Insolvency and Bankruptcy Code, 2016 — Section 7 — Limitation — Article 137, Limitation Act, 1963 — Commencement of limitation — Held, runs from date of default/NPA Paras 13–14 Application under Section 7 of the Code is governed by Article 137 of the Limitation Act. The right to apply accrues on the date of default, i.e., when the account is classified as NPA. Subsequent recovery proceedings do not shift the starting point of limitation. In the present case, limitation commenced on 06.12.2016.

advocatemmmohan

Insolvency and Bankruptcy Code, 2016 — Section 7 — Limitation — Article 137, Limitation Act, 1963 — Commencement of limitation — Held, runs from date of default/NPA

Paras 13–14

Application under Section 7 of the Code is governed by Article 137 of the Limitation Act. The right to apply accrues on the date of default, i.e., when the account is classified as NPA. Subsequent recovery proceedings do not shift the starting point of limitation. In the present case, limitation commenced on 06.12.2016.

---

Limitation — Exclusion of period — Section 60(6), IBC — COVID-19 extension — Effect — Computation

Paras 14–15

While computing limitation, the following periods are to be excluded:
(i) CIRP of DHFL;
(ii) COVID-19 exclusion period as per Supreme Court orders;
(iii) CIRP against the Corporate Debtor.

After exclusion, only three days remained post 29.07.2024, expiring on 01.08.2024. Filing on 23.09.2024 held time-barred.

---

Acknowledgment — Section 18, Limitation Act — Essentials — Must be by debtor — Conscious admission of liability

Para 16

For a valid acknowledgment:

• Must be made by the party against whom liability is claimed or authorised person;
• Must be before expiry of limitation;
• Must indicate conscious admission of subsisting liability.

Mere reference or recital of debt is insufficient.

---

Insolvency — Role of IRP/RP — Admission of claim — Nature — Whether acknowledgment

Paras 16–17

Resolution Professional performs administrative functions of claim collation. Admission of claim:

• Is a clerical/statutory act;
• Does not involve adjudication;
• Is merely entry/recognition of claim.

Such admission does not amount to acknowledgment under Section 18 of the Limitation Act.

---

Acknowledgment after expiry of limitation — Effect

Para 17

Acknowledgment can extend limitation only if made within the subsisting limitation period. An acknowledgment after expiry has no legal effect in reviving limitation.

---

IBC — Section 7 Application — Bar of limitation — Effect

Paras 15, 18

Where the application is filed beyond the computed limitation period, it is liable to be rejected as time-barred. Orders of NCLT and NCLAT admitting such application are unsustainable.

---

Result

Paras 18–19

Impugned orders of NCLT and NCLAT set aside. Appeals allowed. No costs.