Summary
A creditor’s insolvency application identified a July 2011 default but was filed in October 2017. The tribunals treated it as timely by applying mortgage-suit limitation or counting from commencement of the Insolvency and Bankruptcy Code. The Court rejected both approaches: the application attracted the residuary three-year period from default, and the Code did not revive time-barred debts. The admission orders were set aside.
Issues
- Whether Article 62 or Article 137 governed this section 7 insolvency application.
- Whether commencement of the Code or a commercial interpretation revived the expired period.
Provisions considered
- Article 62, Limitation Act, 1963The twelve-year period for suits enforcing mortgage or charge payment did not govern an application under section 7 of the Code. (¶¶ 3, 6)
Held
- Article 62 applies to suits, whereas the section 7 proceeding was an application governed by residuary Article 137. Time ran from the stated default on 21 July 2011, making the October 2017 application time-barred. (¶¶ 3, 4, 5, 6)
- The Code was not intended to give a fresh lease of life to time-barred debts. A commercial interpretation could not displace the clearly applicable limitation article, and equitable considerations did not alter limitation. (¶¶ 6, 7)
Result
The appeal was allowed and the NCLT and NCLAT judgments admitting and sustaining the section 7 application were set aside.