Acknowledgment in balance sheets and settlement correspondence extended limitation for insolvency and supported a fresh cause of action.

A section 7 insolvency application was treated as within limitation because the corporate debtor's balance sheets and financial statements recorded the outstanding secured borrowings and operated as written acknowledgment of liability. The debtor's one-time settlement proposal, the creditor's acceptance, the signed settlement terms, and part-payment further showed an admitted subsisting debt and gave the claim a fresh contractual basis. The pendency of SARFAESI proceedings did not bar commencement of insolvency proceedings. On these facts, the limitation objection failed and the insolvency application remained maintainable.

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Issues: Whether the section 7 application under the Insolvency and Bankruptcy Code, 2016 was barred by limitation, or whether the corporate debtor's balance sheets, financial statements, and one time settlement correspondence amounted to acknowledgment of liability and gave rise to a fresh cause of action.

Analysis: The limitation plea failed because the corporate debtor's financial statements and balance sheets for the relevant years reflected the outstanding secured borrowings and therefore constituted acknowledgment of debt in writing. The one time settlement proposal made by the corporate debtor and accepted by the financial creditor, followed by the signed settlement terms and part-payment, also demonstrated an admitted subsisting liability. On these facts, the later settlement arrangement operated as a new contractual basis for the claim and furnished a fresh cause of action. The pendency of SARFAESI proceedings did not bar initiation of the insolvency process, and the application was held to be within limitation.

Conclusion: The limitation objection was rejected and the section 7 application was held maintainable.

Final Conclusion: The appeal failed, and the admission of the insolvency application with consequential moratorium was sustained.

Ratio Decidendi: A written acknowledgment of liability in balance sheets, financial statements, or signed settlement correspondence extends limitation under section 18 of the Limitation Act, 1963, and a mutually accepted settlement arrangement may supply a fresh cause of action for insolvency proceedings.

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