Directory limitation period for bankruptcy applications under IBC remains condonable under the Limitation Act through Section 238A.

The three-month period for filing a bankruptcy application under Section 121(2) of the Insolvency and Bankruptcy Code is treated as directory, not as a rigid jurisdictional bar, because the provision does not prescribe an express consequence for delay or an outer limit. In the absence of an exclusion, Section 5 of the Limitation Act applies through Section 238A of the Code, so delay can be condoned on sufficient cause being shown. The article notes that refusal to condone delay was therefore unsustainable and the dismissal on limitation was set aside.

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Issues: Whether the three-month period prescribed for filing an application for bankruptcy under Section 121(2) of the Insolvency and Bankruptcy Code, 2016 is mandatory or directory, and whether delay in filing such application can be condoned under Section 5 of the Limitation Act, 1963 read with Section 238A of the Insolvency and Bankruptcy Code, 2016.

Analysis: The provision fixes a period of three months for filing the bankruptcy application but does not prescribe any consequence for non-compliance or any outer bar. In the absence of an express exclusion, the provisions of the Limitation Act continue to apply under Section 238A. The timeline in Section 121(2) was therefore treated as procedural and directory, not as a rigid jurisdictional bar. The Tribunal held that delay could be condoned upon sufficient cause being shown, and the refusal to do so in the impugned order was unsustainable.

Conclusion: The three-month period under Section 121(2) is directory, delay in filing the bankruptcy application can be condoned, and the dismissal of the application on limitation was set aside.

Ratio Decidendi: Where a statutory timeline under the Insolvency and Bankruptcy Code prescribes an inner limit without an express outer bar or exclusion, it is directory and remains amenable to condonation of delay under Section 5 of the Limitation Act, 1963 through Section 238A.

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