In Brief
The Supreme Court held that entries in a corporate debtor's signed balance sheets can constitute acknowledgements of liability under Section 18 of the Limitation Act, thereby extending the limitation period for Section 7 Insolvency and Bankruptcy Code applications. Section 238A of the IBC makes the Limitation Act applicable to insolvency proceedings. While balance sheet filing is mandatory under the Companies Act, no particular admission is compulsory. Whether an entry amounts to acknowledgement depends on case-by-case examination of surrounding circumstances, auditor caveats, and whether the admission is unequivocal and relates to subsisting liability. The Court overruled the NCLAT Full Bench majority decision in V. Padma Kumar and remanded several appeals for reconsideration under this principle.
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