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 VerdictThe 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 ...

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

Amisha Shrivastava

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

Amisha Shrivastava

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Amisha Shrivastava

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