Supreme Court: Admission Of Claim By Resolution Professional Does Not Amount To Acknowledgment Of Debt as per S 18 of limitation Act

The third issue pertains to legal character of the admission of a claim by the IRP/RP and whether such admission can be construed as admission of liability so as to extend the period of limitation Under Section 18 of the 1963 Act. At the outset, it must be noted that scope and ambit of Section 18 of the 1963 Act are well-settled. For a writing to constitute a valid acknowledgment, it must be made by the party against whom the right is claimed, or by a person duly authorized on its behalf; it must be made before the expiration of the prescribed period of limitation; and, most importantly, it must evince a conscious and unequivocal intention to admit a subsisting jural relationship and an existing liability. A mere reference to a past transaction or a bald recital of a debt, without an intention to admit liability, would not suffice. The said principle has been authoritatively enunciated by this Court6. The provisions of the Code and the Regulations were considered by this Court7 and it has been held that 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 Act9. Therefore, IRP's admission of secured financial creditors debt in first CIRP was not an acknowledgement Under Section 18 of 1963 Act. Accordingly, third issue is answered. {Para 16}

IN THE SUPREME COURT OF INDIA

Civil Appeal Nos. 13158-13159 of 2025

Decided On: 29.04.2026

Shankar Khandelwal Vs. Omkara Asset Reconstruction Pvt. Ltd. and Ors.

Hon'ble Judges/Coram:

Pamidighantam Sri Narasimha and Alok Aradhe, JJ.

Author: Alok Aradhe, J.

Citation: 2026 INSC 429,MANU/SC/0421/2026

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How to appreciate evidence if there is an acknowledgement of liability in the Company's balance sheet for extension of limitation as per S 18 of the Limitation Act?

 A perusal of the aforesaid Sections would show that there is no doubt that the filing of a balance sheet in accordance with the provisions of the Companies Act is mandatory, any transgression of the same being punishable by law. However, what is of importance is that notes that are annexed to or forming part of such financial statements are expressly recognised by Section 134(7). Equally, the auditor's report may also enter caveats with regard to acknowledgements made in the books of accounts including the balance sheet. A perusal of the aforesaid would show that the statement of law contained in Bengal Silk Mills (supra), that there is a compulsion in law to prepare a balance sheet but no compulsion to make any particular admission, is correct in law as it would depend on the facts of each case as to whether an entry made in a balance sheet qua any particular creditor is unequivocal or has been entered into with caveats, which then has to be examined on a case by case basis to establish whether an acknowledgement of liability has, in fact, been made, thereby extending limitation Under Section 18 of the Limitation Act.{Para 22}

IN THE SUPREME COURT OF INDIA

Civil Appeal No. 323 of 2021, 3228, 3765 of 2020, 

Decided On: 15.04.2021

 Asset Reconstruction Company (India) Limited

Vs. Bishal Jaiswal and Ors.

Hon'ble Judges/Coram:

Rohinton Fali Nariman, B.R. Gavai and Hrishikesh Roy, JJ.

Author: Rohinton Fali Nariman, J.

Citation: MANU/SC/0279/2021

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Whether the appellate court can remand a case if trial court has not correctly applied principles of acknowledgment of liability as per S 18 of limitation Act?

 Unfortunately NCLAT completely overlooked the pleadings revolving around the letter dated 28.09.2015 and the six cheques. The failure of the NCLAT as the first appellate authority to look into a very vital aspect such as this, vitiates its order, especially when NCLT has recorded a specific finding of fact on this.

{Para 8}

9. It is needless to point out that the law relating to the applicability of Section 18 of the Limitation Act, 1963 is fairly well settled. In Jignesh Shah and Anr. v. Union of India and Anr. MANU/SC/1319/2019 : (2019) 10 SCC 750, this Court pointed out that when time begins to run, it can only be extended in the manner provided in the Limitation Act. For holding so this Court made a reference to Section 18 of the Limitation Act. Though in Babu Lal Vardharji Gurjar v. Veer Gurjar Aluminium Industries Private Limited and Anr. MANU/SC/0589/2020 : (2020) 15 SCC 1, a two member Bench of this Court held that the reference in Jignesh Shah (supra) to Section 18 of the Limitation Act was only illustrative and that the ratio in B.K. Educational Services Private Limited v. Parag Gupta and Associates MANU/SC/1160/2018 : (2019) 11 SCC 633 did not stand altered by Jignesh Shah, no discordant note was struck. But the cloud of doubt created by Babu Lal (supra) was cleared subsequently in Laxmi Pat Surana v. Union Bank of India and Anr. MANU/SC/0221/2021 : (2021) 8 SCC 481. In Asset Reconstruction Co. (India) Limited v. Bishal Jaiswal and Anr. MANU/SC/0279/2021 : (2021) 6 SCC 366, this Court, while applying Section 18 of the Limitation Act, even went to the extent of holding that an entry in the balance sheet of the company could also be treated as an acknowledgment in writing, subject however to any caveat found in the accompanying reports.

10. The law as it has developed on the applicability of Section 18 of the Limitation Act and the circumstances in which it would apply, have also not been examined by NCLAT. Therefore, the order of NCLAT is liable to be set aside and the matter liable to be remanded back for a fresh consideration. 

 IN THE SUPREME COURT OF INDIA

Civil Appeal No. 4228 of 2020

Decided On: 29.03.2022

SVG Fashions Pvt. Ltd. (Earlier Known as SVG Fashions Ltd.)

Vs. Ritu Murli Manohar Goyal and Ors.

Hon'ble Judges/Coram:

Hemant Gupta and V. Ramasubramanian, JJ.

Author: V. Ramasubramanian, J.

Citation: MANU/SC/0370/2022

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How to ascertain limitation for partition suit filed under muslim law?

In the present case, it is apparent that until the year 1927 the appellant and the other parties were clearly kept out of the knowledge of the true character of the properties. Even after 1927 it cannot be said on the evidence on record that the appellant had any knowledge of the true character of the properties or ouster or adverse possession of Abdul Hai. The reasons are that Abdul Hai never alleged against the appellant and the other parties openly that he was enjoying the properties to the total exclusion of the appellant and the other brothers. Possession by one co-owner is not by itself adverse to other co-owners. On the contrary, possession by one co-owner is presumed to be the possession of all the co-owners unless it is established that the possession of the co-owner is in denial of title of co-owners and the possession is in hostility to co-owners by exclusion of them. In the present case there is no evidence to support this conclusion. Ouster is an unequivocal act of assertion of title. There has to be open denial of title to the parties who are entitled to it by excluding and ousting them.

20. Section 18 of the Limitation Act, 1908 provides that when a person having a right to institute a suit has by means of fraud been kept from the knowledge of such right or of the title on which it is founded, the time limited for instituting a suit against the person guilty of the fraud shall be computed from the time when the fraud first became known to the person affected thereby. In Rahimboy v. Turner 20 I.A. 1 Lord Hobhouse said "When a man has committed a fraud and has got property thereby it is for him to show that the person injured by his fraud and suing to recover the property has had clear and definite knowledge of those facts which constitute the fraud, at a time which is too remote to allow him to bring the suit". Therefore if the plaintiff desires to invoke the aid of Section 18 of the Limitation Act he must establish that there has been fraud and that by means of such fraud he has been kept from the knowledge of his right to sue or of the title whereon it is founded. In the present case, he have with reasonable diligence discovered it. There was active properties were Matrooka and not Dargah and Khankah. When Abdul Hai got the properties released by reason of the decision of the Government of the Nizam in the year 1927 the properties became divisible among the appellant and his brothers and sisters. The existence of the right of the appellant was kept concealed by Abdul Hal. The appellant was not aware of the right nor could he have with reasonable diligence discovered it. There was active concealment by Abdul Hai of the fact that the properties were not Dargah and Khankah having full knowledge of the fact. It was only in 1941 (1350 Fasli) that the appellant came to know of the Matrooka character of the properties. It was then that the appellant also came to know that Abdul Hai had kept the character of properties concealed from the parties and entirely misstated and misrepresented the character of the properties by misleading the parties and obtaining by consent an award and a decree thereon without any contest.

21. The cause of action for partition of properties is said to be a "perpetually recurring one" See Monsharam Chakravarty and Ors. v. Gonesh Chandra Chakravarty and Ors. MANU/WB/0404/1912 : 17 C.W.N. 521. In Mohammedan Law the doctrine of partial partition is not applicable because the heirs G are tenants-in-common and the heirs of the deceased Muslim succeed to the definite fraction of every part of his estate. The shares of heirs under Mohammedan Law are definite and known before actual partition. Therefore on partition of properties belonging to a deceased Muslim there is division by metes and bounds in accordance with the specific share of each heir being already H determined by the law.

22. In the present case the suit is for partition of properties which were by consent of parties treated as Dargah and Khankah but which were later discovered to be Matrooka properties in fact and therefore the declaration in the award and the decree on the award that those were Dargah and Khankah properties cannot stand and the entire partition is to be re-opened by reason of fraud in the earlier proceedings.

 IN THE SUPREME COURT OF INDIA

Civil Appeal No. 219 of 1967

Decided On: 17.02.1971

Syed Shah Ghulam Ghouse Mohiuddin and Ors.  Vs. Syed Shah Ahmed Mohiuddin Kamisul Quadri (Died) by Lrs. and Ors.

Hon'ble Judges/Coram:

A.N. Ray and G.K. Mitter, JJ.

Citation: AIR 1971 SC 2184,( 1971 ) 1 SCC 597,MANU/SC/0486/1971

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Whether an entry of debt made in the balance sheet can amount to an acknowledgement of liability as per S 18 of the Limitation Act?

 Going by the above provisions, a balance sheet is the statement of assets and liabilities of the company as at the end of the financial year, approved by the Board of Directors and authenticated in the manner provided by law. The persons who authenticate the document do so in their capacity as agents of the company. The inclusion of a debt in a balance sheet duly prepared and authenticated would amount to admission of a liability and therefore satisfies the requirements of law for a valid acknowledgement under S. 18 of the Limitation Act, even though the directors by authenticating the balance sheet merely discharge a statutory duty and may not have intended to make an acknowledgement.”

31. In Zest Systems Pvt. Ltd. v. Center for Vocational and Entrepreneurship Studies, 2018 SCC OnLine Del 12116, the Delhi High Court held:

“5. In Shahi Exports Pvt. Ltd. v. CMD Buildtech Pvt. Ltd. (supra) this court held as follows:— “7. It is hardly necessary to cite authorities in support of the well-established position that an entry made in the company's balance sheet amounts to an acknowledgement of the debt and has the effect of extending the period of limitation under section 18 of the Limitation Act, 1963. 

 6. In view of the legal position spelt out in judgments noted above, the acknowledgement of the debt in the balance sheet extends the period of limitation. The acknowledgement is as on 31.3.2015. This suit is filed in 2017. The suit is clearly within limitation. The present application is allowed.”

Supreme Court of India

Asset Reconstruction Company ... vs Bishal Jaiswal on 15 April, 2021

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Whether acknowledgement of liability in the balance sheet by a Company extends the period of limitation U/S 18 of limitation Act?

 In Zest Systems Pvt. Ltd. v. Center for Vocational and

Entrepreneurship Studies, 2018 SCC OnLine Del 12116, the Delhi High Court held:

“5. In Shahi Exports Pvt. Ltd. v. CMD Buildtech Pvt. Ltd. (supra)

this court held as follows:—

“7. It is hardly necessary to cite authorities in support

of the well-established position that an entry made in

the company's balance sheet amounts to an

acknowledgement of the debt and has the effect of

extending the period of limitation under section 18 of

the Limitation Act, 1963. However, I may refer to only

one decision of the learned single judge of this Court

(Manmohan, J.) in Bhajan Singh Samra v. Wimpy

International Ltd., 185 (2011) DLT 428 for the simple

reason that it collects all the relevant authorities on the

issue, including some of the judgments cited before me

on behalf of the petitioners. This judgment entirely

supports the petitioners on this point.”{Para 31}

6. In view of the legal position spelt out in judgments noted

above, the acknowledgement of the debt in the balance sheet

extends the period of limitation. The acknowledgement is as on

31.3.2015. This suit is filed in 2017. The suit is clearly within

limitation. The present application is allowed.”

32. In Agni Aviation Consultants v. State of Telangana, 2020 SCC

OnLine TS 1462 : (2020) 5 ALD 561, the High Court of Telangana held:

“107. In several cases, various High Courts have held that an

acknowledgement of liability in the balance sheet by a

Company registered under the Companies Act, 1956 extends

the period of limitation though it is not addressed to the creditor

specifically. (Zest Systems Pvt. Ltd. v. Center for Vocational

and Entrepreneurship Studies, 2018 SCC OnLine Del 12116,

Bhajan Singh Samra v. Wimpy International Ltd., 2012 SCC

OnLine Del 2939, Vijay Kumar Machinery and Electrical Stores

v. Alaparthi Lakshmi Kanthamma, (1969) 74 ITR 224 (AP), and

Bengal Silk Mills Company, Raja of Vizianagram v. Official

Liquidator, Vizianagram Mining Company Limited, AIR 1952

Mad 1361).

108. Therefore it is not necessary that the acknowledgement of

liability must be contained in a document addressed to the

creditor i.e. the petitioners in the instant case.”

33. It is, therefore, clear that the majority decision of the Full Bench in V. Padmakumar (supra) is contrary to the aforesaid catena of judgments.The minority judgment of Justice (Retd.) A.I.S. Cheema, Member (Judicial), after considering most of these judgments, has reached the correct conclusion. We, therefore, set aside the majority judgment of the Full Bench of the NCLAT dated 12.03.2020.

 REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO.323 OF 2021

ASSET RECONSTRUCTION COMPANY (INDIA) LIMITED 

Vs BISHAL JAISWAL 

Author: R.F. Nariman, J.

Dated:April 15, 2021.

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Whether cash payment simpliciter will qualify for extension of limitations U/S 18 and 19 of Limitation Act?

 The only other way in which the suit could have been within limitation was if the suit was based on an open, mutual and current account. An open, mutual and current account under Article 1 of the Limitation Act, 1963 would only exist if there are shifting balances vide Hindustan Forest Company v.. Lal Chand & Others, AIR 1959 SC 1349 and Kesharichand Jaisukhal v. Shillong Banking Corporation, AIR 1965 SC 1711. In the present case, it is seen that in fact the appellant/plaintiff has not filed a copy of its statement of account because what is filed are only individual entries and the same are called as statement of account. Even if we take the entries filed as being a statement of account, such entries do not show shifting balances and once there are no shifting balances, the statement of account relied upon by the appellant/plaintiff is thus not an open, mutual and current account. In fact, the witness of the respondent/defendant no. 1, Sh. Karan K. Luthra, has specifically deposed with respect to the account not being an open, mutual and current account in terms of para 4 of his affidavit by way of evidence dated 13.10.2004.

9. Finally it was argued that the suit is within limitation as respondent/defendant no. 1 is said to have paid a cash amount of Rs. 50,000/- on 29.05.1985, however, this argument is rejected because this cash entry in Ex. DW 1/2 is without any date with the fact that this cash entry is not in an account maintained by the respondent/defendant no. 1, but the entry is an entry in an account of the appellant/plaintiff and the copy of which was given to the respondent/defendant no. 1 and witness DW 1 has categorically and specifically denied any cash payment to the appellant/plaintiff as it is deposed by DW 1 that all payments to appellant/plaintiff have only been made by cheques. A cash payment simpliciter will not qualify for extension of limitations under Sections 18 and 19 of the Limitation Act, as it is not proved.

Delhi High Court

M/S Continental Advertising Pvt. ... vs M/S Karan & Co. on 15 October, 2018

CORAM:

HON'BLE MR. JUSTICE VALMIKI J.MEHTA 

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