Balance-sheet acknowledgements can extend limitation and amended insolvency pleadings may relate back to the original application.

Balance-sheet acknowledgements and repeated settlement proposals can extend limitation under section 18 of the Limitation Act, 1963, where they are made before expiry of the limitation period. An amendment introducing such acknowledgement-based pleading, once allowed without any restriction on effect, ordinarily relates back to the original section 7 application. The text also notes that an application signed by an authorised bank officer is maintainable where authority flows from the governing regulations and the amendment has attained finality. The discussion therefore centres on limitation, relation back of amendments, and authorised signatory requirements in insolvency proceedings.

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Issues: (i) whether the amended section 7 application was barred by limitation and whether the balance-sheet entries and other acknowledgements extended limitation; (ii) whether the amended application was filed by a duly authorised signatory and was maintainable.

Issue (i): whether the amended section 7 application was barred by limitation and whether the balance-sheet entries and other acknowledgements extended limitation.

Analysis: The debt and default were not treated as time-barred merely because the account had been classified as NPA in 2013. The corporate debtor had subsequently acknowledged liability in its balance sheets for multiple financial years and had also made repeated settlement proposals. Such acknowledgements, made within the subsisting period of limitation, extended limitation under section 18 of the Limitation Act, 1963. The Court further held that the amendment permitting incorporation of the acknowledgement-based case related back to the original section 7 application, since no condition excluding relation back had been imposed when the amendment was allowed. The plea that the amended claim was time-barred was therefore rejected.

Conclusion: The limitation objection failed and the application was held to be within time.

Issue (ii): whether the amended application was filed by a duly authorised signatory and was maintainable.

Analysis: The amended application was signed by an Assistant General Manager of the bank who derived authority under the bank's governing regulations. The Court also noted that the amendment had already been permitted and had attained finality between the parties. The objection that the petition was unsigned or unauthorised was therefore not accepted.

Conclusion: The application was held to be properly authorised and maintainable.

Final Conclusion: The admission of the section 7 proceeding and the initiation of insolvency resolution against the corporate debtor were sustained, and the appeal was dismissed.

Ratio Decidendi: An acknowledgement of liability in a balance sheet, if made before expiry of limitation, extends limitation under section 18 of the Limitation Act, 1963, and an amendment allowed without restricting its effect ordinarily relates back to the original pleading.

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