Shankar Khandelwal v. Omkara Asset Reconstruction Pvt. Ltd., 2026

The dispute arose out of loan facilities originally sanctioned by Diwan Housing Finance Corporation Ltd. (DHFL) in 2014 to corporate borrowers.

Two loan accounts were involved, which later turned into Non-Performing Assets (NPA) on 06.12.2016, constituting the date of default.

After DHFL underwent Corporate Insolvency Resolution Process (CIRP), its loan portfolio was assigned to Omkara Asset Reconstruction Pvt. Ltd. (ARC).

Meanwhile, the corporate debtor companies were also subjected to a separate CIRP initiated by another creditor, during which a Resolution Professional (RP) was appointed.

In that CIRP, the RP admitted the creditor’s claim on 02.05.2022 and later updated it on 21.02.2024.

The earlier CIRP of the corporate debtor was subsequently set aside, restoring the creditor’s right to initiate fresh proceedings.

Thereafter, Omkara ARC filed Section 7 applications under IBC on 23.09.2024, relying on the RP’s claim admission to argue that limitation had been extended.

The appellant (erstwhile director) objected, contending that the application was barred by limitation under Article 137 of the Limitation Act (3 years from default).

NCLT admitted the application, and NCLAT upheld it, holding that RP’s admission constitutes acknowledgment under Section 18 of Limitation Act, thereby extending limitation

The Supreme Court held that the Resolution Professional (RP) has no adjudicatory power under the Insolvency and Bankruptcy Code.

The RP’s role is limited to receiving, verifying, and collating claims, which is a purely administrative and ministerial function under Section 18 of IBC.

Admission of a claim by RP is therefore only an entry or recording of debt, and not a legal determination of liability.

Such admission is equivalent to a clerical acknowledgment of existence of a claim, not an acknowledgment of liability by the corporate debtor.

For an acknowledgment under Section 18 of the Limitation Act, there must be:

• a conscious and voluntary admission of liability, and

• it must be made by the debtor or an authorised person,

• and crucially, it must be within the subsisting limitation period.

The Court held that RP’s admission fails all these conditions.

Therefore, RP’s act cannot constitute acknowledgment of debt under Section 18 Limitation Act.

The Court reaffirmed that limitation for Section 7 IBC applications begins from the date of default (06.12.2016).

Even after excluding:

• CIRP moratorium periods,

• COVID-19 exclusion period, and

• other statutory suspensions,
  the Court found that limitation had already expired by August 2024.

Hence, the Section 7 application filed on 23.09.2024 was clearly time-barred.

The Supreme Court therefore set aside the NCLAT judgment.

The Court strongly reinforced the principle that IBC operates within strict limitation discipline, preventing revival of stale debts.

It clarified a major confusion created by lower tribunals regarding RP’s role and legal effect of claim admission.

The ruling draws a clear boundary between:

• administrative acts (RP functions) and

• legal acknowledgments (debtor liability admission)

It prevents misuse of CIRP processes to extend limitation artificially through administrative entries.

The judgment strengthens the principle of commercial certainty and finality in insolvency law.

It also aligns with earlier jurisprudence that IBC is a time-bound, creditor-driven but legally structured recovery mechanism.