Section 18 of the Limitation Act, 1963. The argument based on Section 25(3) of the Indian Contract Act, 1872 was not entertained as it had no proper foundation in the pleadings before the adjudicating authority or in the appeal grounds.

Conclusion: The application was barred by limitation and was correctly rejected.

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