In a significant judgment, the Supreme Court has settled the issue of the applicability of the Limitation Act to proceedings under the Insolvency and Bankruptcy Code (IBC). The Court held that the provisions of the Limitation Act, 1963, shall apply to 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.

This judgment has far-reaching implications for the computation of the limitation period for initiating proceedings under the IBC. Specifically, it clarifies that Article 137 of the Limitation Act, which provides that the period of limitation runs for a period of three years from “when the right to apply accrues,” is applicable for computing the limitation period. Additionally, the Court has held that written acknowledgments of liability prior to the expiry of the prescribed period of limitation can extend the period of limitation, as per Section 18 of the Limitation Act.

This judgment brings much-needed clarity to the issue of limitation periods under the IBC and will have a significant impact on the strategy and approach of creditors and debtors in insolvency proceedings.