NCLT admitted petition under Section 7, ruling limitation period extended by last part repayment, affirming default within three years.
Part Repayment Validates Timeliness of Insolvency Petition
The National Company Law Tribunal (NCLT) admitted a ₹8.42 crore insolvency application under Section 7 of the IBC, holding that a part payment by the corporate debtor reset the limitation period. The financial creditor demonstrated a recognized repayment event within three years preceding the filing.
The bench observed that acknowledgment of debt through part payment constitutes a factual basis to extend limitation under Section 23(6) of the IBC, which incorporates the Limitation Act, 1963. Absent such an act, the petition would have been time-barred. The decision reaffirms that even small repayments can validate the creditor’s claim if made voluntarily and without qualification.
For insolvency practitioners, this underscores the necessity of meticulously documenting all post-default transactions. A single verified payment can significantly alter the timeliness of a petition, making due diligence critical before filing.