CIRP | Admission Of Claim By Resolution Professional Does Not Amount To Acknowledgment Of Debt: Supreme Court

The Supreme Court today set aside the NCLAT judgment which had held that admission of a creditor's claim by a resolution professional amounts to acknowledgment of debt and gives a fresh limitation period to file a application to initiate Corporate Insolvency Resolution Process under Section 7 of the Insolvency and Bankruptcy Code.

A bench of Justices Pamidighantam Sri Narasimha and Alok Aradhe held that admission of a claim by an interim resolution professional or resolution professional is only an administrative act and cannot be treated as acknowledgment of liability under Section 18 of the Limitation Act.

"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 Code8 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 1963 Act", the Court observed, relying on judgments in Committee of Creditors of Essar Steel India Ltd. v. Satish Kumar Gupta & Ors. (2020) and Prabhakaran & Ors. v. M. Azhagiri Pillai (2006).

The Court was dealing with appeals filed by Shankar Khandelwal, erstwhile director of Shrinathji Business Ventures Pvt Ltd and Sanwariyaji Business Ventures Pvt Ltd, against the National Company Law Appellate Tribunal which had upheld admission of insolvency proceedings initiated by Omkara Asset Reconstruction Pvt Ltd.

The NCLAT, on October 15, 2025, had dismissed appeals filed by Khandelwal and had upheld the orders of the National Company Law Tribunal admitting two separate Section 7 applications filed by Omkara Asset Reconstruction Pvt Ltd.

The case arose from two loans advanced by Diwan Housing Finance Corporation Ltd in September 2014 of Rs.12 crore, out of which Rs.11.50 crore was disbursed and a loan of Rs.11 crore, with Rs.9.50 crores. The borrower defaulted and the accounts were classified as non-performing assets on December 6, 2016.

DHFL itself was admitted into CIRP and its resolution was approved in favour of Piramal Capital and Housing Finance Ltd. The loans were later assigned to present respondent Omkara Asset Reconstruction Pvt Ltd.

Meanwhile, the corporate debtor was subjected to a separate CIRP initiated by a third party. During that process, Piramal filed its claim for those loans and the resolution professional admitted the claim on May 2, 2022 and later updated it on February 21, 2024. The CIRP was eventually set aside.

Omkara thereafter filed fresh applications for CIRP on September 23, 2024, stating the date of default as December 6, 2016.

Before the NCLT and NCLAT, the only defence raised by the appellant was limitation. It was argued that applications under Section 7 are governed by Article 137 of the Limitation Act, which prescribes a three-year period for filing applications where no specific limitation is provided.

According to the appellant, limitation began in November or December 2016 and expired in 2019. Even after excluding periods when limitation stood suspended, including the Covid-19 period covered by the Supreme Court's suo motu orders, the applications filed in late 2024 were beyond time.

The creditor contended that limitation stood extended as the admission of its claim by the resolution professional in the earlier CIRP amounted to acknowledgment of debt, thereby providing a fresh starting point for limitation.

The NCLAT accepted the creditor's case. It held that once a CIRP is admitted, the resolution professional takes over management of the corporate debtor under Sections 17 and 18 of the IBC, which vest control of the company in the resolution professional and require it to receive and collate claims from creditors. It also relied on Section 25 of the IBC, which requires the resolution professional to maintain and update the list of claims.

NCLAT held that admission of a claim by the resolution professional constitutes admission of liability by the corporate debtor. It further held that such admission satisfies the requirement of Section 18 of the Limitation Act, which extends limitation if acknowledgment of liability is made before expiry of the limitation period.

The NCLAT concluded that the admission of the claim on May 2, 2022 and its subsequent update on February 21, 2024 provided fresh starting points for limitation. It held that if limitation was computed from either of these dates, the CIRP applications filed in September, November and December 2024 were within time.

On this reasoning, the NCLAT dismissed the appeals and confirmed the NCLT's orders admitting the insolvency proceedings.

Supreme Court Verdict

The Supreme Court held that the right to apply for CRIP accrues on the date of default, which in this case was December 6, 2016, when the accounts were classified as NPA.

The Court then calculated the limitation period of three years excluding three periods - the CIRP of DHFL between December 3, 2019 and June 7, 2021, the Covid-19 period excluded by this Court's suo motu orders between March 15, 2020 and February 28, 2022 (with an additional 90 days from March 1, 2022), and the earlier CIRP of the corporate debtor between December 23, 2021 and July 29, 2024, during which a moratorium was in force, mandating exclusion from computation of limitation.

After excluding these periods, the Court found that only three days of limitation remained as on July 29, 2024, which expired on August 1, 2024. Since the CIRP application was filed on September 23, 2024, it was held to be barred by limitation.

On the issue of acknowledgment, the Supreme Court observed that for a valid acknowledgment under Section 18 of the Limitation Act, there must be a conscious and unequivocal admission of a subsisting liability by the debtor or an authorised person, made before expiry of limitation. The Court held that the role of the resolution professional under Section 18 of the IBC is limited to receiving and collating claims and does not involve adjudication. It held that such admission is akin to a reference to a debt and does not amount to acknowledgment of liability which could extend limitation under Section 18 of the Limitation Act.

The Court further observed that even otherwise, acknowledgment can extend limitation only if it is made within the subsisting limitation period. In the present case, the claim was admitted on May 2, 2022, which was beyond the original three year limitation period from the default, and therefore could not extend limitation.

The Court further held that even otherwise, acknowledgment can extend limitation only if it is made within the subsisting limitation period. Thus, the claim, that was admitted on May 2, 2022 could not extend limitation, the Court observed.

Case no. – C.A. No. 13158-13159/2025

Case Title – Shankar Khandelwal v. Omkara Asset Reconstruction Pvt. Ltd.

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