Acknowledgment of liability and valid assignment of debt can extend limitation and support section 7 maintainability.

Acknowledgment of liability in balance sheets and later communications can extend limitation where the debt remains admitted and crystallised, and a DRT order may provide a fresh cause of action. On that basis, the section 7 application was treated as within limitation because the "without prejudice" letters still reflected acknowledgment of quantified dues. A valid assignee of a financial debt also qualifies as a financial creditor under the Insolvency and Bankruptcy Code and may maintain a section 7 application after stepping into the original lender's shoes. The admission order was therefore left undisturbed, and objections on limitation and maintainability failed.

---

---

Issues: (i) Whether the section 7 application was barred by limitation in view of the balance-sheet entries, the DRT order, and the letters marked "without prejudice"; and (ii) whether the assignee of the debt was a financial creditor entitled to maintain the section 7 application.

Issue (i): Whether the section 7 application was barred by limitation in view of the balance-sheet entries, the DRT order, and the letters marked "without prejudice".

Analysis: The limitation period was extended by successive acknowledgments of liability while the period was running. The corporate debtor's balance sheets acknowledged the debt, the DRT order gave rise to a fresh cause of action, and the later communications, though marked "without prejudice", did not negate the admission of liability because they concerned an admitted and crystallized debt rather than a protected settlement negotiation in the relevant sense. The letters, especially the later communication, also reflected acknowledgment of the quantified dues.

Conclusion: The section 7 application was within limitation and the objection of bar of limitation failed.

Issue (ii): Whether the assignee of the debt was a financial creditor entitled to maintain the section 7 application.

Analysis: A person to whom a financial debt has been legally assigned falls within the definition of financial creditor under the Insolvency and Bankruptcy Code. Since the debt had been validly assigned, the assignee stepped into the shoes of the original lender and was entitled to invoke section 7.

Conclusion: The assignee was a financial creditor and the section 7 application was maintainable.

Final Conclusion: No interference was warranted with the admission order, and the appeal failed on both limitation and maintainability.

Ratio Decidendi: An acknowledgment of liability, including in balance sheets or in communications relating to an admitted debt, can extend limitation under section 18 of the Limitation Act, 1963, and a valid assignee of a financial debt is a financial creditor entitled to file a section 7 application under the Insolvency and Bankruptcy Code, 2016.

---