Balance sheet acknowledgment can extend limitation for a section 7 insolvency application and support admission of CIRP.

Acknowledgment of liability in a corporate debtor's balance sheet was treated as acknowledgment of debt under section 18 of the Limitation Act, 1963, extending limitation for a section 7 insolvency application. On that basis, the application filed after the relevant balance sheet date was held within limitation. The Tribunal also found that the loan documents and admitted acknowledgments established financial debt and default, and that the proposed Interim Resolution Professional satisfied the statutory requirements. The limitation objection failed, the petition was admitted, CIRP commenced, moratorium was declared, and the proposed Interim Resolution Professional was appointed.

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Issues: Whether the application under section 7 of the Insolvency and Bankruptcy Code, 2016 was barred by limitation and whether the financial debt and default were established so as to admit the petition and commence CIRP.

Analysis: The Corporate Debtor did not dispute the lending relationship but raised limitation as the principal objection. The Tribunal held that entries in the balance sheets for the relevant financial years constituted acknowledgment of liability under section 18 of the Limitation Act, 1963. Since the balance sheet as on 31.03.2019 acknowledged the debt and the application was filed on 14.02.2020, the petition was found to be within limitation. The Tribunal further found that the loan documents and the admitted acknowledgments established financial debt and default, and that the proposed Interim Resolution Professional met the statutory requirements.

Conclusion: The limitation objection failed, the debt and default were proved, and the application was admitted with commencement of CIRP, appointment of the proposed Interim Resolution Professional, and declaration of moratorium.

Final Conclusion: The petition succeeded and insolvency proceedings were set in motion against the Corporate Debtor.

Ratio Decidendi: Acknowledgment of liability in a corporate debtor's balance sheet amounts to acknowledgment of debt under section 18 of the Limitation Act, 1963 and can extend limitation for a section 7 insolvency application.

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