Summary
SBI’s insolvency application had been rejected as time-barred on the premise that acknowledgement could not extend limitation after the recorded default. Applying subsequent binding decisions, the Court held Section 18 of the Limitation Act applicable and recognised that qualifying balance-sheet acknowledgements could renew limitation. It did not decide whether SBI’s particular documents established timeliness. The orders were set aside and the application restored for fresh NCLT adjudication within three months, with factual contentions open.
Issues
- Whether Section 18 acknowledgements could extend limitation for the Section 7 insolvency application.
- Whether the application’s factual timeliness should be determined on remand.
Provisions considered
- Section 18, Limitation Act, 1963A qualifying written acknowledgement made within the existing limitation period could start a fresh period in IBC proceedings, including through an appropriate balance-sheet admission. (¶ 8-14)
Held
- Section 18 applies to IBC proceedings. The view excluding balance-sheet acknowledgements in V. Padmakumar had been overruled by Bishal Jaiswal, and the tribunals’ approach could not stand in light of the governing decisions. (¶ 8-13)
- A balance-sheet entry may acknowledge liability, but the statements and accompanying caveats must be examined case by case. The acknowledgement must be within the operative limitation period; an expired claim is not automatically revived by any later entry or settlement proposal. (¶ 10-13)
- SBI relied on alleged timely acknowledgements, a revival letter and an earlier settlement offer. Their factual effect and the resulting application of limitation required fresh NCLT adjudication. The Supreme Court did not itself admit CIRP or finally hold the application timely. (¶ 14-17)
Result
Appeal allowed. The NCLT and NCLAT orders were set aside and the Section 7 application restored to the NCLT, with factual rights and contentions open. Disposal was directed within three months of the order. Pending applications disposed of.