Limitation for insolvency claims runs from default date, and claim admission by the resolution professional is not acknowledgment.

For a Section 7 insolvency application, limitation runs from the date of default under Article 137 of the Limitation Act, 1963; here, the account's classification as a non-performing asset on 06.12.2016 fixed the starting point, not a later recovery step. On that basis, the three-year limitation period expired on 06.12.2019, and the petition filed in 2024 was time-barred even after accounting for excluded periods. Admission of a claim by the Interim Resolution Professional was held to be only an administrative collation of claims and not a conscious, unequivocal acknowledgment of liability under Section 18 of the Limitation Act.

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Issues: (i) whether the period of limitation for filing the petition under Section 7 of the Insolvency and Bankruptcy Code, 2016 had to be reckoned from 06.12.2016 or 06.12.2017; (ii) whether the petition under Section 7 of the Insolvency and Bankruptcy Code, 2016 was within limitation; and (iii) whether admission of debt by the Interim Resolution Professional amounted to acknowledgment of liability under Section 18 of the Limitation Act, 1963.

Issue (i): whether the period of limitation for filing the petition under Section 7 of the Insolvency and Bankruptcy Code, 2016 had to be reckoned from 06.12.2016 or 06.12.2017

Analysis: An application under Section 7 of the Insolvency and Bankruptcy Code, 2016 is governed by Article 137 of the Limitation Act, 1963, and the right to apply accrues on the date of default. The account was classified as non-performing asset on 06.12.2016, which marked the date of default for limitation purposes. Subsequent recovery steps did not shift the starting point.

Conclusion: The period of limitation had to be reckoned from 06.12.2016.

Issue (ii): whether the petition under Section 7 of the Insolvency and Bankruptcy Code, 2016 was within limitation

Analysis: Three years from 06.12.2016 expired on 06.12.2019. The periods relating to the earlier corporate insolvency process, the exclusion ordered for the Covid period, and the later insolvency process were examined, but even after exclusion only three days remained from 29.07.2024, expiring on 01.08.2024. The petition filed on 23.09.2024 was beyond that period.

Conclusion: The petition under Section 7 of the Insolvency and Bankruptcy Code, 2016 was barred by limitation.

Issue (iii): whether admission of debt by the Interim Resolution Professional amounted to acknowledgment of liability under Section 18 of the Limitation Act, 1963

Analysis: An acknowledgment under Section 18 of the Limitation Act, 1963 must be made before expiry of limitation and must evince a conscious and unequivocal admission of existing liability. The Interim Resolution Professional performs an administrative function in collation of claims and does not adjudicate liability. Admission of a claim in the insolvency process was held to be only an administrative entry and not an acknowledgment of liability.

Conclusion: Admission of debt by the Interim Resolution Professional did not amount to acknowledgment of liability under Section 18 of the Limitation Act, 1963.

Final Conclusion: The insolvency application could not be sustained as time-barred, and the orders admitting the petitions were set aside.

Ratio Decidendi: For a Section 7 insolvency application, limitation runs from the date of default under Article 137 of the Limitation Act, 1963, and a claim admitted by the resolution professional, being only an administrative collation of claims, does not constitute an acknowledgment of liability under Section 18 of that Act.

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