The case where the company’s own books restarted the clock. Sit in the Gallery and watch a debt that looked dead come back to life. Step up to the Bar and learn the two admissions that reset limitation. Take the Bench and master the over-readings already loose in the market.
Most readers start in the Gallery — and climb before they realise it.
The loan. Between 2010 and 2012, UCO Bank and a consortium of banks fund a company’s thermal power plant — four loan agreements, serious money.
The default. Repayments stop. On 5 November 2014 the account is declared an NPA — a bad loan. Under the law of limitation, the bank now has, on the face of it, three years to bring an insolvency case.
The clock “runs out”. Three years from November 2014 is November 2017. The bank knocks on the insolvency court’s door only on 13 February 2019 — fifteen months “late”. The company’s suspended director sees the finish line: time-barred, case over.
The twist — the company’s own paper speaks. Two documents surface, both from the company’s side: a June 2016 letter offering the bank a one-time settlement, and the company’s own balance sheet for March 2017, whose Note 3.4 admits “certain defaults in the repayment of term loans and interest”.
The rule. In law, a written, signed admission of a debt — made before the deadline passes — restarts the three-year clock. And the admission doesn’t need the creditor’s name on it: company accounts follow a statutory format that never asks for names.
The verdict. Each paper had restarted the clock; February 2019 was comfortably in time. NCLT, NCLAT and finally the Supreme Court (22 October 2024) all agree. Appeal dismissed; the company stays in resolution.
Epilogue — the lesson every borrower learnt. Your own books can testify against you. A settlement offer without the words “without prejudice”, a candid note in the accounts — each one hands the creditor three more years. Every lender’s lawyer in India now reads balance sheets the way a prospector reads a riverbed.
The letter — the 7 June 2016 one-time settlement proposal. Offering to settle admits there is a debt; it never said “without prejudice”; and it came inside the original three-year window — so the clock restarted, running to June 2019.
The books — the 31 March 2017 balance sheet, whose Note 3.4 admitted “certain defaults in the repayment of term loans and interest”, echoed by the auditor’s report — so the clock restarted again, running to March 2020.
The petition of 13 February 2019 landed inside both windows. If you got both — you understood what the headlines missed: the bank didn’t win despite the delay; the company lost because of its own signatures.
A judgment is authority only for what it decides. Fix the questions before you read a single answer.
The bridge: does Section 18 of the Limitation Act — the acknowledgment rule — apply to a Section 7 IBC petition at all?
The books: can a balance-sheet entry acknowledge a debt when it never names the creditor — and when do entry, notes and auditor’s report add up to a clear admission?
The letter: does a one-time settlement proposal count as an acknowledgment that restarts the clock?
Two layers, so you always know whose voice you are reading: Our reading is this page’s interpretation — we state it and we stand behind it. The Court is the judgment verbatim, para-numbered from the certified copy; where the Court speaks through an earlier case, we name that case and the paragraph where this judgment quotes it.
Our readingLimitation travels with the Code. Section 238A imports the Limitation Act, and with it s. 18: a written, signed acknowledgment of the debt, made before expiry, starts a fresh three years. Three earlier benches had settled this; this judgment applies it (Para 7–7.2).
Our readingThe absence of the creditor’s name proves nothing: the balance sheet follows the statutory format of s. 129 and Schedule III of the Companies Act 2013, which never asks for creditor names. Whether an entry acknowledges is a case-by-case question — read the entry with its notes and the auditor’s report (Para 8.1–10).
Our readingOn these facts the books did acknowledge: the entry recorded long-term borrowings, Note 3.4 admitted defaults on the term loans and a continuing default, and the auditor’s report said the same. Entry + note + auditor’s report, read together, is a clear acknowledgment (Para 10–10.1).
Our readingA one-time settlement proposal is an acknowledgment: it relates to a present, subsisting debt and admits the debtor–creditor relationship — it need not promise to pay or spell out the exact liability. Made within the window, and without the words “without prejudice”, the 07.06.2016 letter restarted the clock by itself (Para 11–12).
Our readingWith two valid acknowledgments inside the window, the 13.02.2019 petition on a 05.11.2014 default was in time. The concurrent findings of the NCLT and NCLAT stand — the Court called them “unimpeachable” — and the appeal fails, with no order as to costs (Para 10, 13–14).
1 · The bridge is already built. Section 238A makes the Limitation Act apply to Code proceedings, and three benches — Laxmi Pat Surana, Dena Bank, Rajendra Sheth — had settled that s. 18 crosses the bridge with it. The Court refuses to reopen what is “no more res integra” (Para 7–7.2).
2 · Read the whole document. The single point argued — no “clear and unequivocal” acknowledgment — dies on a complete reading: the statutory format explains the missing name, and the entry never stood alone — Note 3.4 and the auditor’s report completed it (Para 8–10.1).
3 · Substance over form on the letter. An OTS offer of a live claim admits the debtor–creditor relationship; the construction is liberal, not pedantic — and the letter’s failure to say “without prejudice” left the admission unqualified (Para 11–12).
“We find no merit in the appeal.” Ten years after the default, the case was decided by the debtor’s own signatures — on its accounts, and on its settlement offer. — Para 13: concurrent findings of fact and law, affirmed at every level.
We read the certified copy end to end so you don’t repeat what the summaries got wrong. Both findings are checkable by anyone with the PDF.
Wrong. The framework the Court applied is Bishal Jaiswal’s: there is “no compulsion to make any particular admission”, entries can be “entered into with caveats”, and each case is examined on its own. Here the entry won because Note 3.4 and the auditor’s report made it clear — not because balance sheets acknowledge automatically.
The move: never cite this case bare — take the tribunal to the note and the auditor’s words. Defending, hunt the notes for qualifications: that is exactly where this authority runs out.
✓ verified against certified copy · Para 9–10.1Wrong. Section 18 extends a live clock; it never restarts a dead one. The acknowledgment “must be before the expiration of the prescribed period of limitation including the fresh period of limitation” — every reset here (June 2016, March 2017) landed inside a window still open.
The move: build the date chain before the argument — each acknowledgment must fall within the window the previous one opened. One gap, and the chain is broken for good.
✓ verified against certified copy · Para 7 (quoting Laxmi Pat Surana)A judgment is a tool with two edges. From the Bench you must see both — you will not always be on the same side of it.
Is there a writing signed by the debtor — balance sheet, annexed note, auditor’s report, OTS or settlement letter?s. 18 — “acknowledgment in writing signed by the party” (Laxmi Pat Surana, quoted at Para 7)
Does it admit a present, subsisting liability — expressly or by implication?Lakshmirattan, quoted at Para 11 — the jural relationship is enough; no promise to pay needed
Was it made before the current window closed — counting earlier valid resets?Laxmi Pat Surana, quoted at Para 7 — “must be before the expiration”
Is it free of neutralisers — “without prejudice” wording, denial caveats in the notes?Bishal Jaiswal, quoted at Para 9 — caveats are examined case-by-case
Answer the four questions to see whether the clock restarts under s. 18.