Balance sheet acknowledgment extends limitation for insolvency claims and may be considered at the appellate stage.

A signed balance sheet can operate as a written acknowledgment of liability under Section 18 of the Limitation Act, 1963, extending the three-year limitation period under Article 137 for a Section 7 application under the Insolvency and Bankruptcy Code, 2016. Payment under Section 19 of the Limitation Act may also extend limitation. The appellate tribunal treated additional balance-sheet documents as statutory documents of the corporate debtor and allowed them to be taken on record at the appellate stage because they were relevant to the limitation issue. On that basis, the Section 7 application was treated as within limitation.

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Issues: Whether the application under Section 7 of the Insolvency and Bankruptcy Code, 2016 was within limitation in view of acknowledgments of debt in the corporate debtor's balance sheets and whether such balance sheets could be taken on record at the appellate stage.

Analysis: The period of limitation for an application under Article 137 of the Limitation Act, 1963 is three years from the accrual of the right to apply. That period can be extended by a written acknowledgment of liability under Section 18 of the Limitation Act, 1963 and by payment under Section 19 of the Limitation Act, 1963. Balance sheets signed by the corporate debtor constitute relevant acknowledgments of liability for computing limitation. The documents sought to be introduced on appeal were treated as statutory documents of the corporate debtor, and reliance was placed on the principle that additional documents may be taken on record at the appellate stage when they bear on limitation.

Conclusion: The application under Section 7 was held to be within limitation, the additional balance-sheet documents were taken on record, and the appeal failed.

Ratio Decidendi: A signed balance sheet acknowledging liability constitutes a valid acknowledgment for extending limitation under Section 18 of the Limitation Act, 1963, and such relevant statutory documents may be considered at the appellate stage for deciding limitation under Section 7 of the Insolvency and Bankruptcy Code, 2016.

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