In Brief
This landmark judgment clarifies that the Limitation Act, 1963 applies to insolvency applications filed under Sections 7 and 9 of the Insolvency and Bankruptcy Code from its inception (1 December 2016), not merely after the insertion of Section 238A in June 2018. The Supreme Court held that "default" under the Code requires a debt that is due and legally payable — excluding time-barred claims — because the Limitation Act applies via Section 433 of the Companies Act. Consequently, applications seeking to resurrect debts time-barred beyond three years cannot be admitted unless Section 5 of the Limitation Act (condonation of delay) applies. The Court rejected arguments that Section 238A was merely prospective, finding it clarificatory of the legislature's original intent not to revive stale or dead claims through the insolvency process.
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