Section 10A and limitation under IBC: pre-2020 default and debt acknowledgment kept the Section 7 application alive.

Section 10A of the Insolvency and Bankruptcy Code did not bar the Section 7 application because the pleaded default occurred on 08.08.2018, before the suspension period commenced on 25.03.2020, and later settlement steps, including a consent decree, did not change the date of original default. The application was also within limitation because the corporate debtor's 2020 settlement proposals amounted to acknowledgment of debt under Section 18 of the Limitation Act, 1963, and the consent decree dated 26.04.2022 provided a further relevant date. The Section 7 filing on 13.03.2023 was therefore in time, and no interference with admission was warranted.

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Issues: (i) Whether the application under Section 7 of the Insolvency and Bankruptcy Code, 2016 was barred by Section 10A on account of the default and subsequent one time settlement events. (ii) Whether the Section 7 application was barred by limitation.

Issue (i): Whether the application under Section 7 of the Insolvency and Bankruptcy Code, 2016 was barred by Section 10A on account of the default and subsequent one time settlement events.

Analysis: The date of default pleaded in the Section 7 application was 08.08.2018, which was prior to the Section 10A suspension period commencing on 25.03.2020. The later one time settlement, undertaking, joint application for consent decree and the consent decree itself were subsequent events and did not alter the fact that the original default predated Section 10A. The settlement terms also contemplated recovery of the entire dues on failure to comply, and the failure of the settlement did not convert the case into a default arising within the protected period so as to attract Section 10A.

Conclusion: The application was not barred by Section 10A.

Issue (ii): Whether the Section 7 application was barred by limitation.

Analysis: The corporate debtor had submitted settlement proposals in 2020, which amounted to acknowledgement of debt, thereby extending limitation under Section 18 of the Limitation Act, 1963. In addition, the consent decree was passed on 26.04.2022, which supplied an independent later date relevant to limitation. The Section 7 application filed on 13.03.2023 was therefore within time.

Conclusion: The application was not barred by limitation.

Final Conclusion: No ground was made out to interfere with the admission of the Section 7 application, and the appeal failed.

Ratio Decidendi: Section 10A does not bar a Section 7 application where the pleaded default occurred before 25.03.2020, and acknowledgement of debt together with later settlement-linked events can extend limitation under Section 18 of the Limitation Act, 1963.

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