Acknowledgment of debt and default clause revived claim rights, defeating limitation-based rejection under the assignment arrangement.

Repeated acknowledgments of the corporate debtor's liability in financial statements, together with the assignment arrangement and its event-of-default clause, supported revival of the earlier financial contracts once SBI's communication showed the receivables were already encumbered. On that basis, limitation had to be computed with reference to the acknowledgments, the assignment date and the exclusion applicable during the COVID-19 period. The resolution professional was required to collate and verify the claim, and the rejection of the claim on limitation was not sustainable on the admitted facts and contractual terms. The claim was therefore held not to be time-barred and the impugned rejection was set aside.

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Issues: Whether the claim submitted by the appellant could be rejected as time-barred, and whether the assignment arrangement and its default clause resulted in revival of the earlier financial contracts so as to render the claim admissible.

Analysis: The appellant's loan was repeatedly acknowledged in the corporate debtor's financial statements and was later dealt with through an assignment agreement under which the corporate debtor represented that the receivables were unencumbered. The subsequent communication from SBI showed that the receivables were already encumbered, bringing the event-of-default clause into operation. Under that clause, the existing financial agreements and the corporate debtor's obligations were stated to revive automatically. In that backdrop, the limitation period was computed with reference to the acknowledgments, the assignment date, and the exclusion applicable during the COVID-19 period. The resolution professional was obliged to collate and verify the claim, and the rejection on limitation and the contrary view on validity of termination did not survive the contractual terms and the admitted facts.

Conclusion: The claim was not barred by limitation and the rejection of the claim was unsustainable. The appeal was allowed and the impugned order was set aside.

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