Limitation under insolvency law turns on written acknowledgment in balance-sheets and settlement proposals extending the debt claim.

A Section 7 insolvency application was treated as within limitation because acknowledgments of debt in the corporate debtor's balance-sheets, reply and one-time settlement proposals were made before expiry of the limitation period. The analysis applies Section 18 of the Limitation Act, 1963, under which a written acknowledgment made before limitation expires starts a fresh period of limitation. It also reflects the settled position that the Limitation Act applies to proceedings under the Insolvency and Bankruptcy Code, 2016, and that balance-sheet entries may constitute acknowledgment of liability. On that basis, the limitation objection failed and admission of the Section 7 application was upheld.

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Issues: Whether the Section 7 insolvency application was barred by limitation in view of the date of default, and whether acknowledgments in balance-sheets and one-time settlement proposals extended limitation under Section 18 of the Limitation Act, 1963.

Analysis: The application under Section 7 of the Insolvency and Bankruptcy Code, 2016 had been admitted by the Adjudicating Authority after noticing acknowledgments of debt in the corporate debtor's balance-sheets and relying upon the reply and settlement proposals filed by the corporate debtor. The Tribunal noted that acknowledgments in writing made before expiry of limitation attract Section 18 of the Limitation Act, 1963 and commence a fresh period of limitation. It also relied on the settled position that the Limitation Act applies to proceedings under the Insolvency and Bankruptcy Code, 2016, and that entries in balance-sheets or similar records may amount to acknowledgment of liability.

Conclusion: The limitation objection failed, the debt was not time-barred, and the admission of the Section 7 application was upheld.

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