Acknowledgment of liability extended limitation, allowing the section 7 insolvency application to proceed within time.

Written balance confirmations and revival letters signed by the corporate debtor before expiry of limitation constituted valid acknowledgment of liability under section 18 of the Limitation Act, 1963. The NCLAT held that these acknowledgments triggered a fresh limitation period, so the section 7 application under the Insolvency and Bankruptcy Code, 2016 was treated as filed within time despite being presented more than three years after the original default date. Decisions dealing only with a bare default date, without pleaded acknowledgment, were distinguished on facts, and the limitation objection failed.

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Issues: Whether the section 7 application under the Insolvency and Bankruptcy Code, 2016 was barred by limitation, or whether the written balance confirmations and revival letters constituted acknowledgment of liability so as to extend limitation under section 18 of the Limitation Act, 1963.

Analysis: The application under section 7 had been filed beyond three years from the date originally stated as default, but the record showed several balance confirmations and revival letters executed by the corporate debtor before expiry of the limitation period. Section 18 of the Limitation Act, 1963 applies where, before expiry of the prescribed period, there is a written and signed acknowledgment of liability, and a fresh period of limitation then runs from the date of such acknowledgment. The Tribunal treated the acknowledgments as legally valid and binding, and held that the later confirmations extended limitation. On that basis, the section 7 application was treated as having been filed within time. The reliance placed on cases dealing with a bare default date without any pleaded acknowledgment was distinguished on facts.

Conclusion: The limitation objection failed, and the section 7 proceeding was held to be within limitation because the acknowledgments revived the limitation period.

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