Written acknowledgments and part payments can extend insolvency limitation, while a signed promise may revive a time-barred debt.

A written promise in an assignment agreement, signed by the corporate debtor and acknowledging the debt, can create a fresh enforceable obligation under Section 25(3) of the Indian Contract Act even if the original debt is time-barred. The text also explains that repeated balance-sheet acknowledgments, written confirmations of liability, and part payments can extend limitation for a Section 7 insolvency application by attracting Section 18 of the Limitation Act through Section 238A of the Insolvency and Bankruptcy Code. Successive acknowledgments made within the operative limitation period therefore keep the insolvency claim alive and prevent dismissal on limitation grounds.

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Issues: (i) Whether a written promise or acknowledgment connected with the assignment agreement attracted Section 25(3) of the Indian Contract Act, 1872 so as to constitute a fresh enforceable obligation in respect of the debt; (ii) Whether the period of limitation for the Section 7 insolvency application stood extended by the corporate debtor's part payments and acknowledgments, including for the purposes of Section 18 of the Limitation Act, 1963.

Issue (i): Whether a written promise or acknowledgment connected with the assignment agreement attracted Section 25(3) of the Indian Contract Act, 1872 so as to constitute a fresh enforceable obligation in respect of the debt.

Analysis: The assignment agreement was executed with the corporate debtor as a confirming party, and its terms recorded the outstanding liability and the borrower's undertaking not to contest the assigned loan and to pay the amounts due to the assignee. Section 25(3) of the Indian Contract Act, 1872 treats a written and signed promise to pay a debt barred by limitation as a valid contract. A promise under that provision is not confined to a live debt and may operate even after the original claim has become time-barred, provided the promise is in writing and signed by the person to be charged.

Conclusion: Yes. The assignment-related written undertaking amounted to a fresh and enforceable promise to pay.

Issue (ii): Whether the period of limitation for the Section 7 insolvency application stood extended by the corporate debtor's part payments and acknowledgments, including for the purposes of Section 18 of the Limitation Act, 1963.

Analysis: The record showed repeated acknowledgments in the balance sheet and a written confirmation of liability, along with part payments made after the assignment. Section 18 of the Limitation Act, 1963 applies to insolvency proceedings by virtue of Section 238A of the Insolvency and Bankruptcy Code, 2016, and a signed acknowledgment made before expiry of the then-current limitation period gives rise to a fresh period of limitation. Successive acknowledgments and part payments within the operative limitation period therefore extend the time for initiating proceedings. The tribunal below erred in treating the original 1998 default as decisive and in ignoring the subsequent acknowledgments and payments.

Conclusion: Yes. The limitation period stood extended, and the application was not barred by limitation.

Final Conclusion: The dismissal of the insolvency application was unsustainable, the limitation objection failed, and the matter required fresh consideration on the merits by the adjudicating authority.

Ratio Decidendi: A written and signed acknowledgment or promise made before expiry of the operative limitation period, including successive acknowledgments and part payments, can extend limitation in insolvency proceedings, and a written promise to pay a time-barred debt is enforceable under Section 25(3) of the Indian Contract Act, 1872.

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