SC Rules IRP/RP Claim Admission Doesn’t Extend Limitation in Section 7 IBC Cases

The Supreme Court of India reaffirmed that a limitation period can be extended only through an acknowledgment made within the prescribed limitation period. The Court held that the IRP’s admission of the secured financial creditor’s claim on 02.05.2022 does not benefit the secured financial creditor, as it was made beyond the limitation period.

A bench of Justice Pamidighantam Sri Narasimha and Justice Alok Aradhe heard appeals under Section 62 of the Insolvency and Bankruptcy Code, 2016, challenging NCLT and NCLAT orders that had admitted Section 7 petitions and initiated CIRP, with the core question being whether the secured financial creditor's application was within the period of limitation.

Decision Summary

The Court held that the right to file a petition under Section 7 accrued on the date of default and that the petition filed on 23.09.2024 was time‑barred after appropriate exclusions were applied; the admissions by the IRP/RP did not amount to an acknowledgement under Section 18 of the Limitation Act, 1963 and therefore did not extend the limitation period. 

The Court, in its reasoning, observed: "The third issue pertains to legal character of the admission of a claim by the IRP/RP and whether such admission can be construed as admission of liability so as to extend the period of limitation under Section 18 of the 1963 Act. At the outset, it must be noted that scope and ambit of Section 18 of the 1963 Act are well‑settled. For a writing to constitute a valid acknowledgment, it must be made by the party against whom the right is claimed, or by a person duly authorized on its behalf; it must be made before the expiration of the prescribed period of limitation; and, most importantly, it must evince a conscious and unequivocal intention to admit a subsisting jural relationship and an existing liability. A mere reference to a past transaction or a bald recital of a debt, without an intention to admit liability, would not suffice. The said principle has been authoritatively enunciated by this Court. The provisions of the Code and the Regulations were considered by this Court and it has been held that RP has no adjudicatory powers and his role involves collation of claims. RP performs its administrative duties under Section 18 of the Code. The admission of a claim by RP is merely an administrative/clerical task performed as part of its statutory duties under Section 18 of the Code and, therefore, admission of claim by RP only means induction/entry of a claim. An admission of a claim by RP is akin to mere recital/reference of debt, which does not amount to an acknowledgment under Section 18 of the 1963 Act. Therefore, IRP’s admission of secured financial creditors debt in first CIRP was not an acknowledgement under Section 18 of 1963 Act."

The Court quoted and relied upon precedents to allocate distinct legal propositions: it followed the principle that accrual of the right to sue under Section 7 arises on the date of default as expounded in Babulal Vardharji Gurjar v. Veer Gurjar ( "(2020) 15 SCC 1": 2020 CaseBase(SC) 348), and it relied on BK Educational Services (P) Ltd. v. Paras Gupta & Associates ( "(2019) 11 SCC 633": 2018 CaseBase(SC) 1164), Gaurav Hargovindbhai Dave v. Asset Reconstruction Company (India) Ltd. & Anr. ( "(2019) 10 SCC 572": 2019 CaseBase(SC) 3198) and Tech Sharp Engineers Pvt. Ltd. v. Sanghvi Movers Ltd. to reinforce that limitation began to run from classification as NPA. For the settled test of what constitutes an acknowledgment under Section 18 of the Limitation Act, 1963, the Court relied on Prabhakaran & Ors. v. M. Azhagiri Pillai (Dead) by LRs. & Ors., Tilak Ram & Ors. v. Nathu & Ors. ( "1966 SCC OnLine SC 99": 1966 CaseBase(SC) 102) and Valliamma Champaka Pillai v. Sivathanu Pillai & Ors. ( "(1979) 4 SCC 429": 1979 CaseBase(SC) 530). The administrative character of claims admitted by an RP was treated in light of Swiss Ribbons Private Limited & Anr. v. Union of India & Ors. ( "(2019) 4 SCC 17": 2019 CaseBase(SC) 1223), Ajay Kumar Radheyshyam Goenka v. Tourism Finance Corporation of India Ltd. ( "(2023) 10 SCC 545": 2023 CaseBase(SC) 514) and Committee of Creditors of Essar Steel India Ltd. through authorised signatory v. Satish Kumar Gupta & Ors. ( "(2020) 8 SCC 531": 2019 CaseBase(SC) 1428), which the Court cited to emphasise that admission by RP is a clerical/administrative entry and not an adjudicatory acknowledgment. The judgment also noted the principles concerning exclusion and extension of limitation adopted in Cognizance For Extension of Limitation, In Re; and applied the reasoning in Laxmi Pat Surana v. Union Bank of India & Anr. ( "(2021) 8 SCC 481": 2021 CaseBase(SC) 842), Kotak Mahindra Bank Ltd. v. Kew Precision Parts Pvt. Ltd. & Ors. ( "(2022) 9 SCC 364": 2021 CaseBase(SC) 235) and Reliance Asset Reconstruction Co. Ltd. v. Hotel Poonja International Pvt. Ltd. on computing the period after statutory and judicial exclusions. Finally, the Court referred to M/s. Airen and Associates v. M/s. Sanmar Engineering Services Ltd. among authorities that clarified the limits of acknowledgment in relation to expired limitation.

Background

The appellant was the erstwhile director of two corporate debtors which had taken loans in September 2014 and were classified as NPA on 06.12.2016. DHFL, the original lender, itself entered CIRP and a resolution plan led to assignment of the loans to the secured financial creditor on 10.01.2023. The secured creditor filed Section 7 petitions on 23.09.2024. NCLT admitted the petitions on 22.01.2025 and NCLAT affirmed on 15.10.2025, relying on entries recording the claim by the RP/IRP during the earlier CIRP and treating them as acknowledgments; the NCLAT found that entries dated 22.05.2022 and 21.01.2024 constituted acknowledgments. The appellant contended that limitation expired on 06.12.2019 and that the IRP/RP's admission was only administrative and could not extend limitation under Section 18 of the Limitation Act, 1963. The respondent relied on exclusions under Section 60(6) of the Insolvency and Bankruptcy Code, 2016 and on the periods of suspension and judicially ordered extension of limitation (including the Covid‑19 exclusion) as articulated in Cognizance For Extension of Limitation, In Re; and allied authorities. The Court analysed the chronology, applied Article 137 of the Limitation Act, 1963, excluded the periods of moratorium and the Covid suspension, and concluded that after computing exclusions only a short residual period remained which had expired before the filing on 23.09.2024. The Court found that the RP/IRP admissions did not amount to an acknowledgement under Section 18 of the Limitation Act, 1963 and therefore did not revive or extend limitation. The impugned orders of NCLAT and NCLT were quashed and set aside and the appeals were allowed; no order as to costs was made.

Case Details:
Case No.: CIVIL APPEAL NO(S). 13158-13159 OF 2025
NeutralCitation: 2026 INSC 429
Case Title: SHANKAR KHANDELWAL v. OMKARA ASSET RECONSTRUCTION PVT. LTD & ANR.

Source: 2026 CaseBase(SC) 370