Limitation for Section 7 insolvency petitions runs from default date, and inherent recall power applies only in exceptional cases.

Section 7 insolvency applications are governed by Article 137 of the Limitation Act, with limitation running from the date of default and expiring after three years. The Tribunal rejected reliance on Article 21 and held, on the admitted dates, that the petition was filed within time and was not barred by limitation. It also noted that recall and review are distinct remedies, and that inherent recall power under Rule 11 of the NCLAT Rules may be exercised only in appropriate exceptional circumstances. On the facts, the recall request was entertained only to examine limitation, and the earlier admission order was left undisturbed.

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Issues: (i) whether the Tribunal could entertain a recall application under its inherent powers in the circumstances where liberty had been granted by the Supreme Court to seek review on limitation; (ii) whether the Section 7 application was barred by limitation.

Issue (i): whether the Tribunal could entertain a recall application under its inherent powers in the circumstances where liberty had been granted by the Supreme Court to seek review on limitation.

Analysis: The Tribunal held that review and recall are distinct remedies and that recall may be exercised in appropriate cases under its inherent powers preserved by Rule 11 of the NCLAT Rules, 2016. Although the liberty granted by the Supreme Court was to file a review application, the Tribunal entertained the recall request in the peculiar and exceptional facts of the case and proceeded to examine the limitation issue so as to do justice between the parties.

Conclusion: The recall application was held to be maintainable in the peculiar facts, but only to the limited extent of examining the limitation question.

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

Analysis: The Tribunal applied the settled principle that an application under Section 7 of the Insolvency and Bankruptcy Code, 2016 is governed by the residuary Article 137 of the Limitation Act, 1963 and must be filed within three years from the date of default. On the admitted facts, the default occurred on 15.03.2016 and the Section 7 petition was filed within three years thereof. The Tribunal rejected the contention that the claim was governed by Article 21 of the Limitation Act, 1963 and relied on the consistent line of authority treating the date of default as the decisive trigger for limitation under the Code.

Conclusion: The Section 7 application was held to be within limitation and not time-barred.

Final Conclusion: No error was found in the earlier order admitting the insolvency proceeding, and the request for recall failed on merits.

Ratio Decidendi: An application under Section 7 of the Insolvency and Bankruptcy Code, 2016 is governed by Article 137 of the Limitation Act, 1963, and the limitation period runs from the date of default; the Tribunal may exercise inherent recall power only in appropriate exceptional circumstances.

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