The Supreme Court has clarified a critical threshold in insolvency proceedings: the mere administrative admission of a debt by an Interim Resolution Professional does not revive or extend the limitation period under the Limitation Act, 1963. This ruling resolves a growing conflict in NCLT and NCLAT jurisprudence and reasserts the strict statutory framework governing time-bound insolvency applications.
Background & Facts
The Dispute
The appellant, Shankar Khandelwal, was the erstwhile Director of two corporate debtors - Shrinathji Business Ventures Private Limited and Samaria Business Ventures Private Limited. Dewan Housing Finance Corporation Ltd. (DHFL) extended two term loans to these entities in September 2014: Rs. 12 crores and Rs. 11 crores, of which Rs. 11.50 crores and Rs. 11 crores were disbursed respectively. The corporate debtors defaulted on repayment obligations, leading DHFL to classify the accounts as Non-Performing Assets (NPA) on 06.12.2016.
Key Facts
- Loan facility sanctioned: 26.09.2014
- Accounts declared NPA: 06.12.2016 (date of default)
- SARFAESI Act, 2002, 60-day notice period expired: 06.02.2017
- DHFL’s own CIRP initiated: 03.12.2019
- Resolution plan for DHFL approved by NCLT: 07.06.2021
- PCHFL assigned the debt to Omkara Asset Reconstruction Pvt. Ltd. (secured financial creditor): 10.01.2023
- First CIRP against corporate debtors initiated: 23.12.2021
- Interim Resolution Professional (IRP) admitted the claim of secured creditor: 22.05.2022
- IRP updated claim record: 21.01.2024
- First CIRP terminated: 29.07.2024 (on grounds of fraudulent initiation)
- Section 7 petition filed by secured creditor: 23.09.2024
Procedural History
- 22.01.2025: NCLT admitted the Section 7 petition, holding the claim was within limitation
- 15.10.2025: NCLAT affirmed the NCLT order, relying on IRP’s admission on 22.05.2022 and 21.01.2024 as acknowledgments under Section 18 of the Limitation Act
- 23.09.2024: Section 7 petition filed
- 29.07.2024: First CIRP terminated
- 28.02.2022: Initial COVID-19 limitation extension ended
- 01.03.2022: Additional 90-day extension commenced
- 29.04.2024: End of all extended limitation periods
- 29.04.2024 + 3 days: Limitation expired on 01.08.2024
- 29.04.2026: Judgment delivered by Supreme Court
Relief Sought
The appellant sought quashing of the NCLT and NCLAT orders dated 22.01.2025 and 15.10.2025 respectively, and a declaration that the Section 7 petition filed on 23.09.2024 was barred by limitation.
The Legal Issue
The central question was whether the admission of a debt by an Interim Resolution Professional during a prior Corporate Insolvency Resolution Process constitutes a valid acknowledgment of liability under Section 18 of the Limitation Act, 1963, thereby extending the limitation period for a subsequent Section 7 application under the Insolvency and Bankruptcy Code.
Arguments Presented
For the Appellant
The appellant’s senior counsel argued that the right to file a Section 7 petition accrued on 06.12.2016, the date of NPA declaration, making the limitation period expire on 06.12.2019. The moratorium under Section 60(6) of the IBC suspended limitation from 03.12.2019 to 07.06.2021 (DHFL’s CIRP) and again from 23.12.2021 to 29.07.2024 (CIRP against the corporate debtor). The COVID-19 limitation extension (15.03.2020 to 28.02.2022, plus 90 days) further suspended the period. After accounting for all exclusions, only three days remained after 29.07.2024, expiring on 01.08.2024. The petition filed on 23.09.2024 was thus time-barred. The appellant emphasized that IRP’s admission under Section 18 of the IBC is purely administrative, not judicial, and cannot amount to a legal acknowledgment under Section 18 of the Limitation Act.
For the Respondent
The respondent argued that the limitation period commenced only after the 60-day notice period under the SARFAESI Act expired on 06.02.2017, making the limitation expire on 06.02.2020. The IRP’s admission of the claim on 22.05.2022 and its update on 21.01.2024 constituted valid acknowledgments under Section 18 of the Limitation Act, restarting the limitation clock. The respondent relied on NCLAT precedents and contended that the IBC’s procedural framework should be interpreted to favor creditor recovery, especially where claims are formally recorded.
The Court's Analysis
The Court began by affirming that Article 137 of the Limitation Act, 1963 governs the limitation period for Section 7 applications, which is three years from the date of default. The default date, as consistently held in Babulal Vardharji Gurjar v. Veer Gurjar and BK Educational Services (P) Ltd. v. Paras Gupta & Associates, is the date of NPA declaration - 06.12.2016 - not the expiry of SARFAESI notice or any other procedural milestone.
The Court then meticulously calculated the excluded periods: the moratorium under Section 60(6) of the IBC suspended limitation during two CIRPs (03.12.2019 - 07.06.2021 and 23.12.2021 - 29.07.2024), and the COVID-19 extensions (15.03.2020 - 28.02.2022 and 01.03.2022 - 30.05.2022) further suspended the period. After excluding these, only three days remained after 29.07.2024, expiring on 01.08.2024. The petition filed on 23.09.2024 was therefore beyond limitation.
The Court then turned to the pivotal issue: whether the IRP’s admission of the claim amounted to an acknowledgment under Section 18 of the Limitation Act. The Court held that Section 18 of the IBC empowers the IRP/RP only to collate, verify, and record claims as part of an administrative function. It does not confer adjudicatory powers. The admission of a claim is a procedural step, not a legal concession of liability.
"An admission of a claim by RP is merely an administrative/clerical task performed as part of its statutory duties under Section 18 of the Code and, therefore, admission of claim by RP only means induction/entry of a claim."
The Court reiterated that for an acknowledgment under Section 18 of the Limitation Act, there must be a conscious, unequivocal intention to admit a subsisting liability. A mere recital of debt, even if recorded in official records, does not satisfy this test. The Court cited Prabhakaran & Ors. v. M. Azhagiri Pillai and Tilak Ram & Ors. v. Nathu & Ors. to affirm that acknowledgment must be made by the debtor or its authorized agent, not by a third-party administrator.
Further, the Court emphasized that Section 18 of the Limitation Act cannot revive a time-barred debt. Since the IRP’s admission occurred on 22.05.2022 - well after the limitation period had expired on 06.12.2019 - it could not operate to extend limitation retroactively.
The Verdict
The appeals were allowed. The judgments of the NCLAT dated 15.10.2025 and the NCLT dated 22.01.2025 were quashed and set aside. The Section 7 petition filed on 23.09.2024 was held to be barred by limitation. There shall be no order as to costs.
What This Means For Similar Cases
Admission by RP Is Not an Acknowledgment
- Practitioners must now treat IRP/RP claim admissions as procedural records, not legal acknowledgments
- Any attempt to rely on such admissions to revive limitation under Section 18 of the Limitation Act will fail
- Creditors must file Section 7 applications within the original limitation period, accounting only for statutory exclusions under Section 60(6) IBC and judicial extensions
Limitation Periods Are Strictly Calculated
- The date of NPA declaration remains the definitive trigger for limitation under Section 7
- Multiple CIRPs do not reset the limitation clock unless the debtor is the same entity and the claim is fresh
- COVID-19 extensions are finite and must be precisely accounted for; no further extensions are implied
Procedural Compliance Over Substantive Fairness
- The IBC’s time-bound nature cannot be diluted by procedural formalities
- Courts will not entertain equitable arguments to extend limitation where statutory bars are clear
- Creditors must act promptly; reliance on future CIRPs or claim registrations is legally unsound
