Supreme Court Holds That Admission Of Debt By A Resolution Professional Does Not Amount To Acknowledgment Of Liability Under Article 18 Of The Limitation Act, 1963 And The Time Period Of Earlier CIRP Proceedings Against A Corporate Debtor Is To Be Excluded While Computing The Limitation Period Under Article 137 Of The Limitation Act, 1963

The Supreme Court through its judgement dated 29.04.2026 in the matter of Shankar Khandelwal v Omkara Asset Reconstruction Private Limited & Another¹ held that the admission of debt by a Resolution Professional (“RP”) does not amount to acknowledgement of liability under Article 18 of the Limitation Act, 1963 (“Limitation Act”) & the time period of earlier Corporate Insolvency Resolution Process (“CIRP”) proceedings is to be excluded while computing the period of for calculation of limitation period under Article 137 of the Limitation Act.

In the present matter, the date of default for the debt availed by the Corporate Debtor (“CD”) from Dewan Housing Finance Limited (“DHFL”) was 06.12.2016. However, DHFL itself was admitted into CIRP on 03.12.2019. Thereafter, the resolution plan of Piramal Capital & Housing Finance Limited (“PCHFL”) was approved in the CIRP of DHFL on 07.06.2021 and PCHFL then assigned the loan availed by CD from DHFL to Omkara Asset Reconstruction Private Limited (“Omkara ARC”) on 10.01.2023. Meanwhile on 23.12.2021 the National Company Law Tribunal (“NCLT”) had admitted the CIRP against the CD and moratorium was imposed (“First CIRP”), however the First CIRP was terminated on the ground of fraudulent initiation of CIRP on 29.07.2024. Thereafter, Omkara ARC filed another application under Section 7 of the Insolvency and Bankruptcy Code, 2016 (“IBC”) on 23.09.2024.

The court held that, since the date of default for the CD was 06.12.2016, hence the limitation period for filing Section 7 IBC application against the CD would have ended on 06.12.2019. However, the period ranging from 03.12.2019 to 07.06.2021 (when the resolution plan of PCHFL was approved in the CIRP of DHFL), 15.03.2020 to 28.02.2022 (Suo moto order by the Supreme Court excluding this period from limitation on account of Covid-19 pandemic), and 23.12.2021 to 29.07.2024 (time period of the First CIRP of the CD) are to be excluded from the calculation of limitation.

The court also observed that the admission of debt by the RP in the First CIRP of the CD would not amount to acknowledgement of liability as the admission of a debt by a RP is merely an administrative/ clerical task performed as part of its statutory duties and therefore, the admission of a debt by a RP is merely recital/ reference of debt. The court noted that in any event, the limitation period can only be extended when the acknowledgement is made within limitation period and there is a conscious and unequivocal intention to admit a subsisting jural relationship and an existing liability.

Footnote

1. 2026 INSC 429.

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