Admission of a claim by a Resolution Professional does not constitute an acknowledgment of liability under Section 18 of the Limitation Act.

The Appellant was the Director of two Corporate Debtors (CDs) that defaulted on loans sanctioned by DHFL in 2014.

DHFL classified the accounts as Non-Performing Assets (NPA) on 06.12.2016.

Following the resolution of DHFL’s own insolvency, the debts were assigned to Respondent No. 1.

A first Corporate Insolvency Resolution Process (CIRP) against the CDs commenced on 23.12.2021 but was terminated on 29.07.2024 due to "fraudulent initiation".

Respondent No. 1 then filed a fresh Section 7 application under the Insolvency and Bankruptcy Code (IBC) on 23.09.2024.

Both the NCLT and NCLAT held the application was within limitation, treating the Resolution Professional’s (RP) admission of claims during the first CIRP as an "acknowledgment" under Section 18 of the Limitation Act.

1. Whether the period of limitation for filing a petition under Section 7 of the Code is to be reckoned from the date of NPA or the expiry of the SARFAESI notice period.

2. Whether the petition filed on 23.09.2024 was within the prescribed period of limitation.

3. Whether an admission of debt by an Interim Resolution Professional (IRP) constitutes an acknowledgment of liability under Section 18 of the Limitation Act, 1963.

The Court applied Article 137 of the Limitation Act, 1963, establishing a three-year limitation period from the date the "right to apply accrues"—defined as the date of default/NPA.

Section 60(6) of the IBC provides for the exclusion of the moratorium period when computing limitation.

Regarding Section 18 of the Limitation Act, the Court relied on Prabhakaran v. M. Azhagiri Pillai and Tilak Ram v. Nathu, holding that an acknowledgment must be a "conscious and unequivocal intention" to admit a subsisting jural relationship.

It further applied Swiss Ribbons (P) Ltd. v. Union of India and Committee of Creditors of Essar Steel, which establish that an RP/IRP performs purely administrative functions and lacks adjudicatory power.

The Court rejected the Respondents' argument that limitation begins after the SARFAESI notice period, affirming that the "date of default" is the date of classification as NPA (06.12.2016).

Calculating the timeline, the Court noted the three-year period would have expired on 06.12.2019. While certain periods were excluded—DHFL's CIRP, the Suo Motu COVID-19 extension, and the first CIRP moratorium—only three days of the limitation period remained after the first CIRP was terminated on 29.07.2024. Consequently, the limitation expired on 01.08.2024, making the filing on 23.09.2024 belated.

Crucially, the Court held that the IRP’s admission of a claim is a clerical/administrative task of "collating" debt and does not constitute a "voluntary acknowledgment" by the debtor. Since the IRP is not an authorized agent of the CD for the purpose of admitting liability, and the admission occurred after the original limitation had expired, it could not renew the limitation period.

The Court allowed the appeals, quashing the orders of the NCLAT and NCLT, and set aside the admission of the Corporate Insolvency Resolution Process.