The Supreme Court observed that the provisions of Section 18 of the Limitation Act are applicable to proceedings under the Insolvency and Bankruptcy Code, 2016.
An acknowledgement in a balance sheet without a qualification can furnish a legitimate basis for determining as to whether the period of limitation would stand extended, so long as the acknowledgement was within a period of three years from the original date of default, the bench comprising Justices DY Chandrachud and Surya Kant observed.
In this case, the National Company Law Tribunal rejected the application filed by the State Bank of India under Section 7 of the Insolvency and Bankruptcy Code, 2016 for initiation of the Corporate Insolvency Resolution Process on the ground of limitation. It held that a statement contained in the balance sheet cannot be treated as an acknowledgement of liability under Section 18 of the Limitation Act, 1963. While upholding this order, the National Company Law Appellate Tribunal held that recourse to Section 18 of the Limitation Act [Effect of acknowledgment in writing] was not available.
While considering the appeals filed against these orders, the Apex court bench noted that the judgments relied on by the NCLT/NCLAT has been specifically overruled by the Supreme Court. Referring to Laxmi Pat Surana v Union Bank of India (2021) 8 SCC 481, Asset Reconstruction Company (India) Limited v Bishal Jaiswal (2021) 6 SCC 366, Sesh Nath Singh v Baidyabati Sheoraphuli Coop. Bank Ltd. (2021) 7 SCC 313 and other judgments , the bench observed:
Therefore, the bench allowed the appeal and restored the proceedings back to the NCLT for fresh adjudication. Case details State Bank of India vs Krishidhan Seeds Private Limited | 2022 LiveLaw (SC) 497 | CA 910 of 2021 | 18 April 2022
Coram: Justices DY Chandrachud and Surya Kant Counsel: Sr. Adv Niranjan Reddy for appellant, Sr. Adv Shyam Divan for respondent