Limitation in insolvency proceedings must account for Covid-period exclusion and disputed acknowledgment before a section 7 claim is rejected.

Limitation for the section 7 insolvency application had to be reassessed because the effect of the Supreme Court's Covid-period exclusion and the date of invocation of the corporate guarantee were not properly considered. The appellate tribunal found that the demand notice had been treated as the invocation notice and default had been computed from 19.11.2019, but the record also raised an alleged acknowledgment of debt without supporting material for final determination. As limitation and acknowledgment depended on disputed factual and legal issues, the finding that the application was time-barred was set aside and the matter remanded for fresh adjudication on a complete factual record.

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Issues: Whether the section 7 application was wrongly held to be barred by limitation and whether the matter required remand for fresh consideration in light of the exclusion of the Covid period and the plea of acknowledgment of debt.

Analysis: The notice invoking the corporate guarantee and the date of default were central to computing limitation. The impugned order treated the demand notice dated 04.11.2019 as the invocation notice and reckoned default from 19.11.2019, but the appellate tribunal found that the legal effect of the Supreme Court's limitation directions had not been appreciated in the correct perspective. It also noticed that the record referred to an alleged acknowledgment of debt by the principal borrower, but there was no supporting documentary material before the appellate tribunal for a final determination on that aspect. Since the controversy depended on factual and legal scrutiny of invocation, limitation, and acknowledgment, a fresh examination by the adjudicating authority was necessary.

Conclusion: The finding of limitation was set aside and the matter was remanded for fresh adjudication.

Ratio Decidendi: Where computation of limitation turns on the effect of the Supreme Court's exclusion of the Covid period and on disputed facts relating to invocation of guarantee or acknowledgment of debt, the matter must be reconsidered on a complete factual record rather than rejected as time-barred without such examination.

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