Acknowledgement of liability extends limitation and supports insolvency admission where debt and default remain proved.

An application under section 7 of the Insolvency and Bankruptcy Code, 2016 was found to be within limitation because the corporate debtor had made subsequent acknowledgements of liability in its accounts and annual report. The Tribunal treated those entries as acknowledgements under section 18 of the Limitation Act, 1963, so a fresh period of limitation ran from the date of acknowledgement made before expiry of the original period. It also held that the debtor had not disproved the debt reflected in its books, and the proposed one-time settlement did not negate subsisting liability. The debt and default were therefore established, and the petition was admitted for commencement of corporate insolvency resolution process.

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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 financial creditor had established a subsisting debt and default warranting admission of the petition.

Analysis: The date of default was disputed on the footing that the account had become non-performing much earlier, but the Court found that limitation could be extended by subsequent acknowledgements of liability. The record showed continued reflection of the debt in the corporate debtor's accounts and an annual report entry acknowledging the outstanding liability. The Court treated such entries as an acknowledgement within the meaning of section 18 of the Limitation Act, 1963, and held that a fresh period of limitation runs from the date of acknowledgement if made before expiry of the original period. The Court also noted that the corporate debtor did not disprove the debt reflected in its books and that the conduct relating to the proposed one-time settlement did not negate the subsisting liability.

Conclusion: The petition was held to be within limitation, the default and debt were found to be established, and the application was admitted for commencement of corporate insolvency resolution process.

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