Claim Admission is not Debt Acknowledgement: Supreme Court on RP’s Role & Limitation under the IBC

Introduction

The Hon’ble Supreme Court’s ruling in Shankar Khandelwal v. Omkara Asset Reconstruction Pvt. Ltd. & Anr.[i] is not merely another decision on limitation under the Insolvency and Bankruptcy Code, 2016 (‘IBC’). At its core, the judgment examines three interconnected questions: the scope of acknowledgement under s. 18 of the Limitation Act, 1963 (‘Limitation Act’), the institutional and non-adjudicatory role of the resolution professional (‘RP’) or interim RP (‘IRP’) during the corporate insolvency resolution process (‘CIRP’), and the distinction between procedural claim-verification processes under the IBC and substantive acknowledgements of liability capable of extending the limitation period.

While the immediate issue before the Court was whether the applications under s. 7 of the IBC were barred by limitation, the reasoning carries wider implications. By expressly holding that admission of claims by the IRP/RP is merely an administrative claim-verification process under the IBC and does not constitute acknowledgement of liability, the Supreme Court clarified a position that earlier decisions had only implied through characterization of the RP’s role as non-adjudicatory. The decision, therefore, sits at the intersection of IBC limitation jurisprudence, the scope of s. 18 of the Limitation Act, and the institutional role of the IRP/RP within the CIRP framework.

Brief Facts

• Shankar Khandelwal (‘Appellant’) was the erstwhile director of two corporate debtors (‘CDs’), namely, Shrinathji Business Ventures Pvt. Ltd. and Samaria Business Ventures Pvt. Ltd., to whom Dewan Housing Finance Corporation Ltd. (‘DHFL’) had sanctioned loan facilities in September 2014. Following defaults in repayment, the loan accounts were classified as non-performing assets (‘NPA’) on 06.12.2016. Thereafter, DHFL itself entered CIRP pursuant to proceedings initiated by the Reserve Bank of India (‘RBI’) and, upon approval of the resolution plan submitted by Piramal Capital & Housing Finance Ltd. (‘PCHFL’), the subject debts came to be assigned to Omkara Asset Reconstruction Pvt. Ltd., the secured financial creditor (‘FC’).

• Before the filing of the present s. 7 applications, a CIRP had also been initiated against the CDs on 23.12.2021. During that CIRP, the IRP/RP admitted the FC’s claim, and the said CIRP was subsequently terminated on 29.07.2024 on the ground of fraudulent initiation of CIRP.

• Subsequently, on 23.09.2024, the FC initiated proceedings under s. 7 of the IBC against the CDs. The National Company Law Tribunal (‘NCLT’) admitted the applications and held them to be within limitation. The National Company Law Appellate Tribunal (‘NCLAT’) affirmed the decision on the ground that, during an earlier CIRP of the CDs, the RP had admitted and updated the FC’s claims, which, according to the NCLAT, amounted to acknowledgements of liability under s. 18 of the Limitation Act.

• The Appellant challenged the NCLAT’s judgment before the Supreme Court, contending that admission of claims by the IRP/RP was merely an administrative and statutory exercise undertaken for purposes of CIRP administration and could not constitute an acknowledgement of liability so as to extend limitation under s. 18 of the Limitation Act. The Appellant further contended that the limitation period had expired before the filing of the s. 7 applications, even after giving the FC the benefit of exclusion under s. 60(6) of the IBC and the Supreme Court’s COVID-19 limitation orders.

• The FC, on the other hand, contended that the limitation ought to be computed from 06.12.2017, i.e., after expiry of the period prescribed under s. 13(2) read with s. 13(4) of the SARFAESI Act, 2002. The FC also contended that the admission of its claim by the IRP/RP during the first CIRP constituted acknowledgement of debt and, therefore, extended limitation under s. 18 of the Limitation Act.

  
  

Held

• The Supreme Court allowed the appeals and set aside the judgments of the NCLAT and NCLT. It held that the applications filed under s. 7 of the IBC were barred by limitation, and that admission of claims by an IRP/RP does not amount to acknowledgement of liability under s. 18 of the Limitation Act.

• The Court reiterated that limitation for proceedings under s. 7 of the IBC is governed by a. 137 of the Limitation Act and commences from the date of default, namely, the date on which the account is classified as NPA. Rejecting the FC’s contention that limitation would commence only after expiry of the SARFAESI notice period, the Court held that the right to initiate proceedings accrued on 06.12.2016 itself.

• The Court then considered the intervening exclusion periods. It noted that DHFL’s CIRP commenced on 03.12.2019 and continued until approval of the resolution plan on 07.06.2021; that the Supreme Court’s COVID-19 limitation orders excluded the period from 15.03.2020 to 28.02.2022 and further extended limitation by 90 days from 01.03.2022; and that, before expiry of the COVID extension, CIRP against the CDs commenced on 23.12.2021 and continued until 29.07.2024.

• After computing three years from 06.12.2016 and excluding the aforesaid periods, the Court held that only 3 days remained after 29.07.2024. Accordingly, the limitation expired on 01.08.2024, whereas the applications under s. 7 had been filed only on 23.09.2024. Consequently, the proceedings were held to be time-barred.

• The principal issue before the Court concerned whether admission and updation of claims by the IRP/RP during an earlier CIRP could amount to acknowledgement under s. 18 of the Limitation Act.

• The Court held that an acknowledgement under s. 18 of the Limitation Act requires a conscious and unequivocal admission of a subsisting jural relationship and existing liability by the party against whom the right is claimed, or by a person duly authorized on its behalf. Mere reference to a past transaction, or a bald recital of debt without an intention to admit liability, would not suffice.

• In that context, the Supreme Court relied upon earlier decisions such as Swiss Ribbons Pvt. Ltd. v. Union of India[ii], Committee of Creditors of Essar Steel India Ltd. v. Satish Kumar Gupta[iii], and Ajay Kumar Radheyshyam Goenka v. Tourism Finance Corporation of India Ltd.[iv], which had consistently characterized the RP’s role as administrative and non-adjudicatory. The Court observed that the IRP/RP merely collates and verifies claims in discharge of statutory duties under the IBC and does not adjudicate rights or liabilities between parties.

• Applying that principle, the Court held that admission of claims by the IRP/RP is merely part of the statutory claim-verification process undertaken for purposes of CIRP administration and therefore cannot constitute acknowledgement of liability under s. 18 of the Limitation Act. The Court clarified that such acts merely reflect or record claims for insolvency purposes and do not demonstrate any conscious intention on the part of the CD to admit liability.

• The Supreme Court also distinguished debtor-originated acknowledgements recognized in decisions such as Asset Reconstruction Company (India) Ltd. v. Bishal Jaiswal[v] and Dena Bank v. C. Shivakumar Reddy[vi]. Unlike balance sheet entries, OTS proposals, or other acknowledgements emanating from the CD itself or from persons acting in a manner attributable to the debtor, the IRP/RP’s actions are statutory acts undertaken in discharge of duties under the IBC and cannot readily be equated with a conscious and voluntary acknowledgement of liability by the CD itself.

• The Court additionally reiterated the settled principle that acknowledgement under s. 18 can extend the limitation only if it is made before the expiry of the original limitation period. In any event, the alleged admission of claim by the IRP/RP did not come to the FC’s benefit as it was not made within the period of limitation.

  
  

Our Analysis

What makes Shankar Khandelwal (supra) significant is not merely that the Supreme Court held the proceedings to be barred by limitation. The deeper importance of the judgment lies in the doctrinal clarity it brings to the legal character of the IRP/RP’s role under the IBC. Prior Supreme Court decisions, such as Swiss Ribbons (supra), Essar Steel (supra), and Ajay Kumar Goenka (supra), had consistently characterized the RP as performing administrative and facilitative functions within the CIRP framework rather than adjudicatory functions. However, those decisions had not directly examined whether admission of claims by the IRP/RP could amount to acknowledgement of liability under s. 18 of the Limitation Act. Shankar Khandelwal (supra) is therefore important because it expressly addresses that question.

This significance becomes clearer when viewed against the broader evolution of IBC limitation jurisprudence. In Babulal Vardharji Gurjar v. Veer Gurjar Aluminium Industries Pvt. Ltd.[vii], the Supreme Court had reaffirmed that an application under s. 7 of the IBC is governed by a. 137 of the Limitation Act, and that limitation ordinarily runs from the date of default. Thereafter, in Bishal Jaiswal (supra) and Shivakumar Reddy (supra), the Supreme Court adopted a more contextual approach to acknowledgement under s. 18 by recognizing that balance sheets, OTS proposals, and other debtor-originated materials may, depending on their contents and surrounding circumstances, be capable of extending limitation. The rationale underlying those decisions was that such acknowledgements emanated from, or were attributable to, the CD itself and reflected an admission of a subsisting jural relationship and liability.

The difficulty with extending that principle to CIRP claim admission lies in the fundamentally different role performed by the IRP/RP. Admission or updation of claims by the IRP/RP arises from a statutory claim-verification process undertaken for purposes of insolvency administration. The IRP/RP does not adjudicate disputes inter parties while processing claims under the IBC, and such acts cannot readily be equated with a conscious and voluntary acknowledgement of liability by the CD itself. In other words, there is a conceptual difference between a debtor acknowledging liability in its own books, correspondence, or settlement proposal, and an insolvency professional recording a claim for purposes of CIRP administration.

It is in this context that Shankar Khandelwal (supra) assumes doctrinal importance. The Supreme Court clarified that claim admission by the IRP/RP cannot constitute an acknowledgement under s. 18 because the IRP/RP merely performs statutory and administrative functions within CIRP. In effect, the judgment draws a sharper distinction between procedural insolvency administration and substantive acknowledgement of liability under limitation law.

This clarification is significant both doctrinally and practically. If RP claim admission were treated as an acknowledgement, limitation could effectively be extended through procedural acts undertaken during CIRP, even in the absence of any conscious admission by the CD itself. Such an approach would dilute the requirement under s. 18 that the acknowledgement must be made by the party against whom the right is claimed, or by a person duly authorized on its behalf, and must indicate an intention to admit liability. Further, acceptance or rejection of claims by the IRP/RP during CIRP is not sacrosanct and is often subject to judicial scrutiny and challenge before NCLT.

Lending further support to this decision is reg. 13 of the IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016. This regulation mandates the RP to verify every claim received within 7 days from the last date of receipt of claims and thereafter categorize the claims as acceptable and non-acceptable for the purposes of collation. This statutory function clearly demonstrates that the RP has no adjudicatory powers and merely collates and verifies claims for the Committee of Creditors in a time-bound manner. The Supreme Court has therefore rightly laid down that a third-party administrative act, performed by the IRP/RP in discharge of his statutory obligations, cannot revive or reset limitation under the IBC.

End Notes

[i] 2026 SCC OnLine SC 743 dated 29.04.2026.

[ii] 2019 SCC OnLine SC 73 dated 25.01.2019.

[iii] 2019 SCC OnLine SC 1478 dated 15.11.2019.

[iv] 2023 SCC OnLine SC 266 dated 15.03.2023.

[v] 2021 SCC OnLine SC 321 dated 15.04.2021.

[vi] 2021 SCC OnLine SC 543 dated 04.08.2021.

[vii] (2020) 15 SCC 1 dated 14.08.2020.

Authored by the Editorial Board at Metalegal Advocates. Views expressed are strictly personal and do not constitute legal opinion.