IRP/RP Admission of Claims Is Not “Acknowledgment” Under Section 18 Limitation Act; Section 7 IBC Limitation Runs From Date of NPA/Default

1. Introduction

The Supreme Court, in Shankar Khandelwal v. Omkara Asset Reconstruction Pvt. Ltd. (2026 INSC 429, decided on 29-04-2026), examined limitation in an application under Section 7 of the Insolvency and Bankruptcy Code, 2016 (“IBC”). The appellant (an erstwhile director of the corporate debtors) challenged the admission of two Section 7 petitions that had been upheld by the NCLAT.

Two loans (sanctioned in September 2014) were declared NPA on 06.12.2016. The financial creditor’s rights were later held by entities through DHFL’s own CIRP and eventual assignment to the respondent ARC. A prior CIRP against the corporate debtor (commenced 23.12.2021) was later terminated (29.07.2024) as fraudulently initiated. The respondent filed the present Section 7 petition on 23.09.2024.

Key issues framed by the Court:

  1. Whether limitation for Section 7 is to be reckoned from 06.12.2016 or 06.12.2017.
  2. Whether the Section 7 petition filed on 23.09.2024 was within limitation after exclusions.
  3. Whether admission of a claim by the IRP/RP amounts to an acknowledgment under Section 18 of the Limitation Act, 1963.

2. Summary of the Judgment

The Supreme Court allowed the appeals and set aside the NCLAT judgment (15.10.2025) and the NCLT admission order (22.01.2025). It held:

  • Limitation runs from the date of default/NPA (06.12.2016), not from a later SARFAESI-related date suggested by the creditor.
  • Even after excluding periods attributable to DHFL’s CIRP, the COVID limitation extension directions, and the corporate debtor’s moratorium period, the creditor had only three days remaining after 29.07.2024; the filing on 23.09.2024 was therefore time-barred.
  • IRP/RP’s admission of a claim is not an “acknowledgment” under Section 18 of the Limitation Act; it is an administrative act of collation, not a debtor’s conscious admission of liability.

3. Analysis

3.1 Precedents Cited

A. Limitation for IBC applications: Article 137 and “date of default”

  • BK Educational Services (P) Ltd. v. Paras Gupta & Associates, (2019) 11 SCC 633
    Recognised that IBC applications are governed by the Limitation Act; for Section 7, the relevant period is typically three years under Article 137 from when the “right to apply accrues”, i.e., the default. This supported the Court’s approach that the clock begins from the default/NPA date.
  • Gaurav Hargovindbhai Dave v. Asset Reconstruction Company (India) Ltd. & Anr., (2019) 10 SCC 572
    Reinforced strict application of limitation to Section 7 proceedings and cautioned against reviving stale claims by recasting the cause of action.
  • Babulal Vardharji Gurjar v. Veer Gurjar, (2020) 15 SCC 1
    Applied limitation principles rigorously in IBC; the case was invoked to resist attempts to shift the limitation trigger away from the actual date of default.
  • Tech Sharp Engineers Pvt. Ltd. v. Sanghvi Movers Ltd., (2023) 2 SCC 531
    Cited along with the above to maintain that default is the foundational trigger and that limitation must be computed accordingly.

B. What counts as “acknowledgment” under Section 18, Limitation Act

  • Prabhakaran & Ors. v. M. Azhagiri Pillai (Dead) by LRs. & Ors., (2006) 4 SCC 484, Tilak Ram & Ors. v. Nathu & Ors., 1966 SCC OnLine SC 99, Valliamma Champaka Pillai v. Sivathanu Pillai & Ors., (1979) 4 SCC 429
    These authorities were used to restate the settled essentials of Section 18: acknowledgment must be (i) in writing, (ii) made by the party against whom the right is claimed (or authorised agent), (iii) within limitation, and (iv) reflect a conscious, unequivocal admission of a subsisting jural relationship and liability. The Court relied on these to reject the proposition that a third-party statutory officer’s claim admission equals the debtor’s admission.

C. Nature of the RP/IRP role: administrative, not adjudicatory

  • Swiss Ribbons Private Limited & Anr. v. Union of India & Ors., (2019) 4 SCC 17
    Cited for the broader structural understanding of IBC roles; relevant here to demarcate that the RP’s tasks are largely facilitative/administrative.
  • Committee of Creditors of Essar Steel India Ltd. through authorised signatory v. Satish Kumar Gupta & Ors., (2020) 8 SCC 531
    Relied on for the proposition that the RP’s function is not to adjudicate disputes like a court/tribunal; this supported the characterization of claim admission as a non-adjudicatory, administrative act.
  • Ajay Kumar Radheyshyam Goenka v. Tourism Finance Corporation of India Ltd., (2023) 10 SCC 545
    Used to underline that the RP collates claims and does not pronounce on legal liability in a manner that could bind parties as an “admission.”

D. Acknowledgment cannot revive an already time-barred claim

  • Kotak Mahindra Bank Ltd. v. Kew Precision Parts Pvt. Ltd. & Ors., (2022) 9 SCC 364, Laxmi Pat Surana v. Union Bank of India & Anr., (2021) 8 SCC 481, Reliance Asset Reconstruction Co. Ltd. v. Hotel Poonja International Pvt. Ltd., (2021) 7 SCC 352, M/s. Airen and Associates v. M/s. Sanmar Engineering Services Ltd., 2025 SCC OnLine SC 1562
    These cases were invoked to reaffirm a foundational limit of Section 18: it can only extend a running limitation period; it cannot resurrect a claim once limitation has expired. This was decisive because the Court held (i) RP admission is not acknowledgment, and (ii) in any event, the supposed “acknowledgment” occurred after expiry.

E. COVID-related exclusion of limitation

  • Cognizance For Extension of Limitation, In Re; (2022) 3 SCC 117
    The Court applied the Supreme Court’s suo motu directions excluding time from 15.03.2020 to 28.02.2022 and the further extension thereafter, but found that even with this exclusion, the Section 7 filing was late.

3.2 Legal Reasoning

A. The limitation trigger: 06.12.2016 (NPA/default), not 06.12.2017

The creditor argued for a later trigger linked to SARFAESI timelines (Section 13(2) read with Section 13(4) of the SARFAESI Act, 2002). The Court rejected this and held that the “right to apply” under Article 137 accrues on the date of default. Since the loan accounts were declared NPA on 06.12.2016, limitation started then.

B. Exclusions, but still time-barred

Starting from 06.12.2016, the three-year limitation would ordinarily expire on 06.12.2019. The Court then excluded periods it treated as intervening:

  • DHFL’s CIRP period (from 03.12.2019 to 07.06.2021);
  • the COVID limitation exclusion period (from 15.03.2020 to 28.02.2022, plus the additional period noted by the Court);
  • the corporate debtor’s own CIRP/moratorium period (from 23.12.2021 to 29.07.2024) under Section 60(6) IBC.

After these exclusions, the Court found that only three days of limitation remained after 29.07.2024, expiring on 01.08.2024. The Section 7 filing on 23.09.2024 was therefore beyond limitation.

C. Why RP/IRP claim admission is not Section 18 acknowledgment

The NCLAT treated the RP’s admission/updating of the creditor’s claim as “acknowledgments” that refreshed limitation. The Supreme Court reversed this holding on principle:

  • Section 18 requires an acknowledgment by the debtor (or authorised agent) evidencing a conscious admission of liability.
  • An IRP/RP, while collating/admitting claims, performs a statutory administrative function under the IBC; this act is “induction/entry” of a claim, not a debtor’s admission.
  • The RP has no adjudicatory power on the existence of liability in the Section 18 sense; therefore, RP admission is akin to a mere reference/recital of debt, insufficient under Section 18.
  • Additionally, Section 18 cannot extend limitation if the original period has already expired; thus, even on timing, the alleged acknowledgment would not assist.

3.3 Impact

  • Closes a common limitation workaround: Creditors cannot rely on a CIRP-era “claim admission” by an RP/IRP as an acknowledgment to refresh limitation. This strengthens the separation between (i) administrative claim collation within CIRP and (ii) debtor-driven acknowledgments under the Limitation Act.
  • Reinforces default/NPA as the anchor date: Attempts to postpone limitation by tying it to SARFAESI steps (like the 60-day period) will face greater scrutiny; the Court treats the IBC “right to apply” as accruing at default.
  • Greater diligence expected from assignees/ARCs: Entities acquiring debt must independently ensure limitation viability; assignment does not cure time-bar, and procedural developments in another process may not generate “acknowledgments.”
  • Moratorium exclusions are helpful but not infinite: Even where Section 60(6) and COVID exclusions apply, creditors must act immediately once excluded periods end; residual limitation may be extremely short.

4. Complex Concepts Simplified

  • Section 7 IBC: A financial creditor’s application to initiate CIRP against a corporate debtor upon “default.”
  • Article 137, Limitation Act: A residuary limitation provision (three years) applied to Section 7 applications; time runs from when the right to apply accrues.
  • NPA / Default date: The point when the borrower’s account is treated as non-performing due to non-payment; in this judgment, it is treated as the accrual date for Section 7.
  • Section 60(6) IBC: Excludes, from limitation computation, the period during which a moratorium is in place in relation to the relevant corporate debtor.
  • Section 18, Limitation Act (Acknowledgment): A written admission by the debtor (or authorised agent), made within limitation, acknowledging a subsisting liability—this can reset limitation. A third party’s record-keeping is not enough.
  • IRP/RP admission of claims: A step in CIRP where claims are collated/recorded; the Court treats it as administrative and not equivalent to a debtor admitting liability.

5. Conclusion

The judgment establishes a clear operational rule for limitation in IBC practice: (i) Section 7 limitation generally runs from the date of default/NPA; (ii) exclusions (moratorium/COVID) may pause the clock, but creditors must file within whatever residual time remains; and (iii) an IRP/RP’s admission of a claim is not an acknowledgment under Section 18 and cannot be used to refresh limitation.

By overturning the NCLAT’s “RP admission as acknowledgment” approach, the Court strengthens limitation discipline in insolvency filings and clarifies the distinct legal character of CIRP claim administration versus debtor acknowledgments under the Limitation Act.