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Issues: (i) Whether admission of a secured financial creditor's claim by the IRP/RP in an earlier CIRP amounts to acknowledgement of debt so as to extend limitation for filing a fresh application under Section 7 of the Insolvency and Bankruptcy Code, 2016; and (ii) whether the IRP/RP has authority to make such acknowledgement on behalf of the corporate debtor.
Issue (i): Whether admission of a secured financial creditor's claim by the IRP/RP in an earlier CIRP amounts to acknowledgement of debt so as to extend limitation for filing a fresh application under Section 7 of the Insolvency and Bankruptcy Code, 2016.
Analysis: Limitation for a Section 7 proceeding is governed by Article 137 of the Limitation Act, 1963 and the computation of limitation is distinct from the date of default shown in the statutory form. A claim under the insolvency framework is not the same as an application to initiate CIRP, but admission of a claim by the IRP/RP reflects acceptance of a pre-existing and enforceable liability to repay. Since a secured creditor's claim may remain within time under Article 62 of the Limitation Act, 1963 even when a Section 7 application is time-barred on the original default date, such admission operates as an acknowledgement for the purpose of Section 18 of the Limitation Act, 1963. The subsequent updating of the claim also constitutes a fresh acknowledgement.
Conclusion: Yes. Admission and later updating of the claim by the RP constituted valid acknowledgement of debt and extended limitation for the fresh Section 7 applications.
Issue (ii): Whether the IRP/RP has authority to make such acknowledgement on behalf of the corporate debtor.
Analysis: Upon commencement of CIRP, the management of the corporate debtor vests in the IRP and thereafter the RP performs the statutory functions of administering the process, receiving and collating claims, updating the list of claims, and acting in relation to the corporate debtor. In that statutory setting, the suspended board has no functional role in relation to claim administration. An admission of claim by the IRP/RP is therefore an act done on behalf of the corporate debtor and is capable of amounting to acknowledgement of liability.
Conclusion: Yes. The IRP/RP had authority to admit the claim and thereby acknowledge liability on behalf of the corporate debtor.
Final Conclusion: The appeals failed because the impugned insolvency applications were within limitation, the claim admission by the RP furnished a fresh starting point for limitation, and the admissions of CIRP by the Adjudicating Authority were sustained.
Ratio Decidendi: Where a claim is admitted by the IRP or RP in a CIRP, such admission can operate as acknowledgement of liability under Section 18 of the Limitation Act, 1963 and extend limitation for a subsequent insolvency application, because the IRP/RP acts on behalf of the corporate debtor in administering claims.
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