In Brief
This landmark judgment consolidates the law on how limitation applies to insolvency proceedings under the IBC. The Court held that Section 18 of the Limitation Act—which extends limitation periods upon written acknowledgement of debt—applies to Section 7 applications for corporate insolvency, despite the statutory requirement to file balance sheets. While balance sheets must be filed by law, acknowledgements within them are voluntary. An entry in a signed balance sheet can reset the limitation clock if it unequivocally acknowledges a debt as a present subsisting liability, establishing debtor-creditor relations. The Court overruled NCLAT's opposite holding and clarified that qualification notes need case-by-case examination. The judgment aims to prevent time-barred debts being revived unfairly while respecting genuine acknowledgements.
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