2/15/2020 Analysis of the provisions of Limitation Act, 1963 with respect to Insolvency and Bankruptcy Code, 2016 - IBC

y Code, 2016 - IBC Laws

Analysis of the provisions of Limitation Act, 1963 with respect to

Insolvency and Bankruptcy Code, 2016
FEBRUARY 14, 2020 BY IBC LAWS — LEAVE A COMMENT

Contents: 

IBC
“Decoding the Code”
Laws
Analysis of the provisions of Limitation Act, 1963 with
respect to Insolvency and Bankruptcy Code, 2016 

(updated 14.02.2020)

Section 238A was inserted by the Insolvency and Bankruptcy Code (Second Amendment) Act, 2018,
(w.e.f. 06.06.2018) on recommendation of Insolvency Laws Committee’s Report published in
March, 2018. Prior to the section 238A, the issue of applicability of the Limitation Act to
proceedings under the IBC was Initially dealt with by the NCLAT in the matter of Speculum Plast
Private Limited v. PTC Techno Private Limited and in Neelkanth Township and Construction Pvt.
Ltd. V. Urban Infrastructure Trustees Ltd wherein NCLAT held that the Limitation Act will not be
applicable to proceedings under the IBC.

This part decodes the period of limitation with respect to Insolvency and Bankruptcy Code, 2016.
Before analysing the Section 238A, we are listing here some basic provisions of the Limitation Act,
1963.

I. Some interesting provisions under Limitation Act related to IBC

1. Period of limitation

Clause (j) of the Section 2 of the Limitation Act, 1963 de ned that “period of limitation” means the
period of limitation prescribed for any suit, appeal or application by the Schedule, and “prescribed
Bulletin-XVIII
period” means the period of limitation computed in accordance with the provisions of this Act.

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2. Clause (l) of the Section 2 of the Limitation Act, 1963 de ned that “suit” does not include an
appeal or an application.

3. Expiry of prescribed period when court is closed

As per Section 4 of the Limitation Act, where the prescribed period for any suit, appeal or
application expires on a day when the court is closed, the suit, appeal or application may be
instituted, preferred or made on the day when the court re-opens. Further elaborate through
explanation that a court shall be deemed to be closed on any day within the meaning of this
section if during any part of its normal working hours it remains closed on that day.

4. Section 5 of the Limitation Act, 1963

Section 5 of the Limitation Act, 1963 dealt with the extension of the prescribed period in a certain
case. It states that if the appellant or the applicant satis es the court that he had a suf cient cause
for not preferring the appeal or making the application within such period, then such an
application or appeal shall be admitted after the prescribed period. The section reproduced here:

 “5. Extension of prescribed period in certain cases.

Any appeal or any application, other than an application under any of the provisions
of Order XXI of the Code of Civil Procedure, 1908, (5 of 1908), may be admitted after the
prescribed period if the appellant or the applicant satis es the court that he had
suf cient cause for not preferring the appeal or making the application within such
period.

Explanation: The fact that the appellant or the applicant was misled by any order,
practice or judgment of the High Court in ascertaining or computing the prescribed
period may be suf cient cause within the meaning of this section.”

5. Period of limitation prescribed under Article 137 of Part II- PART II – ‘Other Applications’ of Third
Division- ‘Applications’ of Limitation Act, 1963

Article Description of Period of limitation Time from which

application period begins to run

137. Any other application Three years When the right to

for which no period of apply accrues.
limitation is provided
elsewhere in this divi-
Bulletin-XVIII sion.

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Read more about Exclusion of time, Effect of acknowledgment in writing and more.

II. Analysis of the Section 238A of the Code

1. Legal text of the Section 238A

 238A. Limitation.–The provisions of the Limitation Act, 1963 (36 of 1963) shall, as far
as may be, apply to the proceedings or appeals before the Adjudicating Authority, the
National Company Law Appellate Tribunal, the Debt Recovery Tribunal or the Debt
Recovery Appellate Tribunal, as the case may be.

Hon’ble Supreme Court in the matter of B.K. Educational Services (P) Ltd. Vs. Parag Gupta &
Associates held that the Limitation Act, 1963 is applicable to applications led under Sections 7 and
9 of the Code from the inception of the Code, Article 137 of the Limitation Act gets attracted. “The
right to sue”, therefore, accrues when a default occurs. If the default has occurred over three years
prior to the date of ling of the application, the application would be barred under Article 137 of
the Limitation Act, save and except in those cases where, in the facts of the case, Section 5 of the
Limitation Act may be applied to condone the delay in ling such application.

2. The Section is applicable retrospective i.e. since the inception of the Code

Hon’ble Supreme Court in the matter of B.K. Educational Services (P) Ltd. Vs. Parag Gupta &
Associates clari ed that the Limitation Act is applicable to applications led under Sections 7 and 9
of the Code from the inception of the Code.

3. Limitation period start from the date of default

The Supreme Court in  Gaurav Hargovindbhai Dave vs. Asset Reconstruction Company (India)
Ltd. held that the proceedings under section 7 of the IBC are “an application” and not “suits”; thus
they would fall within the residuary article 137 of the Limitation Act and the right to apply will
arise from the date of default. It was again reiterated by the Supreme Court in  Jignesh Shah vs.
Union of India that the right to apply under the IBC will be from date of default and not from the
date of enactment of the IBC i.e. 01.12.2016.

III. Judicial Pronouncements on Limitation under IBC

Articles 137 of Limitation Act will be apply in case of application led under Section 7 of IBC and
limitation period will be 3 years started when the right to apply accrues –  SC

The Apex Court in the matter of Gaurav Hargovindbhai Dave Vs. Asset Reconstruction Company
(India) Ltd & Anr held that what is apparent is that Article 62 is out of the way on the ground that it
Bulletin-XVIII
would only apply to suits. The present case being “an application” which is led under Section 7,
would fall only within the residuary article 137. As rightly pointed out by learned counsel appearing

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on behalf of the appellant, time, therefore, begins to run on 21.07.2011, as a result of which the
application led under Section 7 would clearly be time-barred. So far as Mr. Banerjee’s reliance on
para 7 of B.K. Educational Services Private Limited (supra), suf ce it to say that the Report of the
Insolvency Law Committee itself stated that the intent of the Code could not have been to give a
new lease of life to debts which are already time-barred.

The bar of limitation of three years would be attracted from the date when the default occur and
not from the ling of winding up petition- Jignesh Shah & Anr Vs.Union of India & Anr – Supreme
Court

On 20.08.20019, a share purchase agreement was executed between MCX and IL&FS, whereby
IL&FS agreed to purchase of 442 lakh equity shares of MCX-SX from MCX. La-Fin as a group
company of MCX issued a letter of undertaking to IL&FS on 20.08.2009 to repurchase the shares
of MCX-SX after a period of one year but before the a period of 3 years from the date of
investment. IL&FS therefore, on August, 2012 issued a letter to exercised its option to sell its entire
holding to MCX. it replied that it was no legal or contractual obligation to buy the aforesaid shares.
IL&FS led a suit in Bombay High Court for speci c performance of the letter of  undertaking,
Bombay High Court passed an injunction order restraining La-Fin from alienating its assets
pending disposal of the suit. On 21.10.2016 IL&FS led a winding up petition u/s 433 of Companies
Act 1956 against La-FIn in the Bombay High Court. Due to introduction of IBC, 2016, case was
transferred to NCLT as a application u/s 7 and the statutory form was lled up by IL&FS indicating
that the date of default was 19.08.2012. The said application has been admitted with the
observation that the bar of limitation would not be attracted as the Winding up Petition was led
within three years of  the date on which the Code came into force, viz., 01.12.2016.  The NCLAT also
af rmed the order of  NCLT  and reject the application of appellant.

Hon’ble Supreme Court held that the bar of limitation of 3 years as prescribed under Article 137
would be attracted from the date when default occurred and not from the date of ling of 
winding up petition. Since, the Winding up Petition led on 21.10.2016 being beyond the period of
three-years mentioned in Article 137 of the Limitation Act is time-barred, and cannot therefore be
proceeded with any further. Accordingly, the impugned judgment of the NCLAT and the judgment
of the NCLT is set aside.

The right to sue is triggered when recovery certi cate was issued & then the bar of limitation will
be started- SC

Hon’ble Supreme Court in the matter of Vashdeo R Bhojwani Abhyudaya Co-Operative Bank Ltd &
Anr referring the B.K. Educational Services (P) Ltd, held that since the section 7 petition was led
by the Respondent No.1 on 21.07.2017 before the NCLT whereas when the Recovery Certi cate
dated 24.12.2001 was issued, this Certi cate injured effectively and completely the appellant’s
rights as a result of which limitation would have begun ticking. This being the case, and the claim
Bulletin-XVIII
in the present suit being time barred, there is no doubt that is due and payable in law.

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The date of coming into force of the IBC Code does not & cannot form a trigger point of limitation
for applications led under the Code and if applications led u/s 7, Article 137 of the Limitation Act
alone will apply – SC

The Apex court in the matter of Sagar Sharma & Anr Vs. Phoenix Arc Pvt. Ltd. & Anr held that
Article 141 of the Constitution of India mandates that our judgments are followed in letter and
spirit. The date of coming into force of the IBC Code does not and cannot form a trigger point of
limitation for applications led under the Code. Equally, since “applications” are petitions which
are led under the Code, it is Article 137 of the Limitation Act which will apply to such
applications. Accordingly, we set aside the judgment under appeal and direct that the matter be
determined afresh. It will be open for both sides to argue the case on facts on the footing that
Article 137 of the Limitation Act alone will apply.

Property having mortgaged, claim is not barred by limitation as the period of limitation is 12 years
with regard to mortgaged property-Babulal Vardhaji Gurjar Vs. JM Financial Asset Reconstruction
Co. Ltd.-NCLAT

The Appellant argued on the question of limitation and submitted that the ‘default’ having
committed on 8th July, 2011 whereas the petition under Section 7 of the I&B Code having led in
March, 2018, the application is not maintainable being barred by limitation. 9 properties i.e. land
and building have been mortgaged by the Corporate Debtor with Respondent No. 2 – Financial
Creditor. Respondent No. 2 also preferred a criminal proceeding on 27th June, 2017 as the
enforcement mortgage of which possession was taken by 2nd Respondent after the order passed
by the DRT, Aurangabad. NCLAT referring the Part V (First Division) of Limitation Act relates to
‘Suits relating to immovable property’ to recover possession of the property mortgaged and
afterwards transferred by the mortgagee for a valuable consideration. The period of limitation is 12
years since the transfer becomes known to the plaintiff [Article 61(b)]. In view of the aforesaid
position of law, the property having mortgaged, we also hold that the claim is not barred by
limitation as the period of limitation is 12 years with regard to mortgaged property and in terms of
Section 5 (7) read with Section 5(8) as the property is mortgaged, Respondent No. 2 also comes
within the meaning of ‘Financial Creditor’.

If the Appellant had moved before an appropriate forum for appropriate relief in time, in
accordance with law, it can’t be said that the claim is barred by limitation – Sanghvi Movers Ltd. Vs.
M/s. Tech Sharp Engineers Pvt. Ltd. – NCLAT

The Appellant issued a statutory notice under Sections 433 and 434 of the Companies Act, 1956 on
24th May, 2014 to the ‘Corporate Debtor’ calling upon to pay a sum of Rs.38,84,709/- together with
interest. The amount having not paid, the Appellant led a winding up petition/ Company Petition
before the Hon’ble High Court of Judicature at Madras on 4th July, 2015 which was registered and
numbered. NCLAT held that it will be evident that the winding up petition was
Bulletin-XVIII led before the
Hon’ble High Court of Judicature at Madras which had not reached nality and in the meantime,
as the ‘I&B Code’ came into force, the demand notice under Section 8(1) was issued on 14th

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November, 2017 for payment of outstanding amount along with the interest. Thus, as we nd that
there is continuous cause of action the claim is within the period of limitation. The Appellant had
moved before an appropriate forum for appropriate relief in time, in accordance with law and so
we hold that the claim of the Appellant is not barred by limitation as the petition under Section
433 & 434 of the Companies Act, 1956 become infructuous, by operation of law.

Application is maintainable within three years from the date when the right to apply accrues i.e.
from 01.12.2016(Limitation Act) – M/s GupShup Technology India Pvt. Ltd. Vs.M/s Interpid Online
Retail Pvt. Ltd. – NCLAT

NCLAT referring the Article 137 of Part II of Third Division of Limitation Act, 1963 held that from
the aforesaid provision of the Limitation Act, it is clear that the application is maintainable within
three years from the date when the right to apply accrues. Since, the Insolvency and Bankruptcy
Code, 2016 has come into effect since 1st December, 2016, we hold that the application is not
barred by limitation.

Financial Creditor has right to get immovable property mortgaged & thereafter may transfer the
mortgage assets for a valuable consideration for which 12 years of limitation has been prescribed
for ling a suit relating to immovable property under Article 61 of Part V of the First Division of the
Schedule of Limitation Act – Sagar Sharma & Another Vs.Phoenix ARC Private Limited – NCLAT

The next question is whether the claim of the Appellant is barred by the limitation. If it is barred
by limitation then the ‘Corporate Debtor’ has right to take plea that the ‘debt’ is not payable. In the
present case, we nd that the immovable property of the ‘Corporate Debtor’ was mortgaged in
favour of the ‘Financial Creditor’ by ‘Deed of Mortgage’ and a further charge was made on 27th
November, 2009 by the ‘Corporate Debtor’ in favour of ‘IDFC Ltd.’. Thereafter by ‘assignment
agreement’ debt payable by ‘Corporate Debtor’ to IDFC was assigned on 11th September, 2014.

The ‘Financial Creditor’ has right to get immovable property mortgaged and thereafter may
transfer the mortgage assets for a valuable consideration for which 12 years of limitation has been
prescribed for ling a suit relating to immovable property under Article 61 of Part V of the First
Division of the Schedule of Limitation Act. Therefore, we hold that the claim of the 1st Respondent
is not barred by limitation.

Question of limitation has to be looked into from the angle whether the debt is payable in law or in
fact. Although the proceeding under IBC is an Application, question for consideration is whether
the debt is payable in law. The yardstick is to see whether there is continuous cause of action for
the debt claimed. – Mr. Basab Biraja Paul Vs. Edelweiss Asset Reconstruction Company Limited –
NCLAT

NCLAT held that it would be strange to say that if you prosecute relief in wrong Court, it would
Bulletin-XVIII
save limitation but if you prosecute relief in right Court, you cannot resort to additional relief
which becomes available later. In our view, when the Financial Creditor was pursuing its remedies
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in proper forum, there was continuous cause of action existing and it cannot be said that the debt
became time barred. The IBC was enforced in 2016 and the additional remedy became available.
Financial Creditor resorted additionally to it and the Application was led under Section 7. It could
not be said to be time barred.

If a Bank had taken action u/s 13(4) of the SARAFAESI Act and the matter is pending before the
DRT, there being 12 years of limitation prescribed for enforcement of payment of money secured
by a mortgage- Sh. B. Prashanth Hegde Vs. State Bank of India – NCLAT

Question before NCLAT it is to be determined, as to whether the application under Section 7 of

the I&B Code was barred by limitation and, if not, whether the claim of the Banks was barred by
limitation to hold that there is no debt payable in the eyes of law?

NCLAT held that for computing the period of limitation of an application under Section 7, one
should refer to Article 137 of Part II of Third Division of the Schedule of Limitation Act, 1963, the
right to apply under Section 7 of the Code, accrued to the Bank only since 1st December, 2016, i.e.,
when I&B Code came into force. From the aforesaid provision, we nd that the application under
Section 7 is not barred by limitation. To nd out, as to whether the claim is barred by limitation or
not, one should refer to Articles 61 & 62 of Part-V of First Division. It relates to mortgage of
property (Article 61) and enforcement of payment of money secured by a mortgage (Article 62),
apart from the fact that the Bank had taken action under Section 13(4) of the SARAFAESI Act and
the matter is pending before the DRT since 2015-16, there being 12 years of limitation prescribed
for enforcement of payment of money secured by a mortgage, we hold that the claim of the none
of the Consortium Banks are barred by limitation and, therefore, the Corporate Debtor cannot
claim that the debt is not payable in the eyes of law.(Author own view that this is disputed decision
with SC verdict).

Jurisdiction to decide whether the application u/s 9 is time barred by limitation or not, it is within
the domain of the Adjudicating Authority and not NCLAT-State Bank of India vs Sical Logistics Ltd.-
NCLAT

SBI claimed to be an Operational Creditor and moved an application u/s 9 Code against M/s. Sical
Logistics Ltd.- (Corporate Debtor). The Adjudicating Authority (NCLT) taking into consideration
the fact that the date of default was 10.04.2008, rejected the application u/s 9 being barred by
limitation. NCLAT rejected such submission and held that such submission cannot be accepted as
it is within the domain of the Adjudicating Authority (Court of Competent Jurisdiction) to decide
whether the application is barred by limitation or not.

  Bulletin-XVIII

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An Acknowledgement in writing within expiration of prescribed period will mark a new

commencement period for limitation to base a claim & the same will not create a new contract-
Vivek Jha vs Daimler Financial Services India Private Ltd. & Anr.-NCLAT

NCLAT held that in Law, an ‘Acknowledgement’ in writing within expiration of prescribed period
will mark a new commencement period for limitation to base a claim and the same will not create
a new contract. In fact, it only extends the limitation period. Suf ce it for this Tribunal to make a
pertinent mention that if a suit is led within three years from the last acknowledgement the same
is not barred by limitation as per decision Union of India Vs. M.C. Pandey AIR 2009 NOC Page 494
(UTR). Further, an ‘Acknowledgement’ must be made before the expiration of the limitation period
as per Section 18 of the Limitation Act, 1963. An ‘Acknowledgement’ of Liability not only saves
limitation period but also confers on an individual a ‘cause of action’ to him, to lay his claim.

Section 18 of the Limitation Act, 1963 reproduced here:

“18. Effect of acknowledgment in writing.

  (1) Where, before the expiration of the prescribed period for a suit or application in
respect of any property or right, an acknowledgment of liability in respect of such
property or right has been made in writing signed by the party against whom such
property or right is claimed, or by any person through whom he derives his title or
liability, a fresh period of limitation shall be computed from the time when the
acknowledgment was so signed.

(2) Where the writing containing the acknowledgment is undated, oral evidence may
be given of the time when it was signed; but subject to the provisions of the Indian
Evidence Act, 1872 (1 of 1872), oral evidence of its contents shall not be received.

Explanation : For the purpose, of this section,—

(a) an acknowledgment may be suf cient though it omits to specify the exact nature of
the property or right, or avers that the time for payment, delivery, performance or
enjoyment has not yet come or is accompanied by a refusal to pay, deliver, perform or
permit to enjoy, or is coupled with a claim to set-off, or is addressed to a person other
than a person entitled to the property or right;

(b) the word “signed” means signed either personally or by an agent duly authorised in
this behalf; and

(c) an application for the execution of a decree or order shall not be deemed to be an
Bulletin-XVIII
application in respect of any property or right.”

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The period from date of notice u/s 13(2) of SARFEASI Act to date of order passed by the court will
be excluded for ling application u/s 7-Sesh Nath Singh Vs. Baidyabati Sheoraphuli Cooperative
Bank Ltd-NCLAT

Appellants issue that the account of Corporate Debtor was declared NPA on 31.03.2013 whereas
the application u/s 7 of IBC has been led on 27.08.2018 i.e. after about 5 years and 5 months from
the date of accrual of cause of action. NCLAT held that the Respondent is entitled for the
exclusion of time period from date of notice under Section 13(2) of SARFEASI Act to when the
Kolkata High Court has passed the order against the Respondent under Section 14(2) of Limitation
Act i.e. the period of 3 years and 6 months. After exclusion of this period the application led
under Section 7 of I&B Code is within limitation period. In such circumstances the application
under Section 7 is within limitation and there is no force in the argument that the application is
time barred.

If Corporate Debtor has written the letter for due debt, the period of limitation stands shifted to
the date on which the Corporate Debtor agreed to pay-Anubhav Anilkumar Agarwal vs Bank of
India – NCLAT

Bank of India moved an Application under Section 7 of the ICode, pursuant to which, by impugned
order dated 26th  November, 2019 the Adjudicating Authority (NCLT), Mumbai Bench initiated
CIRP against RNA Corp. Pvt. Ltd. (Corporate Debtor), who was the Guarantor. The Appellant has
challenged the impugned order on main ground that the Application under Section 7 of the Code
was barred by limitation.

In the present case, the Corporate Debtor by its letter dated 18.03.2016/20.03.2019 has speci cally
stated that it will make an effort in reducing their outstanding dues and raise other funding to
save their Bank account from getting NPA. The last three paragraphs of the aforesaid letter show
that to save the Bank Account from getting NPA and citing the good reputation and goodwill, the
‘Corporate Debtor’ agreed to pay the amount and acknowledged the dues.

In view of the letter dated 18th March, 2016 written to the Bank, NCLAT has held that the period of
limitation stands shifted to the date on which the Corporate Debtor agreed to pay and thus,  held
that the Application under Section 7 of the Code was not barred by limitation.

Whether the order of Decree passed by the Debts Recovery Tribunal can be taken into
consideration to hold that application u/s 7 of the Code is within period of three years as
prescribed under Article 137 of Limitation Act, 1963? –Sh G Eswara Rao vs Stressed Assets
Stabilisation Fund – NCLAT

NCLAT set aside the order of NCLT and has held that in the present case, the Corporate Debtor
defaulted to pay prior to 2004, due to which O.A. No.193 of 2004 was
Bulletin-XVIII led by Respondent
(Financial Creditor). A Decree passed by the Debts Recovery Tribunal or any suit cannot shift
forward the date of default. On the other hand, the judgment and Decree passed by Debts
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Recovery Tribunal on 17.08.2018, only suggests that debt become due and payable. It does not
shifting forward the date of default as Decree has to be executed within a speci ed period.  It is
not  that  after  passing  of  judgment  or  Decree,  the  default  takes  place immediately, as
recovery is permissible, all the debts in terms of judgment and Decree dated 17.08.2018 with
pendent lite and future interest at the rate of 12% per annum could have been executed only
through an execution case. As noticed above, in absence of any acknowledgement under Section
18 of the Limitation Act, 1963, the date of default/ NPA was prior to 2004 and does not shift
forward, therefore, the period of limitation for moving application under Section 7 of the Code
was for three years, if counted, to be completed in the year 2007. As date of passing of Decree is
not the date of default, NCLAT has held that the application under Section 7 of the I&B Code was
barred by limitation, though the claim may not be barred.

IV. Reason of introduce the Section 238A into the Code

The Report of the Insolvency Laws Committee would indicate that it has applied its mind to
judgments of the NCLT and the NCLAT. It has also applied its mind to the aspect that the law is a
complete Code and the fact that the intention of such a Code could not have been to give a new
lease of life to debts which are time-barred.

Recommendation of the Insolvency Laws Committee

 “28. APPLICATION OF LIMITATION ACT, 1963

 28.1 The question of applicability of the Limitation Act, 1963 (“Limitation Act”) to the Code has
been deliberated upon in several judgments of the NCLT and the NCLAT. The existing
jurisprudence on this subject indicates that if a law is a complete code, then an express or
necessary exclusion of the Limitation Act should be respected (Ravula Subba Rao and another
v. The Commissioner of Income Tax, Madras, (1956) S.C.R. 577). In light of the confusion in this
regard, the Committee deliberated on the issue and unanimously agreed that the intent of the
Code could not have been to give a new lease of life to debts which are time-barred. It is settled
law that when a debt is barred by time, the right to a remedy is time-barred (Punjab National
Bank and others v. Surendra Prasad Sinha AIR 1992 SC 1815). This requires being read with
the de nition of ‘debt’ and ‘claim’ in the Code. Further, debts in winding up proceedings cannot
be time-barred, (Interactive Media and Communication Solution Private Limited v Go
Airlines, 199 (2013) DLT267) and there appears to be no rationale to exclude the extension of
this principle of law to the Code.

28.2 Further, non-application of the law on limitation creates the following problems: rst, it
re-opens the right of
Bulletin-XVIII nancial and operational creditors holding time-barred debts under the
Limitation Act to le for CIRP, the trigger for which is default on a debt above INR one lakh. The
purpose of the law of limitation is “to prevent disturbance or deprivation of what may have

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been acquired in equity and justice by long enjoyment or what may have been lost by a party’s
own inaction, negligence or latches”( Rajinder Singh v. Santa Singh, AIR 1973 SC 2537).
Though the Code is not a debt recovery law, the trigger being ‘default in payment of debt’
renders the exclusion of the law of limitation counter-intuitive. Second, it re-opens the right of
claimants (pursuant to issuance of a public notice) to le time-barred claims with the IRP/RP,
which may potentially be a part of the resolution plan. Such a resolution plan restructuring
time-barred debts and claims may not be in compliance with the existing laws for the time
being in force as per section 30(4) of the Code.

28.3 Given that the intent was not to package the Code as a fresh opportunity for creditors and
claimants who did not exercise their remedy under existing laws within the prescribed
limitation period, the Committee thought it t to insert a speci c section applying the
Limitation Act to the Code. The relevant entry under the Limitation Act may be on a case to
case basis. It was further noted that the Limitation Act may not apply to applications of
corporate applicants, as these are initiated by the applicant for its own debts for the purpose of
CIRP and are not in the form of a creditor’s remedy.”

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Related

Section 238A: Limitation Whether the order of Decree

The Insolvency and Bankruptcy passed by the Debts Recovery
Code, 2016 PART V Tribunal can be taken into
Miscellaneous 1[Section 238A: consideration to hold that
Limitation: 238A. Limitation. – application u/s 7 of the Code is
The provisions of the Limitation within period of three years as
July 1, 2018 prescribed under Article 137 of
Limitation Act is applicable to
In "Insolvency & Bankruptcy Limitation Act, 1963? -Sh G
applications led under Sec. 7
Code-Section" Eswara Rao vs Stressed Assets
and 9 of the Code from the
Stabilisation Fund - NCLAT
inception of the Code-B.K.
NCLAT has held that as noticed
Educational Services (P) Ltd. Vs.
above, in absence of any
Parag Gupta & Associates-
acknowledgement under
Supreme Court
Section 18 of the Limitation Act,
October 13, 2018
1963, the date of default/ NPA
In "Supreme Court"
Bulletin-XVIII February 11, 2020
In "NCLAT"

https://ibclaw.in/analysis-of-the-provisions-of-limitation-act-1963-with-respect-to-insolvency-and-bankruptcy-code-2016/ 11/12
2/15/2020 Analysis of the provisions of Limitation Act, 1963 with respect to Insolvency and Bankruptcy Code, 2016 - IBC Laws

Bulletin-XVIII

https://ibclaw.in/analysis-of-the-provisions-of-limitation-act-1963-with-respect-to-insolvency-and-bankruptcy-code-2016/ 12/12