The NCLT has admitted an insolvency petition based on acknowledged debt in balance sheets, allowing the bank to proceed with CIRP despite earlier limitation objections.
Acknowledged Debt in Balance Sheets Saves Limitation Objection
The National Company Law Tribunal (NCLT) has admitted a Section 7 insolvency petition, allowing the bank to initiate Corporate Insolvency Resolution Process (CIRP) based on acknowledged debt shown in the balance sheets. The bank was directed to deposit ₹3 lakh for initial CIRP expenses.
This ruling indicates that previous limitation objections may be superseded when there is documented acknowledgment of debt, reflecting a significant shift in how limitations are approached in insolvency contexts.
Copies of the order have been dispatched to the Registrar of Companies and the Insolvency and Bankruptcy Board of India (IBBI) for documentation and dissemination. This precedent demonstrates the Tribunal's flexibility in restoring creditor rights based on substantive evidence of debt. Legal practitioners must consider the implications of this approach in advising clients regarding solvency assessments.
Citations
- NCLT Order (2026)
