Limitation Act Will Be Applicable Retrospectively To The I&B Code

The Supreme Court of India in BK Education Services Private Limited vs. Parag Gupta and Associates¹ held that Section 238 A of the Insolvency and Bankruptcy Code (the "Code"), which was inserted pursuant to an amendment dated 6^th August 2018, is not merely a prospective amendment but would be effective retrospectively from the date of enactment of the Code itself i.e 1^st December 2016.

Prior to the insertion of Section 238 A, there was a lack of clarity regarding the applicability of the Limitation Act 1968 to the proceeding under the Code. The NCLAT on a couple of occasions held that the Limitation Act is not applicable to the Code on the ground that the Code is not an act for recovery of money, but it relates to initiation of corporate insolvency resolution process. Hence, so long as debt is due, the Code can be invoked even after the expiry of limitation period.² The above view of NCLAT was a departure from the traditional view that 'a time barred debt is not a