Supreme Court holds that admission of claim by IRP/RP does not constitute acknowledgment under section 18 of the limitation act; section 7 petition filed beyond limitation held time-barred

The Hon’ble Supreme Court, in its judgment dated April 29, 2026, in Shankar Khandelwal v. Omkara Asset Reconstruction P. Ltd. and Another, addressed the critical issue of whether the admission of a creditor’s claim by the IRP/RP during an earlier Corporate Insolvency Resolution Process (CIRP) constitutes a valid acknowledgment of liability under Section 18 of the Limitation Act, 1963, so as to extend the period of limitation for filing a subsequent petition under Section 7 of the Insolvency and Bankruptcy Code, 2016 (IBC).

The appeals before the Hon’ble Supreme Court arose from the order dated October 15, 2025 passed by the Hon’ble NCLAT, which affirmed the order dated January 22, 2025 passed by the Ld. NCLT, admitting two separate petitions under Section 7 of the IBC and initiating CIRP against two corporate debtors — M/s Shrinathji Business Ventures P. Ltd. and M/s Samaria Business Ventures P. Ltd. The Appellant was the erstwhile director of both corporate debtors. Two loans of Rs. 12 Crores and Rs. 11 Crores had been sanctioned by Dewan Housing Finance Corporation Ltd. (DHFL) in September 2014, of which Rs. 11.50 Crores and Rs. 11 Crores respectively were disbursed. The corporate debtors defaulted in repayment, and on December 6, 2016, DHFL classified both accounts as non-performing assets (NPA). Subsequently, DHFL itself entered CIRP pursuant to proceedings initiated by the Reserve Bank of India, and its resolution plan submitted by Piramal Capital and Housing Finance Ltd. (PCHFL) was approved by the NCLT, Mumbai on June 7, 2021. PCHFL thereafter assigned the subject loans to M/s Omkara Asset Reconstruction P. Ltd. (Respondent No. 1 / secured financial creditor), which filed a Section 7 petition on September 23, 2024.

The NCLAT had held that the admission of the creditor’s claim by the IRP on May 2, 2022 during the first CIRP against the corporate debtors constituted a valid acknowledgment under Section 18 of the Limitation Act, and that its subsequent updating on January 21, 2024 constituted a second acknowledgment, thereby rendering the debt not time-barred.

The Hon’ble Supreme Court, while allowing the appeals and quashing the orders of both tribunals, held as follows:

1. Limitation Commences from Date of Default: Reaffirming the settled position, the Court held that the limitation for filing an application under Section 7 of the IBC is three years governed by Article 137 of the Limitation Act, and the right accrues on the date of default, i.e., when the account is classified as NPA. In the present case, the date of default was December 6, 2016.

2. IRP/RP’s Claim Admission is Not Acknowledgment: The Court held that the admission of a claim by the IRP/RP is merely an administrative/clerical task performed as part of its statutory duties under Section 18 of the IBC. Relying on Swiss Ribbons P. Ltd. v. Union of India and Committee of Creditors of Essar Steel India Ltd. v. Satish Kumar Gupta, the Court reiterated that the Resolution Professional has no adjudicatory powers and the role involves collation of claims. Such admission is akin to a mere recital or reference of debt, which does not amount to an acknowledgment under Section 18 of the Limitation Act. 

3. Requirements of Valid Acknowledgment: For a writing to constitute a valid acknowledgment under Section 18 of the Limitation Act, it must be: (i) made by the party against whom the right is claimed, or by a person duly authorized on its behalf; (ii) made before the expiration of the prescribed period of limitation; and (iii) must evince a conscious and unequivocal intention to admit a subsisting jural relationship and an existing liability. 

4. Acknowledgment Cannot Revive Expired Limitation: Even assuming the IRP’s acts constituted acknowledgments, the Court held that an acknowledgment under Section 18 of the Limitation Act can only extend or renew a limitation period which has not already expired. The IRP’s admission of the creditor’s claim on May 2, 2022 was made after the period of limitation had already expired and therefore could not enure to the benefit of the secured financial creditor. 

Conclusion

The Court thereafter computed the limitation period as follows: limitation of three years commenced from December 6, 2016 and would ordinarily have expired on December 6, 2019. However, three intervening events warranted exclusion: (i) the CIRP of DHFL from December 3, 2019 to June 7, 2021 under the IBC; (ii) the suo motu order of the Supreme Court due to the COVID-19 pandemic excluding the period from March 15, 2020 to February 28, 2022 (plus 90 days); and (iii) the first CIRP against the corporate debtors themselves from December 23, 2021 to July 29, 2024. After excluding these periods, only three days remained from July 29, 2024, with limitation expiring on August 1, 2024. The Section 7 petition having been filed on September 23, 2024 was therefore held to be barred by limitation, and both the NCLAT order and the NCLT order were quashed and set aside.