Recently, the National Company Law Appellate Tribunal (NCLAT), Principal Bench, in the matter of Vivek Malik v. Punjab National Bank & Anr1 held that the Application filed under Section 7 of the Insolvency and Bankruptcy Code (I&B Code) will not be time-barred if the application filed by the Financial Creditor before the Adjudicating Authority includes the letter of acknowledgment of debt and the same need not be specifically pleaded.

The Appeal was preferred by the Suspended Director of the Corporate Debtor against the order of the Adjudicating Authority i.e. NCLT, New Delhi, admitting the application filed under Section 7 of the I&B Code by Punjab National Bank holding that, "the application was filed within the period of limitation as it gives fresh lease of limitation from the date of such acknowledgment of the acknowledgment letter and the Corporate Debtor defaulted in repaying loans as per the agreed terms and conditions."

Brief Facts of the Case

The financial creditor i.e. Punjab National Bank filed the application under Section 7 of the I&B Code as the Bank had advanced a term loan of Rs. 200 crores on 17.03.2011 and due to non-payment of the dues, the account of the Corporate Debtor became a Non-Performing Asset (NPA) on 15.03.2016. On 10.05.2016, Notice under Section 13(2) of the SARFAESI Act was issued to the Corporate Debtor demanding the debt amount. The Corporate Debtor acknowledged the debt by a letter dated 10.07.2018 sent to the Bank. The Application under Section 7 of I&B Code was filed on 11.10.2019 before the NCLT claiming the default of Rs. 2,68,37,90,311.

Points of Adjudication:

  1. Whether Section 18 of the Limitation Act, 1963 is applicable to the application filed under Section 7 of the I&B Code?
  2. Whether there is a requirement of specific pleading of claiming benefit under Section 18 of the Limitation Act even after the Applicant has mentioned the details of letter of acknowledgement and annexed the same with the application?
  3. Is the Applicant also required to change the date of default to the later date for claiming the benefit of Section 18 of the Limitation Act ?

The Appellants contended that Section 238 A of I&B Code read with Article 137 of Limitation Act, 1963 says that the period of limitation is 3 years from the date of non-payment of the debt due. As the account became NPA on 15.03.2016, the application filed on 11.10.2019 was time-barred as it should have been filed on or before 14.03.2019. Other contentions of the Appellant were increased cost of the project leading to the default. The Corporate Debtor also referred to the Judgment of Babulal Vardharji Gurjar vs. Gurjar Aluminium Industries Pvt. Ltd. & Anr2 that held that limitation began to run from the date of NPA and the application filed under Section 7 after the expiry of 3 years from the date of NPA is barred by law of limitation. The Appellant also referred to the judgment of Jinesh Shah & Anr. vs. Union of India3 where it was held that Section 18 of the Limitation Act, 1963 was not applicable to the application under Section 7 of the I&B Code as the date of default cannot be shifted and proceedings under the I&B Code are not recovery proceeding.

Findings of NCLAT

On the first issue, the NCLAT referred to the recent judgments of the Supreme Court in the case of Sesh Nath Singh & Anr vs. Baidyabati Sheoraphuli Co-operative Bank Ltd4, Laxmi Pat Surana vs. Union Bank of India & Anr5 and Asset Reconstruction Company (India) Limited vs. Bishal Jaiswal & Anr6 that have positively affirmed the applicability of Section 18 of the Limitation Act, 1963 to proceedings under IBC. It was observed in the case of Sesh Nath Singh that Section 238A of the I&B Code makes the provisions of the Limitation Act applicable to the proceedings held before the NCLT and NCLAT " as far as may be" and the IBC doesn't exclude the application of Section 14 or 18 of the Limitation Act. NCLAT, therefore, upheld that the provisions of Limitation Act, 1963 shall apply mutatis mutandis to the proceedings under IBC before the NCLT/NCLAT.

On the remaining issues, the NCLAT referred to Asset Reconstruction Company (India) Limited & Anr v. Bishal Jaiswal, wherein the Supreme Court observed in one of the appeals that since service was not properly effected on the respondents and no one was present at the time of ex parte order admitting the Section 7 application, the parties were allowed to amend their pleadings in case of deficiency in pleadings by giving them an opportunity even at the NCLAT stage. The NCLAT further referred to the Law of Pleadings in India by Mogha (18th Edition) which states that 'pleadings' include contentions raised in Application, Counter, Appeal, Reply and Rejoinder. Therefore, NCLAT held that pleadings in an appeal may also constitute pleading and there is no need to remand back the matter to NCLT for making any amendments in the application filed under Section 7 of the Code.

Keeping in view the above-mentioned principles with regard to pleadings, the issue with regard to limitation was considered with the documents in support. The Corporate Debtor had acknowledged the debt by a letter sent to the Bank. The letter was issued on the letter head of the Corporate Debtor dated 10th July, 2018 and it was duly addressed to the General Manager of the Punjab National Bank. In view of the above acknowledgment, the application filed under Section 7 of the Code 2019 could not be said to be time barred. The appeal stands dismissed.


The above decision of NCLAT has reiterated the position recently taken by the Supreme Court in the recently pronounced three cases of Bishal Jaiswal, Sesh Nath Singh and Laxmi Pat Surana on the applicability of Limitation Act to insolvency proceedings. However, the judgment of NCLAT holds significance inasmuch as it clarifies on the necessity of making specific pleading to claim benefit of Section 18 of Limitation Act. NCLAT has rightly observed that where the letter of acknowledgement has been mentioned in the application filed under Section 7 of IBC and the same is annexed with the application, it meets the requirement of the same constituting part of the pleadings for the purpose of taking such benefit of limitation.

*The Authors represented the Financial Creditor before the NCLAT and the NCLT in the above matter.


1. Company Appeal (AT) (Insolvency) No. 224 of 2021

2. Civil Appeal no. 6347 of 2019

3. (2019) 10 SCC 750

4. Civil Appeal No. 9198 of 2019

5. Civil Appeal No. 2734 of 2020

6. Civil Appeal No. 323 of 2021

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