Acknowledgment of debt extends limitation for insolvency claims where settlement proposals confirm the existing default.

An insolvency application under Section 7 of the Insolvency and Bankruptcy Code was found to be within limitation because the corporate debtor's one-time settlement proposals were treated as acknowledgments of debt under Section 18 of the Limitation Act, 1963. The date of default was taken as 27.12.2014, and the proposals dated 09.11.2015 and 29.03.2016 were held to extend the limitation period. The argument that the default date shifted after the settlement proposals was rejected, and the application filed on 14.02.2019 was treated as time-barred objection failing, making the insolvency filing maintainable.

---

---

Issues: Whether the insolvency application under Section 7 of the Insolvency and Bankruptcy Code, 2016 was barred by limitation, and whether the corporate debtor's one-time settlement proposals constituted acknowledgment of debt extending the limitation period under Section 18 of the Limitation Act, 1963.

Analysis: The date of default was treated as 27.12.2014. The subsequent one-time settlement proposals dated 09.11.2015 and 29.03.2016 were treated as acknowledgments of the existing debt and default. On that basis, the limitation period was held to have been extended under Section 18 of the Limitation Act, 1963, so the application filed on 14.02.2019 was within time. The challenge that the date of default shifted after the settlement proposals was rejected.

Conclusion: The limitation objection failed and the insolvency application was held to be maintainable.

---