Balance sheet acknowledgement extended limitation, so the insolvency application was treated as timely and CIRP commenced.

An application under section 7 of the Insolvency and Bankruptcy Code, 2016 was examined on limitation, with default not seriously disputed at admission. Applying article 137, limitation ran from the date of default, but the corporate debtor's duly signed balance sheet for the relevant financial year recorded outstanding secured borrowings and was treated as a conscious acknowledgement of liability under section 18 of the Limitation Act, 1963. A fresh limitation period therefore commenced from that acknowledgement, and the application was held to be within time. The corporate insolvency resolution process was ordered to commence, moratorium was imposed, and an interim resolution professional was appointed.

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Issues: Whether the application under section 7 of the Insolvency and Bankruptcy Code, 2016 was barred by limitation, and whether the corporate debtor's balance sheet constituted an acknowledgement extending the period of limitation.

Analysis: The Financial Creditor's claim was founded on assigned financial debt and the corporate debtor's default was not seriously disputed at the stage of admission. The only live controversy was limitation. Applying article 137, the period was computed from the date of default, but the balance sheet of the corporate debtor for the relevant financial year, signed by its directors within three years of default, recorded outstanding secured borrowings from banks and financial institutions. Such an entry was treated as a conscious acknowledgement of liability within the meaning of section 18 of the Limitation Act, 1963, and therefore a fresh period of limitation commenced from the date of that acknowledgement. On that basis, the application was held to be within time.

Conclusion: The application was not barred by limitation and was liable to be admitted.

Final Conclusion: The corporate insolvency resolution process was ordered to commence, the moratorium under the Insolvency and Bankruptcy Code, 2016 was imposed, and an interim resolution professional was appointed.

Ratio Decidendi: A duly signed balance sheet of a debtor company recording outstanding liability can constitute acknowledgement of debt and extend limitation under section 18 of the Limitation Act, 1963.

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