SN Law Chambers
Medchal, Hyderabad · Advocates & Consultants
Admission of Claim by Resolution Professional Is Not Acknowledgement of Debt Under Section 18 of the Limitation Act: NCLAT Delhi
No. Admission of a creditor’s claim by a Resolution Professional during the Corporate Insolvency Resolution Process does not amount to an acknowledgement of debt under Section 18 of the Limitation Act, 1963. It cannot be used to extend the limitation period for initiating insolvency proceedings against a personal guarantor under Section 95 of the Insolvency and Bankruptcy Code, 2016.
Key Takeaways
- An RP’s admission of a claim is only an administrative/clerical entry of the debt, not a conscious acknowledgement of liability.
- The Supreme Court settled this in Shankar Khandelwal v. Omkara Asset Reconstruction Pvt. Ltd. (2026 INSC 429, 29 April 2026).
- NCLAT Delhi applied the principle and set aside the admission of a Section 95 petition against the personal guarantor of Frost International Limited.
- Limitation for personal guarantors is calculated independently and often starts from the expiry of a valid demand/invocation notice.
- Valid acknowledgements under Section 18 must come from the debtor or guarantor (or a person properly authorised to bind them) within the original limitation period.
Facts of the Case: Poonam Anoop Wadhera v. Canara Bank
Canara Bank had extended working capital facilities to Frost International Limited in 2014 under a consortium arrangement. The facilities were secured, among other things, by personal guarantees. The corporate debtor’s account was classified as a non-performing asset on 17 July 2018. A demand notice under Section 13(2) of the SARFAESI Act was issued on 19 January 2019, calling upon the corporate debtor and the personal guarantors to pay within 60 days.
CIRP of the corporate debtor commenced on 9 February 2023. Canara Bank’s claim was verified and admitted by the Resolution Professional. A demand notice under the Personal Guarantor Rules was later issued, and the bank filed an application under Section 95 of the IBC against Poonam Anoop Wadhera on 8 November 2024. The NCLT Mumbai admitted the petition. The personal guarantor appealed to the NCLAT.
The appeal was numbered Company Appeal (AT) (Ins.) No. 666/2026. It was decided on 27 October 2026 by a Bench comprising Justice Yogesh Khanna (Officiating Chairperson) and Technical Member Barun Mitra.
What the NCLAT Held
The NCLAT allowed the appeal, set aside the NCLT order dated 6 February 2026, and dismissed the Section 95 petition as barred by limitation.
The Tribunal held that the admission of a claim by the Resolution Professional does not constitute an acknowledgement of debt under Section 18 of the Limitation Act. It relied on the Supreme Court’s decision in Shankar Khandelwal v. Omkara Asset Reconstruction Pvt. Ltd. (Civil Appeal Nos. 13158-13159 of 2025, decided 29 April 2026; 2026 INSC 429). In that judgment the Supreme Court had already overruled an earlier NCLAT view that treated RP admission as a valid acknowledgement.
The Supreme Court observed that an RP performs only administrative duties under Section 18 of the IBC. Admission of a claim is merely an induction or entry of the claim and is akin to a mere recital or reference of debt. It does not show a conscious and unequivocal intention to admit a subsisting liability. Therefore, it cannot extend limitation under Section 18 of the Limitation Act.
On the facts, the NCLAT calculated limitation from the expiry of the 60-day period under the 19 January 2019 SARFAESI notice (29 March 2019). After applying the COVID-related exclusion, the remaining period expired around 12 March 2024. The filing on 8 November 2024 was therefore time-barred. Limitation goes to the root of maintainability and must be independently examined by the Adjudicating Authority.
Legal Position: Section 18 of the Limitation Act and the Role of the RP
Section 18 of the Limitation Act provides that where, before the expiration of the prescribed period, an acknowledgement of liability is made in writing signed by the party against whom the right is claimed (or by a person through whom he derives title or liability), a fresh period of limitation begins from the date of the acknowledgement.
For an acknowledgement to be valid it must:
- be in writing and signed by the person against whom the claim is made or by a duly authorised person;
- be made before the original limitation period expires; and
- evince a conscious and unequivocal intention to admit a subsisting jural relationship and an existing liability.
An RP or IRP does not act as an agent of the corporate debtor for the purpose of admitting liability. The RP’s role under the IBC is to collate, verify and record claims for the administration of the CIRP. That statutory administrative act is not the same as a voluntary acknowledgement by the debtor.
The same principle applies when the question arises in proceedings against a personal guarantor. The RP’s admission of the bank’s claim in the corporate debtor’s CIRP does not bind the guarantor as an acknowledgement under Section 18.
Starting Point of Limitation for Personal Guarantors
Applications under Section 95 of the IBC are governed by Article 137 of the Limitation Act (three years from the date the right to apply accrues). For personal guarantors the date of default is determined by the terms of the guarantee deed and the mode of invocation.
In cases of on-demand or continuing guarantees, courts and tribunals have frequently treated a clear demand notice (including a Section 13(2) SARFAESI notice that specifically calls upon the guarantor to pay) as fixing the starting point once the notice period expires. This date can be different from the corporate debtor’s NPA date.
Periods of COVID-related exclusion and other statutory suspensions are applied where applicable, but they do not create a new cause of action. An acknowledgement made after limitation has already expired cannot revive a time-barred debt.
Common Mistakes and Practical Points
- Treating the RP’s list of creditors or claim admission as a fresh starting point of limitation.
- Relying only on the RP’s report under Section 99 without independently verifying limitation before the Adjudicating Authority.
- Assuming that the corporate debtor’s NPA date automatically governs the guarantor’s limitation.
- Filing a Section 95 application years after a valid invocation notice without a genuine acknowledgement signed by the guarantor (or someone authorised to bind the guarantor) within the original period.
- Confusing balance-sheet entries of the corporate debtor (which may amount to acknowledgement in appropriate cases) with the RP’s subsequent recording of the same debt.
Valid acknowledgements can still arise from the corporate debtor’s own balance sheets (subject to the tests laid down by the Supreme Court), one-time settlement proposals, part-payments, or other writings that clearly admit a subsisting liability. Those remain available; the RP’s administrative admission does not.
Relevance for Creditors and Guarantors in Telangana
Banks and financial institutions based in Hyderabad, Medchal and other parts of Telangana frequently advance consortium or bilateral facilities secured by personal guarantees. When the account turns NPA and SARFAESI or IBC remedies are pursued, the timing of the Section 95 application against the personal guarantor becomes critical.
Guarantors facing such applications can raise limitation as a threshold objection. Creditors must document valid invocations and any genuine acknowledgements carefully and file within the prescribed period. SN Law Chambers assists clients with the interplay of SARFAESI notices, personal guarantees and IBC proceedings before the NCLT and NCLAT.
Frequently Asked Questions
Does admission of a claim by the Resolution Professional extend limitation under the IBC?
No. Both the Supreme Court and the NCLAT have held that it is only an administrative act of recording the claim. It does not constitute an acknowledgement under Section 18 of the Limitation Act.
What is the difference between an RP’s admission and a valid acknowledgement under Section 18?
A valid acknowledgement must be a conscious, written admission of a subsisting liability by the debtor or a person authorised to bind the debtor, made before limitation expires. An RP’s claim admission is a statutory clerical function performed for CIRP administration and lacks that character.
From when does limitation start for a personal guarantor under Section 95?
Generally from the date the right to apply accrues, often the expiry of the period mentioned in a valid demand or invocation notice addressed to the guarantor. The precise date depends on the guarantee deed and the notice. It is not automatically the same as the corporate debtor’s NPA date.
Can balance-sheet entries still extend limitation?
Yes, in appropriate cases. The Supreme Court has held that entries in the balance sheet of a corporate debtor can amount to acknowledgement under Section 18, subject to the facts and any notes or qualifications. This is different from an RP’s later administrative recording of the claim.
Does this principle apply to Section 7 applications as well?
Yes. The Supreme Court’s decision in Shankar Khandelwal arose in the context of Section 7 applications. The NCLAT has now applied the same reasoning to a Section 95 petition against a personal guarantor.
What should a creditor do if the claim appears old?
Examine the date of default or invocation carefully, identify any genuine acknowledgements signed by the debtor or guarantor within the limitation period, apply applicable exclusions (such as COVID periods), and file within time. Relying solely on the RP’s claim admission is not sufficient.
How can a personal guarantor challenge a time-barred Section 95 petition?
Limitation can be raised before the Adjudicating Authority. The Authority must examine it independently. If the petition is admitted despite a clear bar of limitation, an appeal lies to the NCLAT under Section 61 of the IBC.
How SN Law Chambers Can Help
SN Law Chambers, with chambers at Medchal and practice in Hyderabad, advises and represents clients in insolvency matters under the IBC, including proceedings against personal guarantors, limitation objections, and the interface with SARFAESI actions. Consultations are available to examine the specific facts of a case, the date of default or invocation, and the available remedies. Contact the chambers for a factual discussion of your matter.
Sources / Legal Authorities
- Poonam Anoop Wadhera v. Canara Bank, Company Appeal (AT) (Ins.) No. 666/2026, NCLAT Delhi, 27 October 2026.
- Shankar Khandelwal v. Omkara Asset Reconstruction Pvt. Ltd., Civil Appeal Nos. 13158-13159 of 2025, Supreme Court, 29 April 2026, 2026 INSC 429.
- Insolvency and Bankruptcy Code, 2016, Sections 18, 95 and 238A.
- Limitation Act, 1963, Section 18 and Article 137.
- LiveLaw Biz report on the NCLAT decision.