Admission Of Claims By Resolution Professional Not Acknowledgment Of Debt Under Limitation Act: SC

RP’s Role Is Administrative, Not Adjudicatory A bench comprising Justices Pamidighantam Sri Narasimha and Alok Aradhe held that admission of claims by a resolution professional (RP) is merely an administrative function and does not amount to acknowledgment of liability under Section 18 of the Limitation Act, 1963. The Court observed that the RP’s role is limited to collating and recording claims under the Insolvency and Bankruptcy Code (IBC), 2016, and such actions cannot be equated with a debtor admitting liability. Background The ruling came in appeals filed by Shankar Khandelwal against orders upholding insolvency proceedings initiated by Omkara Asset Reconstruction Pvt Ltd. The dispute originated from loans extended by Dewan Housing Finance Corporation Ltd in 2014. Following defaults, the accounts were classified as non-performing assets in December 2016. The loans were later assigned to Omkara after DHFL’s resolution in favour of Piramal Capital and Housing Finance Ltd. Limitation Dispute The central issue was whether limitation for initiating Corporate Insolvency Resolution Process (CIRP) under Section 7 of the IBC could be extended based on the RP’s admission of claims in a prior insolvency process. While the NCLAT had held that such admission constituted acknowledgment of debt—thus restarting the limitation clock—the Supreme Court rejected this view. Court’s Reasoning The Court clarified that acknowledgment under Section 18 of the Limitation Act must involve a conscious admission of liability by the debtor. Actions of an RP, who does not represent the debtor in that capacity, cannot fulfil this requirement. It further held that mere recording or updating of claims during CIRP proceedings is akin to referencing a debt and does not create a fresh limitation period. Implications The judgment reinforces stricter interpretation of limitation in insolvency cases, ensuring that procedural actions during CIRP do not inadvertently revive time-barred claims. It also clarifies the limited, non-adjudicatory role of resolution professionals under the IBC framework. (KNN Bureau)