Bench Holds that Admission of Claim by Resolution Professional During CIRP Does Not Extend Limitation Period under Section 18 of Limitation Act, 1963; Petition Filed Beyond Three-Year Limitation Barred
In a significant ruling dated October 27, 2026, the National Company Law Appellate Tribunal (NCLAT), Principal Bench, New Delhi, in the appeal filed by Ms. Poonam Anoop Wadhera against Canara Bank, held that the admission of a financial claim by the Resolution Professional (RP) during the Corporate Insolvency Resolution Process (CIRP) does not amount to an acknowledgment of debt under Section 18 of the Limitation Act, 1963. Consequently, such admission cannot extend the limitation period for initiating insolvency proceedings against a personal guarantor.
The dispute arose from Canara Bank's application under Section 95(1) of the Insolvency and Bankruptcy Code (IBC), 2016, seeking initiation of insolvency resolution against the appellant, who was a personal guarantor to Frost International Limited, the corporate debtor. The bank contended that the debt default occurred on April 17, 2018, with the account classified as a Non-Performing Asset (NPA) on July 17, 2018. However, the insolvency petition was filed only on November 8, 2024, which was beyond the three-year limitation period prescribed under Article 137 of the Limitation Act.
The appellant challenged the maintainability of the petition on the ground of limitation, asserting that the claim was time-barred. The National Company Law Tribunal (NCLT), Mumbai Bench, had admitted the petition relying on the Resolution Professional's report which acknowledged the financial creditor's claim during the CIRP of the corporate debtor, holding that this acknowledgment extended the limitation period.
On appeal, the NCLAT examined the issue in light of the Hon'ble Supreme Court's recent authoritative judgment dated April 29, 2026, which overruled a prior NCLAT decision relied upon by the NCLT. The Supreme Court clarified that for an acknowledgment under Section 18 of the Limitation Act to extend the limitation period, it must:
- Be made by the party against whom the right is claimed or an authorized representative;
- Be made before the expiration of the prescribed limitation period; and
- Evince a conscious and unequivocal intention to admit an existing liability.
The Court emphasized that the RP's role is strictly administrative and involves collation and admission of claims for CIRP purposes. Admission of a claim by the RP is merely a clerical act without any adjudicatory power and does not constitute an acknowledgment of debt under Section 18. Therefore, such admission cannot operate to revive or extend a time-barred claim.
Considering the facts, the NCLAT noted that the petition was filed well beyond the three-year limitation period, even after accounting for the suspension of limitation during the COVID-19 pandemic as per the Suo Moto orders of the Supreme Court. The RP's admission of the claim in the CIRP of the corporate debtor, which commenced on February 9, 2023, did not qualify as a valid acknowledgment to extend limitation for the personal guarantor's insolvency petition.
The NCLAT accordingly set aside the impugned order of the NCLT and dismissed the insolvency petition filed by Canara Bank against Ms. Poonam Anoop Wadhera, ruling that the petition was barred by limitation and not maintainable. The Bench underscored that limitation is a jurisdictional and fundamental bar that cannot be bypassed in insolvency proceedings.
This ruling reinforces the legal position that administrative admission of claims in CIRP does not impact limitation for filing insolvency petitions, providing clarity to financial creditors and personal guarantors on limitation issues in insolvency resolution processes.
Bottom Line:
Admission of a claim by the Resolution Professional (RP) during the Corporate Insolvency Resolution Process (CIRP) does not constitute an acknowledgment of debt under Section 18 of the Limitation Act, 1963, and cannot extend the limitation period for filing insolvency proceedings.
Statutory provision(s):
Insolvency and Bankruptcy Code, 2016, Sections 61(1), 95, 100; Limitation Act, 1963, Section 18; SARFAESI Act, 2002, Section 13(2)
