The limitation period for an insolvency application under Section 7 commences from the date of default. An admission of a claim by a resolution professional is an administrative function and does not constitute a valid acknowledgment of liability under Section 18 of the Limitation Act, 1963.

Headnote:(A) Insolvency and Bankruptcy Code, 2016 - Section 7 - Limitation Act, 1963 - Article 137 - Section 18 - Corporate Insolvency Resolution Process - Admission of claim by resolution professional - Whether constitutes acknowledgment of liability.

(B) Limitation - Period of limitation for filing application under Section 7 of the Code is three years from the date of default - Right to file accrues on the date of classification of account as non-performing asset - Subsequent proceedings or administrative actions do not extend limitation unless they qualify as valid acknowledgment under Section 18 of the 1963 Act. (Paras 13, 17)

(C) Acknowledgment of liability - Admission of claim by resolution professional is an administrative/clerical function - Does not evince a conscious and unequivocal intention to admit a subsisting jural relationship or existing liability - Cannot be construed as an acknowledgment under Section 18 of the 1963 Act. (Para 16)

Facts of the case:
Loans were sanctioned and subsequently classified as non-performing assets. Following the initiation of insolvency proceedings against the original lender and subsequent assignment of loans, an application under Section 7 of the Code was filed. The lower tribunals held the application to be within limitation, relying on the admission of the claim by the resolution professional as an acknowledgment of debt.

Findings of Court:
The court determined that the application was filed beyond the prescribed period of limitation after accounting for statutory exclusions. It further held that the admission of a claim by a resolution professional is a purely administrative act and does not satisfy the requirements of a valid acknowledgment under Section 18 of the 1963 Act.

Issues: The main issues were the commencement of the limitation period, whether the petition was time-barred, and whether the admission of a claim by a resolution professional constitutes an acknowledgment of liability.

Ratio Decidendi: The court ruled that the limitation period for a Section 7 application commences from the date of default (non-performing asset classification). Admission of a claim by a resolution professional is merely a collation of claims and lacks the requisite intent to admit liability necessary for an acknowledgment under Section 18 of the 1963 Act.

Result: Appeals allowed.

Table of Content
1. factual history regarding npa and insolvency proceedings. (Para 1 , 2 , 3 , 4 , 5)
2. parties' contentions on limitation and acknowledgment of debt. (Para 6 , 7 , 8)
3. computation of limitation period and exclusion of time. (Para 9 , 10 , 11 , 13 , 14 , 15)
4. admission by irp does not constitute legal acknowledgment. (Para 16 , 17)
5. final order setting aside previous adverse decisions. (Para 18 , 19)

ALOK ARADHE, J.

1. These appeals under Section 62 of the Insolvency and Bankruptcy Code, 2016 (hereinafter referred to as “the Code”), are directed against the impugned judgment dated 15.10.2025 passed by the National Company Law Appellate Tribunal (NCLAT), whereby the order dated 22.01.2025 passed by the National Company Law Tribunal (NCLT), admitting two separate petitions under Section 7 of the Code and initiating the Corporate Insolvency Resolution Process (CIRP), has been affirmed.

2. The central question that arises for determination in these appeals are whether the application filed under Section 7 of the Code by the Signature Not Verified KAPIL TANDON Date: 2026.04.29

17:25s:11e ISTcured financial creditor was within the period of limitation.

Reason:

FACTS

3. The facts giving rise to the filing of these appeals, briefly stated, are that the appellant is the erstwhile Director of Shrinathji Business Ventures Private Limited and Samaria Business Ventures Private Limited (Corporate Debtors). Two separate loans were sanctioned by Dewan Housing Finance Corporation Ltd., (DHFL) in September 2014 for sums of Rs.12 crores and Rs.11 crores, out of which Rs.11.50 crores and Rs.11 crores respectively were disbursed. The corporate debtors defaulted in repayment, and on 06.12.2016, DHFL classified their accounts as Non-Performing Assets (NPA). Subsequently, DHFL itself entered CIRP pursuant to proceedings initiated by the Reserve Bank of India, and on 07.06.2021, a resolution plan submitted by Piramal Capital & Housing Finance Ltd., (PCHFL) was approved by the NCLT, Mumbai. On 10.01.2021, PCHFL assigned the subject loans to Omkara Asset Reconstruction Pvt. Ltd., the secured financial creditor.

4. Following the termination of the earlier CIRP, the secured financial creditor filed an application under Section 7 of the Code on 23.09.2024 against the corporate debtor. By order dated 22.01.2025, the NCLT held that the application was within limitation and admitted the same.

5. The appellant challenged the aforesaid order in appeal. By order dated 15.10.2025, the NCLAT, inter alia, held that the admission of the claim by the Resolution Professional (RP) in the first CIRP against the corporate debtor on 22.05.2022 constituted a valid acknowledgment, and its subsequent updating on 21.01.2024 constituted a second acknowledgment. It was further held that, if limitation is computed from either of these dates, the debt is not time- barred. Accordingly, the NCLAT concluded that the petition under Section 7 of the Code was within limitation and affirmed the order of the NCLT. In this factual background, the present appeals arise for consideration.

SUBMISSIONS

6. Learned senior counsel for the appellant submitted that the date of default of corporate debtor was 06.12.2016 and the limitation would have expired on 06.12.2019. It is, however, submitted that the period of limitation remained suspended from 03.12.2019 to 29.04.2024 in view of mandate contained in Section 60(6) of the Code. However, the period of limitation expired three days after 29.04.2024, whereas, the petition under Section 7 of the Code was filed by the secured creditors on 23.09.2024, and was thus barred by limitation.

7. It is further contended that admission of debt by an Interim Resolution Professional (IRP) cannot be equated with an acknowledgment of liability under Section 18 of the Limitation Act, 1963 (hereinafter referred to as “the 1963 Act”). It is urged that the admission of claims is merely an administrative function of the IRP under Section 18 of the Code. It was

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2026 Supreme(Online)(SC) 1680

Pamidighantam Sri Narasimha, Alok Aradhe, JJShankar Khandelwal – AppellantVersusOmkara Asset Reconstruction Pvt. Ltd. – RespondentCIVIL APPEAL NO(S). 13158-13159 OF 2025

The limitation period for an insolvency application under Section 7 commences from the date of default. An admission of a claim by a resolution professional is an administrative function and does not constitute a valid acknowledgment of liability under Section 18 of the Limitation Act, 1963.

Cases Referred (3)

Pamidighantam Sri Narasimha, Alok Aradhe, JJ
Shankar Khandelwal – Appellant
Versus
Omkara Asset Reconstruction Pvt. Ltd. – Respondent
CIVIL APPEAL NO(S). 13158-13159 OF 2025