The Supreme Court has allowed two appeals filed by Shankar Khandelwal, the erstwhile director of Shrinathji Business Ventures Private Limited and Samaria Business Ventures Private Limited, and set aside the orders passed by the National Company Law Tribunal and the National Company Law Appellate Tribunal admitting petitions under Section 7 of the Insolvency and Bankruptcy Code, 2016. A bench comprising Justice Pamidighantam Sri Narasimha and Justice Alok Aradhe held that the applications filed by the secured financial creditor Omkara Asset Reconstruction Private Limited were barred by limitation.
The central question before the Court was whether the application under Section 7 of the Code filed by the secured financial creditor was within the period of limitation. The facts, as noted by the Court, are that two separate loans were sanctioned by Dewan Housing Finance Corporation Limited in September 2014 for sums of ₹12 crores and ₹11 crores, out of which ₹11.50 crores and ₹11 crores respectively were disbursed. The corporate debtors defaulted in repayment, and on December 6, 2016, DHFL classified their accounts as Non-Performing Assets. Subsequently, DHFL itself entered CIRP pursuant to proceedings initiated by the Reserve Bank of India, and on June 7, 2021, a resolution plan submitted by Piramal Capital & Housing Finance Limited was approved by the NCLT, Mumbai. On January 10, 2021, PCHFL assigned the subject loans to Omkara Asset Reconstruction Private Limited, the secured financial creditor.
Following the termination of the earlier CIRP, the secured financial creditor filed an application under Section 7 of the Code on September 23, 2024 against the corporate debtor. By order dated January 22, 2025, the NCLT held that the application was within limitation and admitted the same. The appellant challenged the aforesaid order in appeal. By order dated October 15, 2025, the NCLAT, inter alia, held that the admission of the claim by the Resolution Professional in the first CIRP against the corporate debtor on May 22, 2022 constituted a valid acknowledgment, and its subsequent updating on February 21, 2024 constituted a second acknowledgment. It was further held that, if limitation is computed from either of these dates, the debt is not time-barred. Accordingly, the NCLAT concluded that the petition under Section 7 of the Code was within limitation and affirmed the order of the NCLT.
Learned senior counsel for the appellant submitted that the date of default of corporate debtor was December 6, 2016 and the limitation would have expired on December 6, 2019. It is, however, submitted that the period of limitation remained suspended from December 3, 2019 to April 29, 2024 in view of mandate contained in Section 60(6) of the Code. However, the period of limitation expired three days after April 29, 2024, whereas, the petition under Section 7 of the Code was filed by the secured creditors on September 23, 2024, and was thus barred by limitation. It is further contended that admission of debt by an Interim Resolution Professional cannot be equated with an acknowledgment of liability under Section 18 of the Limitation Act, 1963. It is urged that the admission of claims is merely an administrative function of the IRP under Section 18 of the Code. It was argued that the IRP’s admission of the secured financial creditor’s claim in the first CIRP does not constitute an acknowledgment under Section 18 of the 1963 Act. Accordingly, it is submitted that the application under Section 7 of the Code was filed beyond the prescribed period of three years and is barred by limitation.
Learned senior counsel for the respondent no. 1, on the other hand, submitted that the period of limitation would commence from December 6, 2017 i.e., upon expiry of the period prescribed under Section 13(2) read with Section 13(4) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 expired. It is further submitted that in view of the order passed by this Court, the period from March 15, 2020 to February 28, 2022, is excluded from computation of limitation. It is pointed out that during the pendency of the first CIRP on May 2, 2022, IRP acknowledged the debt. It is contended that petition under Section 7 of the Code was within limitation.
The Supreme Court noted the relevant undisputed facts reflected in the chronology of events and held that it is well-settled in law that the limitation for filing an application under Section 7 of the Code is three years and is governed by Article 137 of the Limitation Act, 1963. An application under Section 7 of the Code is governed by Article 137 of the Limitation Act. The accrual of such right has been consistently interpreted by this Court to arise on the date of the default, that is, when the corporate debtor first fails to discharge its repayment obligations. The limitation begins to run from the date of classification of the account as NPA, being the date of default, and not from any subsequent proceeding initiated for recovery. In the instant case, it is not in dispute that accounts of the CD were declared NPA on December 6, 2016. Therefore, the right to file a petition under Section 7 of the Code accrued on December 6, 2016.
The Court observed that after reckoning three years from December 6, 2016 and excluding the periods of CIRP of DHFL, the Covid-19 extension of limitation period, and the earlier CIRP of the corporate debtor itself, only three days remain from July 29, 2024 which would expire on August 1, 2024. However, petition under Section 7 was filed on September 23, 2024 which is well beyond the period of limitation.
On the issue of whether admission of debt by an IRP amounts to acknowledgment of liability under Section 18 of the Limitation Act, the Supreme Court held that the scope and ambit of Section 18 of the Limitation 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 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 Limitation Act. Therefore, IRP’s admission of secured financial creditors debt in first CIRP was not an acknowledgment under Section 18 of the Limitation Act.
The Supreme Court further held that it is a well-settled legal proposition that an acknowledgment under Section 18 of the Limitation Act can only extend/renew a limitation period which has not already expired. Therefore, a limitation period can be extended only by an acknowledgment which is made within the period of limitation. In any case, the admission of claim of secured financial creditor by IRP on May 2, 2022 does not enure to the benefit of the secured financial creditor as the same was not made within the period of limitation.
In view of the foregoing analysis, the Supreme Court quashed and set aside the impugned judgment dated October 15, 2025 and order dated January 22, 2025 passed by NCLAT and NCLT respectively. In the result, the appeals were allowed. There shall be no order as to costs.
Case Title: Shankar Khandelwal v. Omkara Asset Reconstruction Pvt. Ltd. & Anr.
Citation: 2026 INSC 429
Coram: Justice Pamidighantam Sri Narasimha and Justice Alok Aradhe
Date of Judgment: April 29, 2026
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