Limitation for Section 7 insolvency claims runs from default; separate recovery proceedings do not extend time.

Limitation for a Section 7 insolvency application is governed by Article 137 of the Limitation Act, with time running from the date of default. Pendency of separate recovery proceedings does not create a continuing cause of action, and limitation cannot be postponed to the date on which the Insolvency and Bankruptcy Code came into force. Where delay is not shown to be sufficiently, satisfactorily, and convincingly explained, equitable considerations alone do not justify condonation under Section 5. On that basis, the application remained barred by limitation and the challenge to dismissal failed.

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Issues: Whether the delay in filing the application under Section 7 of the Insolvency and Bankruptcy Code, 2016 could be condoned and the application could survive the bar of limitation.

Analysis: The limitation for initiating a Section 7 proceeding is governed by Article 137 of the Limitation Act, 1963, and time begins to run from the date of default. Pendency of separate recovery proceedings does not amount to a continuous cause of action. A plea that limitation should commence only from the date on which the Insolvency and Bankruptcy Code, 2016 came into force was rejected, as the delay was not shown to be sufficiently, satisfactorily, and convincingly explained. In such circumstances, equitable considerations by themselves cannot justify condonation under Section 5 of the Limitation Act, 1963.

Conclusion: The delay was not condonable and the insolvency application remained barred by limitation. The challenge to the dismissal of the petition failed.

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