Limitation for section 7 insolvency applications runs from default date; later settlement talks do not extend time without valid acknowledgment.

For a section 7 application under the Insolvency and Bankruptcy Code, limitation runs from the date of default, treated here as the date the account was classified as a non-performing asset on 01.10.2012. Subsequent demand notices, settlement discussions, compromise proceedings and alleged acknowledgments did not, on the facts stated, alter that starting point or extend limitation. In the absence of a legally effective acknowledgment or other valid extension within time, the application filed later remained beyond limitation and was rejected as time-barred.

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Issues: Whether the application under section 7 of the Insolvency and Bankruptcy Code, 2016 was barred by limitation, and whether the later correspondence, acknowledgment, compromise proceedings and one-time settlement negotiations could shift the reckoning of limitation from the date when the account was declared non-performing asset.

Analysis: The account was declared non-performing asset on 01.10.2012, which was treated as the date of default for the purpose of initiating insolvency proceedings. The later demand notice, settlement discussions, compromise decree in recovery proceedings, and alleged acknowledgments were held not to displace the original date of default for limitation purposes. The application was filed long after the expiry of the period computed from the date of default, and therefore could not be sustained by reference to the subsequent events relied upon by the appellant.

Conclusion: The section 7 application was time-barred and was rightly rejected.

Ratio Decidendi: For a financial creditor's application under section 7 of the Insolvency and Bankruptcy Code, 2016, limitation runs from the date of default, and a subsequent demand, settlement proposal, or related recovery proceedings do not, by themselves, postpone that commencement unless a legally effective acknowledgment or other valid extension of limitation is established within time.

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