{"file_name": "2024_10_1462_1474_EN.pdf", "text": "[2024] 10 S.C.R. 1462 : 2024 INSC 810\n\nVidyasagar Prasad \nv.  \nUCO Bank & Anr.\n\n(Civil Appeal No. 1031 of 2022)\n\n22 October 2024\n\n[Pamidighantam Sri Narasimha* and Sandeep Mehta, JJ.]\n\nIssue for Consideration\n\nWhether  specific  and  clear  acknowledgement  of  debt  by  the \nCorporate Debtor in its balance sheet is necessary while considering \nlimitation under Section 18 of the Limitation Act, 1963.\n\nHeadnotes†\n\nInsolvency  and  Bankruptcy  Code,  2016  –  s.238A  –  s.18  of \nLimitation Act – No specific and clear acknowledge of debt in \nthe balance sheet entries necessary while computing limitation \nu/s.18 Limitation Act r/w s.238A of the IBC:\n\nHeld:  It  was  contended  by  the  Appellant  that  there  is  no \nunequivocal, unambiguous and specific acknowledgement of debt \nowed  to  Respondent  –  Financial  Creditor  in  the  balance  sheet \nentries of Corporate Debtor for the years 2017 and 2019 – The \nCIRP  was  admitted  by  the  NCLT  on  the  ground  that  there  is \nacknowledgement  of  debt  in  the  balance  sheet  entries  as  well \nas Auditors Report for the year ending 31.01.2017 – The order \nof  admission  of  CIRP  affirmed  by  the  NCLAT  –  The Appellant \ncontended that the name of Financial Creditor in question is not \nspecifically  mentioned  in  the  relied  upon  entry  in  the  balance \nsheet – It was contended that in the absence of clear demarcation \nas to what the Corporate Debtor owes to the Financial Creditor \nin question, the balance sheet entries cannot be relied on for the \npurpose of extending the period of limitation in terms of Section \n18  of  the  Limitation Act  –  By  relying  on  Asset  Reconstruction \nCompany (India) Ltd. v. Bishal Jaiswal [2021] 3 SCR 524, the Civil \nAppeal filed by the Appellant was dismissed – The contention of \nthe Financial Creditor that there was no compulsion for Companies \nto  make  any  particular  admissions  in  the  balance  sheet  was \naccepted  by  the  Court  –  The  entry  made  in  the  balance  sheet \n\n* Author\n\n\f[2024] 10 S.C.R.  \n\n1463\n\ncoupled  with  the  note  of  the  auditor  of  the  Appellant  clearly \namounts to acknowledgement of the liability – The Court noted \nthat  the  Corporate  Debtor’s  proposal  of  One  Time  Settlement \n(OTS)  also  fortifies  the  case  against  the Appellant  –  The  Civil \nAppeal dismissed accordingly. [Paras 8-13]\n\nInsolvency and Bankruptcy Code, 2016; Limitation Act, 1963\n\nList of Acts\n\nList of Keywords\n\nAcknowledgement of debt; Limitation; CIRP; Admission of CIRP; \nBalance-Sheet; Entries in Balance Sheet.\n\nCase Arising From\n\nCIVIL APPELLATE JURISDICTION: Civil Appeal No. 1031 of 2022\n\nFrom the Judgment and Order dated 04.10.2021 of the National \nCompany  Law  Appellate  Tribunal,  New  Delhi  in  Company \nAppeal (AT) (Insolvency) No. 238 of 2020\n\nAppearances for Parties\n\nBalbir Singh, Sr. Adv., Sandeep Bajaj, Soayib Qureshi, Devansh \nJain, Naman Tandon, Ms. Vasudha Chadha, Advs. for the Appellant.\n\nPartha  Sil,  Tavish  Bhushan  Prasad,  Ms.  Sayani  Bhattacharya, \nAbhiraj Chaudhary, Srijit Datta, Gopal Prasad, Ms. Shalya Agarwal, \nDhananjaya Sud, Advs. for the Respondents.\n\nJudgment / Order of the Supreme Court\n\nJudgment\n\nPamidighantam Sri Narasimha, J.\n\n1.  By  the  present  appeal,  the  suspended  director  of  the  Corporate \nDebtor  assails  the  order  of  the  NCLAT1  affirming  the  order  of  the \nAdjudicating Authority2  admitting  the  application  under  Section  7  \n\n1 \n\n2 \n\nNational Company Law Appellate Tribunal in Company Appeal (AT) (Insolvency) No. 238 of 2020, dated \n04.10.2021.\n\nAdjudicating Authority/National Company Law Tribunal, Kolkata Bench, Kolkata order dated 13.12.2019 \nin CP No. 254/KB/2019.\n\nVidyasagar Prasad v. UCO Bank & Anr.\f1464 \n\n[2024] 10 S.C.R.\n\nof  IBC3  for  initiating  CIRP4  proceedings  against  the  Corporate  \nDebtor.\n\n2.  The  undisputed  facts  before  us  are  that  the  Corporate  Debtor \n(respondent  No.  2  herein),  now  represented  by  its  Insolvency \nResolution Professional (IRP), availed loan and credit facilities from \nUCO Bank (respondent No. 1 herein) and other consortium of banks \nunder agreements dated 21.06.2010, 30.08.2012, 19.07.2012 and \n31.12.2012. The said loan and other credit facilities were availed for \nfunding of Corporate Debtor’s Thermal Power Plant.\n\n2.1  Having defaulted on repayment of principal as well as interest \nlevied  thereupon,  Corporate  Debtor’s  account  was  declared \nas  Non-Performing  Asset  (NPA)  on  05.11.2014.  Further, \nproceedings  under  SARFAESI5 Act  and  DRT6  for  recovery  of \ndues were also initiated. However, we are not concerned with \nthese proceedings for disposal of the present appeal. \n\n3.  The root of the present controversy arose on 13.02.2019 when UCO \nBank filed an application under Section 7 of the Code to initiate CIRP \nproceeding  against  the  Corporate  Debtor  before  the Adjudicating \nAuthority (NCLT, Kolkata Bench). These proceedings were resisted \nby  the  Corporate  Debtor,  primarily  on  the  grounds  of  limitation. \nAdditionally,  the  Section  7  application  was  also  challenged  on  the \ngrounds that it was not signed by a competent person and also that \nthere is no liability to pay as per the terms of the agreement and as \nsuch there is no debt.\n\n4.  On  the  issue  of  competency  of  the  Bank  to  file  the  petition  under \nSection 7, the Adjudicating Authority held that the General Manager \nof Bank was legally authorized as attorney to do all acts and also act \non behalf of the Bank and he had the authority to sign the application. \nOn  the  issue  relating  to  the  existence  of  debt,  the  Adjudicating \nAuthority, examined the contract, the terms and conditions of sanction \nletter as well as the relevant credit agreements in detail and came \nto the conclusion that the amount was disbursed as a loan and the \nCorporate Debtor had in-fact defaulted in repayment of principal as \n\n3 \n\n4 \n\n5 \n\n6 \n\nInsolvency and Bankruptcy Code, 2016.\n\nCorporate Insolvency Resolution Process.\n\nSecuritization and Reconstruction of Financial Assets and Enforcement of Security Interest. \n\nDebts Recovery Tribunal.\n\nDigital Supreme Court Reports\f[2024] 10 S.C.R.  \n\n1465\n\nwell  as  interest  levied  thereupon.  Thus,  the  contention  that  there \nwas no debt was also rejected.\n\n4.1  The main objection to the initiation of CIRP proceedings on the \nground of limitation was rejected by the Adjudicating Authority \non  the  ground  that  there  is  an  acknowledgement  of  debt  in \nthe  financial  statements  as  well  as  auditor’s  report  of  the \nCorporate  Debtor  for  the  year  ending  on  31.03.2017.  On  the \nbasis of Section 238A of the Code, incorporating the Limitation \nAct,  the  Adjudicating  Authority  relied  on  Section  18  of  the \nLimitation Act to reckon the period of limitation from the date of \nacknowledgement of the debt and concluded that the institution \nof  CIRP  on  13.02.2019  is  within  the  period  of  limitation.  The \nfurther contention of the Corporate Debtor that name of UCO \nBank, the financial creditor, is not specifically mentioned in the \nrelied upon entry in the balance sheet was rejected by NCLT \nby  referring  to  the  Explanation  to  Section  7(1)  of  the  Code \nproviding  that the proceedings thereunder  get triggered  even \nin  the  case  of  a  default  by  debtor  in  respect  of  any  financial \ncreditor other than the applicant. \n\n5.  Aggrieved  by  the  admission  of  Section  7  application,  initiation  of \nCIRP and appointment of IRP, the appellant preferred an appeal to \nthe NCLAT, Principal Bench. The same arguments were advanced \nbefore  the  NCLAT  and  having  considered  the  same  in  detail,  the \nNCLAT dismissed the appeal with the following reasoning:\n\n“11.5 Therefore, in the instant case, the balance sheet that \nhas been brought on record in the instant case before the \nAdjudicating Authority  shall  be  taken  into  consideration \nwhile deciding the question of limitation and default on the \npart of the Corporate Debtor. The said documents cannot \nbe ignored simply on the premise that it is not pleaded in \nthe Application filed in Form-1 for initiation of the Corporate \nInsolvency Process. \n\n11.6 We find that the balance sheet for the financial year \nending on March 31 2017, was part of the record before \nthe learned Adjudicating Authority and was annexed with \nSection 7 Application, which was also duly admitted by the \nAppellant during the hearing. Subsequently, the balance \nsheet  for  the  financial  year  ending  will  March  31  2019, \n\nVidyasagar Prasad v. UCO Bank & Anr.\f1466 \n\n[2024] 10 S.C.R.\n\nwas  annexed  with  the  reply  filed  by  Respondent  No.  1 \nbefore this Hon’ble Tribunal on March 02, 2020. However, \nas  the  practice  and  procedure  of  this  Hon’ble  Tribunal, \nthe  same  was  not  accepted  at  the  filing  counter  without \nthe specific mention of this Hon’ble Tribunal. Accordingly, \na  copy  of  the Application  for  the  additional  document  is \nalso annexed as Annexure A. Subsequently; this Hon’ble \nTribunal permitted such additional documents to be taken \non record vide its Order dated July 15 2020.\n\n11.7  The  Company’s  balance  sheet  is  prepared  in  the \nstatutory  format  as  per  Schedule  3rd  of  the  Companies \nAct  2013,  which  does  not  provide  for  giving  the  specific \nname of every secured or unsecured creditor.\n\n11.8 It is further observed that the Corporate Debtor has \nnot denied that there are no outstanding dues to the UCO \nBank. A perusal of extract of register of charges submitted \nwith ROC, at Sr. No. 3, shows that a charge of rupees one \nhundred and seventy-five crores created by the Corporate \nDebtor has not been satisfied and remains outstanding.\n\n11.9 After  the  judgement  of  Hon’ble  Supreme  Court  in \ncase Asset  Reconstruction  Company  (India)  Limited  v. \nBishal  Jaiswal  (supra),  it  is  settled  that  entries  in  books \nof accounts and/or balance sheets of a Corporate Debtor \nwould amount to an acknowledgement under Section 18.\n\n11.10 In the instant case, we also find that the Corporate \nDebtor  issued  a  letter  dated  June  07  2016  (Annexure A \nPage 11 of their reply affidavit of R-1) wherein it has given \nOTS  proposal.  Based  on  the  ratio  of  the  judgement  of \nHon’ble Supreme Court in the case of Lakshmirattan Cotton \nMills  Co  Ltd  and  further  reiterated  in  Dena  Bank’s  case \n(supra)  that  there  is  an  acknowledgement  of  subsisting \nliability  of  the  Corporate  Debtor.  However,  it  may  not \nnecessarily  specify  the  exact  nature  of  the  liability.  But \nit indicates the jural relation between the parties, and in \nany event, the same can also be derived by implication. \nFurther, the said Letter is not “without prejudice” basis and, \ntherefore, amounts to an unequivocal acknowledgement \nof  liability  of  the  Corporate  Debtor.  A  reading  of  the \n\nDigital Supreme Court Reports\f[2024] 10 S.C.R.  \n\n1467\n\ndocuments above reveals that the Corporate Debtor has \nacknowledged/subsisting liability to attract the provisions \nof Section 18 of the Limitation Act, 1963. \n\n11.11 Based on the discussion as above, we think that the \npresent Appeal is liable to be dismissed, and the interim \nOrder dated April 07, 2020, is exposed to vacated.”\n\n6.  Mr. Balbir Singh, senior counsel appearing on behalf of the appellant \nhas  emphatically  argued  only  one  point  before  us.  It  is  that  there \nis  no  clear  and  unequivocal  acknowledgement  of  debt  of  the \nCorporate Debtor in the entries of the balance sheets. If this is true, \nit  is  submitted,  then  the  financial  creditor  cannot  have  the  benefit \nof Section 18 of the Limitation Act to extend the period of limitation \nwhich commenced on 05.11.2014.\n\n7.  The commencement of a fresh period of limitation from the time of \nacknowledgement of the debt is part of the statutory scheme. Section \n238A of the Code extends the applicability of the provisions of the \nLimitation Act to the proceedings under the Code. With the extension \nof Limitation Act to the provisions of the Code, the benefit of Section \n18 of the Limitation Act dealing with the effect of acknowledgement \nof  a  debt  in  writing  applies.  Considering  the  same  issue  in  Laxmi \nPat Surana v. Union Bank of India7, the Court observed:\n\n“42. Notably, the provisions of the Limitation Act have been \nmade applicable to the proceedings under the Code, as far \nas may be applicable. For, Section 238-A predicates that \nthe provisions of the Limitation Act shall, as far as may be, \napply to the proceedings or appeals before the adjudicating \nauthority, NCLAT, the DRT or the Debt Recovery Appellate \nTribunal, as the case may be. After enactment of Section \n238-A IBC on 6-6-2018, validity whereof has been upheld \nby this Court, it is not open to contend that the limitation for \nfiling application under Section 7 IBC would be limited to \nArticle 137 of the Limitation Act and extension of prescribed \nperiod in certain cases could be only under Section 5 of \nthe Limitation Act. There is no reason to exclude the effect \nof  Section  18  of  the  Limitation Act  to  the  proceedings \ninitiated under the Code.\n\n7 \n\n(2021) 8 SCC 481.\n\nVidyasagar Prasad v. UCO Bank & Anr.\f1468 \n\n[2024] 10 S.C.R.\n\n43.  Ordinarily,  upon  declaration  of  the  loan  account/\ndebt  as  NPA  that  date  can  be  reckoned  as  the  date  of \ndefault  to  enable  the  financial  creditor  to  initiate  action \nunder Section 7 IBC. However, Section 7 comes into play \nwhen the corporate debtor commits “default”. Section 7, \nconsciously uses the expression “default” — not the date \nof notifying the loan account of the corporate person as \nNPA. Further, the expression “default” has been defined \nin  Section  3(12)  to  mean  non-payment  of  “debt”  when \nwhole or any part or instalment of the amount of debt has \nbecome due and payable and is not paid by the debtor or \nthe corporate debtor, as the case may be. In cases where \nthe  corporate  person  had  offered  guarantee  in  respect \nof  loan  transaction,  the  right  of  the  financial  creditor  to \ninitiate action against such entity being a corporate debtor \n(corporate guarantor), would get triggered the moment the \nprincipal  borrower  commits  default  due  to  non-payment \nof  debt.  Thus,  when  the  principal  borrower  and/or  the \n(corporate) guarantor admit and acknowledge their liability \nafter declaration of NPA but before the expiration of three \nyears  therefrom  including  the  fresh  period  of  limitation \ndue  to (successive) acknowledgments, it  is not possible \nto  extricate  them  from  the  renewed  limitation  accruing \ndue  to  the  effect  of  Section  18  of  the  Limitation  Act. \nSection 18 of the Limitation Act gets attracted the moment \nacknowledgment  in  writing  signed  by  the  party  against \nwhom such right to initiate resolution process under Section \n7 IBC enures. Section 18 of the Limitation Act would come \ninto  play  every  time  when  the  principal  borrower  and/or \nthe  corporate  guarantor  (corporate  debtor),  as  the  case \nmay be, acknowledge their liability to pay the debt. Such \nacknowledgment, however, must be before the expiration \nof  the  prescribed  period  of  limitation  including  the  fresh \nperiod  of  limitation  due  to  acknowledgment  of  the  debt, \nfrom time to time, for institution of the proceedings under \nSection 7 IBC. Further, the acknowledgment must be of a \nliability in respect of which the financial creditor can initiate \naction under Section 7 IBC.”\n\n(emphasis supplied)\n\nDigital Supreme Court Reports\f[2024] 10 S.C.R.  \n\n1469\n\n7.1 \n\nIn Dena Bank v. C. Shivakumar Reddy8 after reviewing the case \nlaw on the subject, this Court held;\n\n“138.  While  it  is  true  that  default  in  payment  of  a  debt \ntriggers the right to initiate the corporate resolution process, \nand a petition under Section 7 or 9 IBC is required to be \nfiled within the period of limitation prescribed by law, which \nin this case would be three years from the date of default \nby virtue of Section 238-A IBC read with Article 137 of the \nSchedule to the Limitation Act, the delay in filing a petition \nin the NCLT is condonable under Section 5 of the Limitation \nAct unlike delay in filing a suit. Furthermore, as observed \nabove Sections 14 and 18 of the Limitation Act are also \napplicable to proceedings under the IBC.\n\n…………\n\n140. To sum up, in our considered opinion an application \nunder  Section  7  IBC  would  not  be  barred  by  limitation, \non  the  ground  that  it  had  been  filed  beyond  a  period \nof  three  years  from  the  date  of  declaration  of  the  loan \naccount  of  the  corporate  debtor  as  NPA,  if  there  were \nan acknowledgment of the debt by the corporate debtor \nbefore expiry of the period of limitation of three years, in \nwhich case the period of limitation would get extended by \na further period of three years.”\n\n(emphasis supplied)\n\n7.2  A reference must also be made to a three Judge Bench decision \nin Rajendra Narottamdas Sheth v. Chandra Prakash Jain9 which \nsuccinctly observed;\n\n“27. It is no more res integra that Section 18 of the Limitation \nAct is applicable to applications filed under Section 7 of \nthe Code. In case the application under Section 7 is filed \nbeyond the period of three years from the date of default \nand the financial creditor furnishes the required information \nrelating to the acknowledgment of debt, in writing by the \n\n8 \n\n9 \n\n[2021] 8 SCR 1061 : (2021) 10 SCC 330\n\n[2021] 7 SCR 838 : (2022) 5 SCC 600\n\nVidyasagar Prasad v. UCO Bank & Anr.\f1470 \n\n[2024] 10 S.C.R.\n\ncorporate  debtor,  before  the  adjudicating  authority,  with \nsuch acknowledgment having taken place within the initial \nperiod  of  three  years  from  the  date  of  default,  a  fresh \nperiod  of  limitation  commences  and  the  application  can \nbe entertained, if filed within this extended period.”\n\n(emphasis supplied)\n\n8. \n\nIn  view  of  the  above  referred  principles,  we  will  now  consider  the \nnuanced arguments advanced by Mr. Balbir Singh that there is no \nunequivocal,  unambiguous  and  specific  acknowledgement  of  debt \nowed to UCO Bank in the balance sheet entries of Corporate Debtor \nfor the years 2017 and 2019. In the absence of clear demarcation as \nto what the Corporate Debtor owes to the UCO Bank, the said entries \ncannot be relied on for the purpose of extending the period of limitation \nin terms of Section 18 of the Limitation Act. Mr. Balbir Singh further \nargues that even if said entry is taken to be an acknowledgment of \ndebt, the same cannot aid respondent No.1’s case since it fails to \nmention the name of financial creditor.\n\n8.1  Mr.  Partha  Sil,  counsel  on  behalf  of  respondent  No.  1-Bank \nsubmitted that the Balance Sheets of a company are prepared \nin  the  prescribed  statutory  format  as  per  Section  129,  read \nwith Schedule III of the Companies Act 2013, which does not \nprovide for giving specific names of each and every Secured \nand Unsecured creditor. In support of his submission, Mr. Partha \nSil referred to the judgment in Asset Reconstruction Company \n(India) Ltd. v. Bishal Jaiswal10 where it was observed that there \nwas  no  compulsion  for  Companies  to  make  any  particular \nadmissions in the balance sheet, except for what is prescribed.\n\n9.  A  three  Judge  Bench  of  this  Court  in  Bishal  Jaiswal  (Supra)  has \n\naddressed and clarified this issue by holding that;\n\n“35. A perusal of the aforesaid sections would show that \nthere  is  no  doubt  that  the  filing  of  a  balance  sheet  in \naccordance  with  the  provisions  of  the  Companies Act  is \nmandatory, any transgression of the same being punishable \nby law. However, what is of importance is that notes that \nare annexed to or forming part of such financial statements \n\n10 \n\n[2021] 3 SCR 524 : (2021) 6 SCC 366.\n\nDigital Supreme Court Reports\f[2024] 10 S.C.R.  \n\n1471\n\nare expressly recognised by Section 134(7). Equally, the \nauditor’s  report  may  also  enter  caveats  with  regard  to \nacknowledgments made in the books of accounts including \nthe balance sheet. A perusal of the aforesaid would show \nthat the statement of law contained in Bengal Silk Mills Co. \nv. Ismail Golam Hossain Ariff, that there is a compulsion \nin  law  to  prepare  a  balance  sheet  but  no  compulsion  to \nmake  any  particular  admission,  is  correct  in  law  as  it \nwould depend on the facts of each case as to whether an \nentry made in a balance sheet qua any particular creditor \nis  unequivocal  or  has  been  entered  into  with  caveats, \nwhich then has to be examined on a case by case basis \nto establish whether an acknowledgment of liability has, \nin  fact,  been  made,  thereby  extending  limitation  under \nSection 18 of the Limitation Act.”\n\n(emphasis supplied)\n\n10.  Having considered the specific facts and circumstances of this case, \nthe Adjudicating Authority as well as the NCLAT have concurrently held \nthat the entries in the balance sheets amount to clear acknowledgment \nof debt. We agree with the findings. Further, Note 3.4 appended to \nsaid balance sheet entry dated 31.03.2017 mentions that “company \nhas made certain defaults in the repayment of term loans and interest.” \nIt further mentions of a continuing default. The entry also mentions \nlong-term  borrowings.  The  conclusions  of  NCLT  and  NCLAT  that \nthere is acknowledgment of debt are unimpeachable. \n\n10.1 Following  the  principles  as  expounded  in  the  case  of  Bishal \nJaiswal  (Supra),  the  Adjudicating  Authority  as  well  as  the \nNCLAT have examined the case in detail and have come to the \nconclusion  that  the  entry  made  in  the  balance  sheet  coupled \nwith the note of the auditor of the appellant clearly amounts to \nacknowledgement of the liability. We see no reason whatsoever \nto take a different view of the matter. Their findings are fortified \nwhen we examine the matter from another perspective.\n\n11.  Adjudicating Authority and NCLAT have also considered the Corporate \nDebtor’s proposal of One Time Settlement (OTS) to UCO Bank. The \nproposal made by letter dated 07.06.2016 acknowledges that there \nwere prior debts owed to UCO Bank. To substantiate the argument \nthat such OTS constituted acknowledgment of debt since it relates \n\nVidyasagar Prasad v. UCO Bank & Anr.\f1472 \n\n[2024] 10 S.C.R.\n\nto present and subsisting liability and indicates existence of a jural \nrelationship between the parties, UCO Bank relied on judgment of \nthis Court in Lakshmirattan Cotton Mills Co. Ltd. and Messrs Behari \nLal  Ram  Charan  v. Aluminium  Corporation  of  India  Limited11.  The \nimplication of a statement about a present and subsisting debt of a \nCorporate Debtor is articulated by this Court in the following manner;\n\n“9.  It  is  clear  that  the  statement  on  which  the  plea  of \nacknowledgment  is  founded  must  relate  to  a  subsisting \nliability as the section requires that it must be made before \nthe  expiration  of  the  period  prescribed  under  the Act.  It \nneed  not,  however,  amount  to  a  promise  to  pay,  for,  an \nacknowledgment does not create a new right of action but \nmerely extends the period of limitation. The statement need \nnot indicate the exact nature or the specific character of \nthe liability. The words used in the statement in question, \nhowever, must relate to a present subsisting liability and \nindicate  the  existence  of  jural  relationship  between  the \nparties,  such  as,  for  instance,  that  of  a  debtor  and  a \ncreditor and the intention to admit such jural relationship. \nSuch an intention need not be in express terms and can \nbe inferred by implication from the nature of the admission \nand the surrounding circumstances. Generally speaking, \na liberal construction of the statement in question should \nbe  given.  That  of  course  does  not  mean  that  where  a \nstatement is made without intending to admit the existence \nof jural relationship, such intention should be fastened on \nthe person making the statement by an involved and far-\nfetched reasoning…” \n\n(emphasis supplied) \n\n11.1  It  is  also  relevant  to  refer  to  judgment  in  Dena  Bank  (Supra) \n\nwhich held as follows:\n\n“139.  Section  18  of  the  Limitation  Act  cannot  also  be \nconstrued with pedantic rigidity in relation to proceedings \nunder  the  IBC. This  Court  sees  no  reason  why  an  offer \nof  one-time  settlement  of  a  live  claim,  made  within  the \n\n11 \n\n(1971) 1 SCC 67\n\nDigital Supreme Court Reports\f[2024] 10 S.C.R.  \n\n1473\n\nperiod  of  limitation,  should  not  also  be  construed  as  an \nacknowledgment  to  attract  Section  18  of  the  Limitation \nAct…”\n\n(emphasis supplied)\n\n12.  Both these factors, acknowledgment of debt in the balance sheet as \nwell as in the OTS proposal, have been considered by NCLAT while \ndismissing the appeal. The relevant portion of the NCLAT findings, \nafter considering balance sheet entries and OTS letter are as follows:\n\n“11.7  The  Company’s  balance  sheet  is  prepared  in  the \nstatutory  format  as  per  Schedule  3rd  of  the  Companies \nAct  2013,  which  does  not  provide  for  giving  the  specific \nname of every secured or unsecured creditor. \n\n11.8 It is further observed that the Corporate Debtor has \nnot denied that there are no outstanding dues to the UCO \nBank. A perusal of extract of register of charges submitted \nwith ROC, at Sr. No. 3, shows that a charge of rupees one \nhundred and seventy-five crores created by the Corporate \nDebtor has not been satisfied and remains outstanding. \n\n11.10 In the instant case, we also find that the Corporate \nDebtor  issued  a  letter  dated  June  07  2016  (Annexure A \nPage 11 of their reply affidavit of R-1) wherein it has given \nOTS  proposal.  Based  on  the  ratio  of  the  judgement  of \nHon’ble Supreme Court in the case of Lakshmirattan Cotton \nMills  Co  Ltd  and  further  reiterated  in  Dena  Bank’s  case \n(supra)  that  there  is  an  acknowledgement  of  subsisting \nliability  of  the  Corporate  Debtor.  However,  it  may  not \nnecessarily  specify  the  exact  nature  of  the  liability.  But \nit indicates the jural relation between the parties, and in \nany event, the same can also be derived by implication. \nFurther, the said Letter is not “without prejudice” basis and, \ntherefore, amounts to an unequivocal acknowledgement \nof  liability  of  the  Corporate  Debtor.  A  reading  of  the \ndocuments above reveals that the Corporate Debtor has \nacknowledged/subsisting liability to attract the provisions \nof Section 18 of the Limitation Act, 1963.” \n\n13.  Having  examined  the  matter  in  detail,  we  are  of  the  opinion  that \nthe findings arrived at by the Adjudicating Authority and NCLAT are \n\nVidyasagar Prasad v. UCO Bank & Anr.\f1474 \n\n[2024] 10 S.C.R.\n\ncorrect  in  law  and  fact.  We  find  no  merit  in  the  appeal.  The  Civil \nAppeal  No.  1031  of  2022  arising  out  of  the  NCLAT  order  dated \n04.10.2021  (Company Appeal  (AT)  (Insolvency)  No.  238  of  2020) \nis dismissed accordingly. \n\n14.  No order as to costs.\n\nResult of the Case: Appeal dismissed.\n\n†Headnotes prepared by:  Mukund P Unny, Hony. Associate Editor \n\n(Verified by: Liz Mathew, Sr. Adv.)\n\nDigital Supreme Court Reports\f"}