Case Note & Summary
The appeals under Section 62 of the Insolvency and Bankruptcy Code, 2016 (IBC) were filed by Appellant, erstwhile Director of two corporate debtors, against the judgment of the National Company Law Appellate Tribunal (NCLAT) dated 15.10.2025. The NCLAT had affirmed the order of the National Company Law Tribunal (NCLT) dated 22.01.2025 admitting two petitions under Section 7 of the IBC filed by Respondents, the secured financial creditor, and initiating Corporate Insolvency Resolution Process (CIRP). The central issue was whether the Section 7 applications were filed within the period of limitation. The facts revealed that Dewan Housing Finance Corporation Ltd. (DHFL) sanctioned two loans in September 2014, which were disbursed partially. The corporate debtors defaulted, and their accounts were declared Non-Performing Assets (NPA) on 06.12.2016. DHFL itself entered CIRP, and on 07.06.2021, a resolution plan by Piramal Capital & Housing Finance Ltd. was approved. On 10.01.2023, the loans were assigned to Respondents. The secured financial creditor filed a Section 7 application on 23.09.2024. The NCLT admitted the application, holding it within limitation, and the NCLAT affirmed, reasoning that the admission of the claim by the Resolution Professional (RP) in the first CIRP on 22.05.2022 constituted a valid acknowledgment under Section 18 of the Limitation Act, 1963, and its subsequent updating on 21.01.2024 constituted a second acknowledgment. The appellant argued that the date of default was 06.12.2016, limitation expired on 06.12.2019, and the petition was barred by limitation. The appellant contended that the IRP's admission of debt is merely administrative and does not amount to acknowledgment under Section 18 of the Limitation Act. The respondent argued that limitation should run from 06.12.2017 (expiry of SARFAESI notice period) and that the IRP's acknowledgment extended limitation. The Supreme Court held that the limitation for a Section 7 application commences from the date of NPA classification (06.12.2016), not from the expiry of the SARFAESI notice. The Court computed the limitation period by excluding the moratorium period under Section 60(6) of the IBC (from 23.12.2021 to 29.07.2024) and the COVID-19 extension period (15.03.2020 to 28.02.2022 plus 90 days). After exclusions, only three days remained from 29.07.2024, expiring on 01.08.2024, but the petition was filed on 23.09.2024, which was beyond limitation. The Court further held that the admission of a claim by the IRP/RP is an administrative function under Section 18 of the IBC and does not constitute an acknowledgment under Section 18 of the Limitation Act, as it lacks the conscious intention to admit liability. Additionally, any acknowledgment must be made within the limitation period to extend it. Consequently, the appeals were dismissed, and the orders of the NCLT and NCLAT were set aside, with the Section 7 petitions being dismissed as time-barred.
Headnote
A) Limitation Act, 1963 - Section 18 - Acknowledgment of Liability - Admission of claim by IRP/RP under Section 18 of IBC is an administrative/clerical function and does not constitute a valid acknowledgment under Section 18 of the Limitation Act, 1963 - The admission of a claim by the Resolution Professional is akin to a mere recital/reference of debt and does not evince a conscious intention to admit a subsisting jural relationship or existing liability - Held that such admission cannot extend the period of limitation (Paras 16-17). B) Insolvency and Bankruptcy Code, 2016 - Section 7 - Limitation - Commencement of Limitation - The limitation for filing an application under Section 7 of the IBC commences from the date of default, i.e., the date of classification of the account as Non-Performing Asset (NPA), and not from the expiry of the notice period under Section 13(2) read with Section 13(4) of the SARFAESI Act, 2002 - Held that the right to apply accrues on the date of NPA classification (Paras 13-14). C) Insolvency and Bankruptcy Code, 2016 - Section 60(6) - Exclusion of Moratorium Period - In computing the period of limitation for any suit or application by or against a corporate debtor, the period during which a moratorium is in place under Part II of the IBC shall be excluded - Held that the period of CIRP moratorium from 23.12.2021 to 29.07.2024 is excluded from limitation computation (Paras 14-15). D) Limitation Act, 1963 - Article 137 - Application under Section 7 IBC - The period of limitation for an application under Section 7 of the IBC is three years, governed by Article 137 of the Limitation Act, 1963 - The period begins to run when the right to apply accrues, i.e., on the date of default (Paras 13-14). E) Limitation Act, 1963 - Section 18 - Acknowledgment Must Be Within Limitation - An acknowledgment under Section 18 of the Limitation Act, 1963 can only extend or renew a limitation period which has not already expired - Held that any acknowledgment made after the expiry of the limitation period is ineffective (Para 17).
Issue of Consideration
Whether the application under Section 7 of the Insolvency and Bankruptcy Code, 2016 filed by the secured financial creditor was within the period of limitation; whether admission of debt by an Interim Resolution Professional amounts to acknowledgment of liability under Section 18 of the Limitation Act, 1963
Final Decision
The Supreme Court allowed the appeals, set aside the impugned judgment of the NCLAT dated 15.10.2025 and the order of the NCLT dated 22.01.2025, and dismissed the petitions filed under Section 7 of the Insolvency and Bankruptcy Code, 2016 as barred by limitation.
Law Points
- Limitation for Section 7 IBC application runs from NPA date
- not from expiry of SARFAESI notice
- IRP's admission of claim is administrative
- not acknowledgment under Section 18 of Limitation Act
- Acknowledgment under Section 18 must be made within limitation period to extend it
- Period of moratorium under Section 60(6) IBC is excluded from limitation computation
- COVID-19 extension period is excluded from limitation computation
