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Shankar Khandelwalv.Omkara Asset Reconstruction Pvt Ltd & Anr

Citation:
2026 INSC 429
Date:
30 April 2026
Reading time:
15 min read

Legal Analysis: Shankar Khandelwal vs. Omkara Asset Reconstruction Pvt Ltd & Anr

Citation: 2026 INSC 429
Court: Supreme Court of India
Bench: Justice Pamidighantam Sri Narasimha and Justice Alok Aradhe (Division Bench)
Judgment Author: Justice Alok Aradhe
Date of Decision: April 29, 2026
Nature of Judgment: Civil Appeal under Section 62 of the Insolvency and Bankruptcy Code, 2016 against order of the National Company Law Appellate Tribunal (NCLAT) affirming admission of Section 7 petition.


Synopsis of the Judgment

The appellant (erstwhile director of the corporate debtors) challenged the admission of Section 7 petitions filed by a secured financial creditor (Omkara Asset Reconstruction Pvt. Ltd.) on the ground of limitation. The loans were sanctioned in September 2014, and the accounts were declared NPA on 06.12.2016. The Section 7 petitions were filed on 23.09.2024. The NCLT and NCLAT held that the petitions were within limitation, relying on (i) the CIRP of DHFL (original lender) from 03.12.2019 to 07.06.2021, (ii) the suo motu COVID‑19 exclusion of limitation from 15.03.2020 to 28.02.2022 (extended by 90 days), and (iii) the admission of debt by the Interim Resolution Professional (IRP) in the first CIRP of the corporate debtors. The Supreme Court reversed, holding that (a) limitation for a Section 7 petition commences from the date of default/NPA classification (06.12.2016); (b) after excluding the periods of moratorium under Section 60(6) of the IBC and the COVID‑19 exclusion, only three days remained from 29.07.2024, which expired on 01.08.2024; the petition filed on 23.09.2024 was time‑barred; and (c) admission of a claim by an IRP/RP is merely an administrative act under Section 18 of the IBC and does not constitute an acknowledgment of liability under Section 18 of the Limitation Act, 1963. The appeals were allowed, and the Section 7 petitions were dismissed as barred by limitation.


1. Basic Information of the Judgment

Field Details Case Title Shankar Khandelwal vs. Omkara Asset Reconstruction Pvt Ltd & Anr.Civil Appeal Nos.13158-13159 of 2025 Bench Justice Pamidighantam Sri Narasimha and Justice Alok Aradhe Judgment Author Justice Alok Aradhe Date of Decision April 29, 2026 Citation 2026 INSC 429 Appeal From Judgment dated 15.10.2025 of NCLAT, Principal Bench, New Delhi, affirming order dated 22.01.2025 of NCLT (Mumbai Bench)


2. Legal Framework

Laws and Provisions Involved:

  • Insolvency and Bankruptcy Code, 2016 (IBC): Section 7 (initiation of corporate insolvency resolution process by financial creditor), Section 60(6) (exclusion of moratorium period in computing limitation), Section 18 (duties of interim resolution professional – collation and admission of claims), Section 62 (appeal to Supreme Court).

  • Limitation Act, 1963: Article 137 (period of limitation for any other application – three years from when the right to apply accrues), Section 18 (effect of acknowledgment in writing – extends limitation).

  • Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act): Sections 13(2) and 13(4) (referred to for computing limitation from expiry of notice period – argument rejected).

Precedents Cited:

  • B.K. Educational Services Pvt. Ltd. v. Parag Gupta and Associates (2019) 11 SCC 668 – Limitation for Section 7 application is three years from the date of default (NPA classification).

  • Gaurav Hargovindbhai Dave v. Asset Reconstruction Company (India) Ltd. (2025) – Reaffirmed that limitation runs from the date of default, not from the date of assignment or SARFAESI notice.

  • Jignesh Shah v. Union of India (2022) – Exclusion of limitation due to COVID‑19 (suo motu orders).

  • State of Punjab v. M/s. Nathura Ram (dead) (2022) – Principles of acknowledgment under Section 18 of the Limitation Act.

  • Other precedents on the role of IRP/RP (not cited by name, but referred to in para 16).

What the Judgment is About: The judgment addresses the computation of limitation for filing a Section 7 application under the IBC. It clarifies that (i) the starting point is the date of default (NPA classification), not the date of expiry of SARFAESI notice; (ii) the admission of a claim by an IRP or RP in a CIRP is not an “acknowledgment of liability” under the Limitation Act; it is merely an administrative act that does not extend limitation; and (iii) the COVID‑19 exclusion and moratorium under Section 60(6) are to be excluded, but after such exclusion, if only a few days remain, the application must be filed within that short window – otherwise it is time‑barred.


3. Relevant Facts

  • Loans sanctioned (September 2014): Dewan Housing Finance Corporation Ltd. (DHFL) sanctioned loans of ₹12 crores and ₹11 crores to two corporate debtors (Shrinathji Business Ventures Pvt. Ltd. and Samaria Business Ventures Pvt. Ltd.). Disbursements were ₹11.50 crores and ₹11 crores respectively.

  • Default (06.12.2016): DHFL classified the loan accounts as Non‑Performing Assets (NPA).

  • CIRP of DHFL (03.12.2019 – 07.06.2021): DHFL itself entered CIRP. On 07.06.2021, the NCLT approved a resolution plan submitted by Piramal Capital & Housing Finance Ltd. (PCHFL).

  • Assignment (10.01.2021): PCHFL assigned the subject loans to Omkara Asset Reconstruction Pvt. Ltd. (secured financial creditor).

  • First CIRP of corporate debtors (23.12.2021 – 29.07.2024): The corporate debtors also underwent CIRP. During this CIRP, the IRP admitted the claim of the secured financial creditor on 02.05.2022. The CIRP was terminated by order of the NCLT on 29.07.2024.

  • Section 7 petition (23.09.2024): The secured financial creditor filed an application under Section 7 of the IBC against the corporate debtors.

  • NCLT order (22.01.2025): Admitted the Section 7 petition, holding it was within limitation.

  • NCLAT order (15.10.2025): Affirmed the NCLT, holding that the admission of claim by the IRP on 02.05.2022 and its updating on 21.01.2024 constituted acknowledgments under Section 18 of the Limitation Act, extending the limitation.

  • Appeal to Supreme Court: The erstwhile director (appellant) challenged the orders.


4. Issues

  1. Whether the period of limitation for filing a Section 7 petition under the IBC is to be reckoned from the date of default (NPA classification) or from the date of expiry of the notice period under SARFAESI Act (as argued by the respondent).

  2. Whether the application under Section 7 filed on 23.09.2024 was within the period of limitation after excluding the periods of moratorium under Section 60(6) of the IBC and the COVID‑19 exclusion orders.

  3. Whether the admission of a claim by an Interim Resolution Professional (IRP) or Resolution Professional (RP) in a CIRP constitutes an “acknowledgment of liability” under Section 18 of the Limitation Act, 1963, so as to extend the period of limitation.


5. Ratio Decidendi

  • Limitation for Section 7 petition commences from the date of default, not from SARFAESI notice: The Court held that Article 137 of the Limitation Act applies to applications under Section 7 of the IBC. The right to apply accrues on the date of default. Classification of an account as NPA is the recognised indicator of default. Therefore, the limitation period of three years begins from the date the account is declared NPA (06.12.2016), not from the expiry of any period under the SARFAESI Act (Para 13).

  • Computation of limitation after exclusions: The Court computed the timeline as follows (Para 14-15):
    Starting point: 06.12.2016. Limitation would expire on 06.12.2019.
    Moratorium under Section 60(6) of the IBC: The CIRP of DHFL was from 03.12.2019 to 07.06.2021. This period is excluded. However, the CIRP of DHFL started before 06.12.2019, but the Court noted that the limitation period had not yet expired when the moratorium began.
    COVID‑19 exclusion: The Supreme Court’s suo motu order excluded limitation from 15.03.2020 to 28.02.2022, with an additional 90 days thereafter.
    CIRP of the corporate debtors: From 23.12.2021 to 29.07.2024 – this period is also excluded under Section 60(6).
    After excluding all these periods, the remaining limitation period was only three days, which expired on 01.08.2024. The Section 7 petition was filed on 23.09.2024 – well beyond the extended limitation period. Hence, it was time‑barred (Para 15).

  • Admission of claim by IRP/RP is not an acknowledgment under Section 18 of the Limitation Act: The Court held that the role of an IRP or RP under Section 18 of the IBC is administrative – to collate and admit or reject claims based on documents. It does not involve any adjudicatory function. An admission of a claim by the IRP/RP merely means that the claim has been entered into the list of claims; it does not evince a conscious and unequivocal intention by the corporate debtor to admit a subsisting liability. Therefore, it does not satisfy the requirements of Section 18 of the Limitation Act, which requires an acknowledgment made by the party against whom the right is claimed (or its authorised agent). The IRP/RP is not an agent of the corporate debtor for the purpose of acknowledging liability. Moreover, even if it could be considered, the acknowledgment was made after the limitation period had already expired (02.05.2022), and an acknowledgment after the expiry of limitation cannot revive a time‑barred debt (Para 16-17).

  • Extended limitation period cannot be revived by subsequent events: The Court reiterated the settled principle that an acknowledgment under Section 18 of the Limitation Act can only extend a limitation period that has not already expired. If the original limitation period has expired before the acknowledgment, the acknowledgment is of no avail (Para 17).


6. New Legal Principles Established / Reiterated

  • Clarification that admission of claim by IRP/RP does not reset limitation: The judgment settles a recurring question in IBC jurisprudence: whether the act of an IRP or RP admitting a claim in a CIRP amounts to an “acknowledgment” under the Limitation Act, thereby extending the period of limitation. The Court unequivocally holds that it does not. This prevents creditors from using the administrative act of an IRP to revive time‑barred debts.

  • Computation of limitation under Section 7 after CIRP of the financial creditor and the corporate debtor: The judgment provides a practical illustration of how to compute limitation when there are overlapping CIRPs and COVID‑19 exclusions. It establishes that the exclusions under Section 60(6) are to be taken into account, but after such exclusions, the remaining period (however short) must be adhered to strictly.

  • Reiteration that limitation for Section 7 begins from NPA date, not from SARFAESI proceedings: The Court rejected the argument that limitation begins after the expiry of the notice period under Section 13(2) of the SARFAESI Act. This reaffirms the consistent view of this Court that the cause of action for a financial creditor to approach the NCLT under Section 7 arises on default, not on completion of other recovery procedures.


7. Court’s Analysis and Examination of Concepts

  • Examination of the chronology of exclusions: The Court carefully computed the timeline. It noted that the limitation period (three years from 06.12.2016) would have expired on 06.12.2019. However, on 03.12.2019, DHFL entered CIRP, and Section 60(6) of the IBC excludes the moratorium period. The Court also considered the COVID‑19 exclusion orders (15.03.2020 to 28.02.2022 plus 90 days) and the CIRP of the corporate debtors (23.12.2021 to 29.07.2024). The Court found that after excluding all these periods, only three days remained (from 29.07.2024 to 01.08.2024). The petition filed on 23.09.2024 was, therefore, time‑barred (Para 14-15).

  • Rejection of the acknowledgment argument: The Court distinguished between a judicial/adjudicatory admission and an administrative collation of claims. It observed that the IRP’s function under Section 18 of the IBC is to verify claims based on the records provided. The IRP does not act as a representative of the corporate debtor. An acknowledgment under Section 18 of the Limitation Act requires “a conscious and unequivocal intention to admit a subsisting jural relationship and an existing liability.” The IRP’s act of admitting a claim in the list of creditors does not carry such an intention; it is a mechanical process (Para 16).

  • Timing of acknowledgment: Even if one were to assume that the IRP’s admission could constitute an acknowledgment, the Court noted that the acknowledgment was made on 02.05.2022. The limitation period (even after exclusions) had already expired before that date. An acknowledgment made after the expiry of the limitation period cannot extend time – it is only the existing period that can be extended, not a period that has already elapsed (Para 17).

  • Rejection of NPA date vs. SARFAESI date: The respondent argued that limitation should begin from 06.12.2017 – when the notice period under Section 13(2) of SARFAESI Act expired after the NPA classification. The Court rejected this, holding that the right to apply under Section 7 accrues on the date of default, not on the completion of any statutory notice period under a different enactment (Para 13).


8. Critical Analysis

Strengths: The judgment provides much-needed clarity on two recurring issues in IBC litigation: (i) whether admission of a claim by an IRP/RP can extend limitation, and (ii) how to compute limitation when there are multiple overlapping moratorium periods. By holding that IRP/RP’s admission is not an acknowledgment, the Court prevents a potential abuse where creditors could rely on an administrative act of a third party (the IRP) to revive time‑barred claims. The strict computation of the remaining three days demonstrates judicial commitment to the Limitation Act even in the complex IBC framework.

Potential concerns: The judgment does not explicitly discuss the situation where the IRP’s admission might be based on a clear acknowledgment by the corporate debtor’s management (e.g., books of accounts showing the debt). In such a case, the admission might be evidence of acknowledgment by the corporate debtor itself, not by the IRP. However, the Court’s reasoning focuses on the act of the IRP, not on the underlying documents. The judgment could be read narrowly as applying only when the acknowledgment is solely by the IRP. Also, the computation of “only three days remaining” may be disputed by financial creditors in future with different factual matrices, but the principle is sound.

Practical impact: This judgment will be cited by corporate debtors and their directors to challenge Section 7 petitions that are filed long after the date of default but rely on IRP admissions during an earlier CIRP. It will also guide NCLT and NCLAT in computing limitation when there are multiple CIRPs and COVID‑19 exclusions. Financial creditors must now file Section 7 petitions promptly after the expiry of the limitation period as extended by statutory exclusions, and cannot rely on IRP admissions to reset the clock.


9. Final Outcome

Appeals allowed. The impugned judgment dated 15.10.2025 of the NCLAT and the order dated 22.01.2025 of the NCLT are quashed and set aside. The Section 7 petitions filed by the secured financial creditor (Omkara Asset Reconstruction Pvt. Ltd.) are held to be barred by limitation and are dismissed. No order as to costs.


10. Practical Application (Use in Court)

  • By corporate debtors/erstwhile directors: When a Section 7 petition is filed long after the date of default, and the financial creditor relies on an admission of claim made by an IRP in an earlier CIRP, argue that such admission does not constitute an acknowledgment under Section 18 of the Limitation Act. Cite this judgment to establish that the IRP’s act is merely administrative and cannot extend limitation. Also, request the court to compute the limitation period strictly, excluding only periods of moratorium under Section 60(6) and COVID‑19 exclusions, but no other.

  • By financial creditors: To avoid a limitation defence, file the Section 7 petition as soon as possible after the accrual of the right (i.e., within three years from the date of default/NPA). If there have been overlapping CIRPs or COVID‑19 exclusions, carefully compute the remaining limitation period. Do not rely on the IRP’s admission of claim in a previous CIRP as a tool to extend limitation – it will not be accepted. If the corporate debtor admits the debt in its books or correspondence (not through the IRP), preserve that evidence; that may constitute a valid acknowledgment under Section 18.

  • By NCLT/NCLAT: When computing limitation for Section 7 petitions, first determine the date of default (NPA classification). Then, apply Section 60(6) of the IBC to exclude periods during which a moratorium was in place against the corporate debtor. Also, apply the COVID‑19 exclusion orders if applicable. Do not treat an IRP’s admission of a claim as an acknowledgment under the Limitation Act. If the limitation period, after exclusions, has expired, dismiss the Section 7 petition as time‑barred.


11. Court Lines

“It is well-settled in law that the limitation for filing an application under Section 7 of the Code is three years and is governed by Article 137 of 1963 Act. … The accrual of such right has been consistently interpreted by this Court to arise on the date of the default, that is, when the corporate debtor first fails to discharge its repayment obligations.” (Para 13)

“After reckoning three years from 06.12.2016 and excluding the above referred periods, only three days remain from 29.07.2024 which would expire on 01.08.2024. However, petition under Section 7 was filed on 23.09.2024 which is well beyond the period of limitation.” (Para 15)

“The admission of a claim by the IRP/RP is merely an administrative/clerical task performed as part of its statutory duties under Section 18 of the Code 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.” (Para 16)

“It is a well-settled legal proposition that an acknowledgment under Section 18 of the 1963 Act can only extend/renew a limitation period which has not already expired.” (Para 17)


12. Legal Strategy Insight

For the corporate debtor/erstwhile director (appellant/defendant): In a Section 7 proceeding, immediately after notice, file a detailed reply highlighting the date of default. Obtain a certified copy of the loan documents and NPA classification. Compute the limitation period with precision, taking into account only the exclusions permitted by law (Section 60(6) IBC and COVID‑19 orders). If the financial creditor relies on the IRP’s admission of claim in a previous CIRP, cite this judgment to argue that it is not an acknowledgment. Request the NCLT to frame a preliminary issue on limitation. If the NCLT admits the petition despite limitation being time‑barred, appeal to the NCLAT and then to the Supreme Court under Section 62.

For the financial creditor (respondent/claimant): Do not delay filing a Section 7 petition after default. Keep track of the limitation period. If the corporate debtor undergoes CIRP, note that the period of CIRP is excluded under Section 60(6). However, after the CIRP terminates, you have only the remaining period left – act immediately. Do not rely on the IRP’s admission of your claim in the CIRP as a fresh starting point for limitation. Instead, if the corporate debtor has, through its directors or authorised officers, admitted the debt in writing (e.g., in balance sheets, emails, board resolutions), preserve those documents – they may constitute valid acknowledgments under Section 18. Also, maintain a clear chronological record of all events to assist the court in computing limitation correctly. If the limitation period is short, consider filing the Section 7 petition even before the termination of the corporate debtor’s CIRP (while the moratorium is in place – the petition can be filed, but no coercive action can be taken). The date of filing is what matters for limitation.

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