Written promise to repay a time-barred debt can create a fresh enforceable obligation and defeat a limitation objection.

A written and signed promise to repay a debt already barred by limitation can fall within Section 25(3) of the Indian Contract Act, 1872, creating a fresh enforceable obligation. The letter relied on in the dispute referred to earlier payments and continued repayment of bank debts, and was treated as sufficient evidence of such a promise. On that basis, the insolvency application under Section 7 of the Insolvency and Bankruptcy Code, 2016 was not to be rejected merely because limitation had run from the original default date. The limitation objection was therefore not accepted as decisive, and the matter was remitted for fresh consideration on merits.

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Issues: Whether a written promise by the corporate debtor to repay a time-barred debt attracts Section 25(3) of the Indian Contract Act, 1872, and whether the insolvency application under Section 7 of the Insolvency and Bankruptcy Code, 2016 was therefore barred by limitation under Article 137 of the Limitation Act, 1961.

Analysis: A written letter issued after expiry of the original limitation period referred to payments already made and recorded a commitment to continue repayment of the bank debts approved in the joint lenders meeting. Such a written commitment was treated as sufficient evidence of a promise to pay a debt barred by limitation, bringing the case within Section 25(3) of the Indian Contract Act, 1872. On that basis, the debt was treated as supported by a new enforceable promise, and the application was not to be dismissed merely on the footing that limitation had run from the original default date. The objection based on Section 18 of the Limitation Act, 1961 was not accepted as decisive in the appeal.

Conclusion: The written promise was held to fall within Section 25(3) of the Indian Contract Act, 1872, and the insolvency application was directed to be considered as within limitation.

Final Conclusion: The dismissal of the Section 7 application on limitation was set aside and the matter was remitted for fresh consideration on merits by the Adjudicating Authority.

Ratio Decidendi: A written and signed promise to repay a debt barred by limitation can create a fresh enforceable obligation under Section 25(3) of the Indian Contract Act, 1872, and such promise may be relied upon to defeat a limitation-based rejection of an insolvency application.

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