Application under Section 7 or 9 of the IBC is extendable only by an application under Section 5 of Limitation Act on grounds of sufficient cause

The Supreme Court of India (“Supreme Court”) has held that (a) in an application under Section 7 or 9 of the Insolvency and Bankruptcy Code, 2016 (“IBC”), the period of limitation would be 3 (three) years from the date when the right to apply accrues, i.e. the date when default occurs and is extendable only by an application under Section 5 of the Limitation Act, 1963 (“Limitation Act”) on grounds of ‘sufficient cause’; and (b) while considering existence of a pre-existing dispute between the parties, the courts need not be satisfied that the defence is likely to succeed; it is enough that a dispute exists between the parties, i.e. there is a plausible contention requiring investigation for adjudication.

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