NCLT Ahmedabad held that revival letters and financial statements toll limitation for IBC petitions under Section 7. Debt acknowledgment resets time for insolvency initiation.
Revival Letters Extend Limitation for Section 7 IBC Petition: NCLT Ahmedabad
The NCLT, Ahmedabad, admitted a Section 7 petition filed by a financial creditor against SE Transstadia Infrastructure Limited, holding that acknowledgment of debt through revival letters and audited financial statements kept the claim within limitation under the Insolvency and Bankruptcy Code, 2016.
The tribunal rejected objections relating to limitation, authority of claim assignment, and alleged pre-existing settlement. It observed that the financial statements explicitly recognized the outstanding debt, and revival letters issued by the corporate debtor constituted written acknowledgment under Section 18 of the Limitation Act, 1963, thereby resetting the limitation period.
This ruling reaffirms that ongoing financial disclosures and revival communications can serve as valid acknowledgments, extending the window for initiating CIRP. Practitioners must ensure such documents are preserved and cited in Section 7 petitions to overcome time-bar defenses.
Citations
- Insolvency and Bankruptcy Code, 2016, Section 7
- Limitation Act, 1963, Section 18
