Limitation for insolvency claims: TDS deductions and ledger entries were held insufficient to extend time under Section 18.

Deduction of TDS and mere reflection of a liability in ledger accounts do not, by themselves, amount to acknowledgement of debt for extending limitation under Section 18 of the Limitation Act, 1963. Statutory filings such as balance sheets and annual returns, being mandatory and penalised for non-compliance, were also noted not to constitute acknowledgement. As the last payment and part payment were made in March and April 2017 and the Section 7 application was filed on 04.02.2021, the claim fell beyond the three-year period under Article 137 and was held barred by limitation.

---

---

Issues: Whether the application under Section 7 of the Insolvency and Bankruptcy Code, 2016 was barred by limitation, and whether deduction of TDS or reflection of the debt in the ledger account amounted to acknowledgement of debt extending limitation under Section 18 of the Limitation Act, 1963.

Analysis: Deduction of TDS was held not to constitute an acknowledgement of debt, as tax deduction may be made on an estimated liability and does not by itself amount to admission of liability. The amount reflected in the ledger account was also held not to amount to acknowledgement of debt. Since the last payment and part payment were made in March and April 2017, while the application was filed on 04.02.2021, the claim was beyond three years from the date when the right to apply accrued under Article 137 of the Limitation Act, 1963. The discussion also drew support from the principle that statutory filings such as balance sheet and annual return, being mandatory under Section 92(4) of the Companies Act, 2013 and subject to penal consequences under Sections 92(5) and 92(6) of the Companies Act, 2013, do not constitute acknowledgement under Section 18 of the Limitation Act, 1963.

Conclusion: The application was held to be barred by limitation and could not be maintained on the basis of TDS deduction or ledger entries as acknowledgement of debt.

---