Acknowledgment of debt extended limitation for the insolvency claim, making the Section 7 application timely.

An acknowledgment of debt within the limitation period extends time under Section 18 of the Limitation Act, 1963. The record showed an acknowledgment dated 19.12.2015, along with balance sheets and financial statements reflecting the debt, so the Section 7 insolvency application was treated as within limitation. Balance sheets and financial statements may constitute acknowledgment of liability, and one-time settlement or restructuring proposals can also support extension where they are accompanied by acknowledgment and a continuing jural relationship. On that basis, the application was not barred by limitation.

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Issues: Whether the application under Section 7 of the Insolvency and Bankruptcy Code, 2016 was barred by limitation.

Analysis: The date of default was treated as 30.09.2014, but the record disclosed an acknowledgment of liability dated 19.12.2015, together with balance sheets and financial statements reflecting the debt. The Court applied the principle that an acknowledgment of debt within the limitation period extends the period under Section 18 of the Limitation Act, 1963. It further relied on the settled position that balance sheets and financial statements can amount to acknowledgment of liability, and that one-time settlement or restructuring proposals, when accompanied by such acknowledgment and continuing jural relationship, may also support extension of limitation.

Conclusion: The application under Section 7 was within limitation and was not barred.

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