In Brief
A bank filed a petition under the Insolvency and Bankruptcy Code to initiate insolvency proceedings against a manufacturing company for defaulting on loans. The corporate debtor challenged this on grounds that the application was barred by limitation, as the default occurred in 2015 and the petition was filed in 2019—more than three years later. The Supreme Court held that while the limitation period is ordinarily three years from default, the National Company Law Appellate Tribunal erred in dismissing the petition without allowing the bank to show sufficient cause under Section 5 of the Limitation Act. The Court emphasized that written promises to pay time-barred debts are valid contracts under the Indian Contract Act, and that the Adjudicating Authority must permit additional documents and evidence before finally rejecting an application. The appeal was allowed and remanded.
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