The Supreme Court has set aside orders initiating insolvency proceedings against two corporate entities, holding that the creditor’s application was filed beyond the legally permitted time.
Background of the Case
The appeals arose from orders of the National Company Law Tribunal (NCLT) and the National Company Law Appellate Tribunal (NCLAT), which had admitted petitions under Section 7 of the Insolvency and Bankruptcy Code, 2016 (IBC).
The case involved loans sanctioned in September 2014 by Dewan Housing Finance Corporation Ltd. (DHFL) to companies linked to the appellant, Shankar Khandelwal. The accounts were classified as Non-Performing Assets (NPA) on December 6, 2016, after defaults in repayment.
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Later, following DHFL’s own insolvency process, the debt was assigned to Omkara Asset Reconstruction Pvt. Ltd., which filed a fresh insolvency application on September 23, 2024.
The central question before the Court was whether the creditor’s application under Section 7 of the IBC was filed within the prescribed limitation period of three years.
A related issue was whether the admission of a claim by a Resolution Professional (RP) during an earlier insolvency process could extend the limitation period as an acknowledgment of debt.
The Court clarified that limitation begins from the date of default, which in this case was December 6, 2016—the date when the loan accounts were declared NPA.
“The right to apply accrues on the date of default,” the bench observed,
emphasizing that subsequent recovery actions do not reset this clock.
The Court carefully examined periods that could be excluded from limitation calculation, including:
- The insolvency proceedings against DHFL
- The Supreme Court’s COVID-19 extension orders
- The earlier CIRP initiated against the corporate debtor
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After accounting for these exclusions, the Court found that only three days remained in the limitation period after July 29, 2024 (when the earlier CIRP ended).
“The limitation period expired on August 1, 2024,” the Court noted, adding that the creditor filed the application much later, on September 23, 2024.
A crucial aspect of the ruling dealt with whether the admission of a claim by an Interim Resolution Professional (IRP) could extend limitation under Section 18 of the Limitation Act, 1963.
Rejecting this argument, the Court held that such admission is merely administrative.
“The admission of a claim by the RP is only a clerical exercise and does not amount to acknowledgment of liability,” the bench stated.
The Court explained that for a valid acknowledgment, there must be a clear and conscious admission of liability by the debtor—not a procedural step taken by an insolvency professional.
The Supreme Court held that the Section 7 application was filed beyond the limitation period and was therefore not maintainable.
It set aside the orders of both the NCLAT (dated October 15, 2025) and the NCLT (dated January 22, 2025).
“In view of the foregoing analysis, the impugned judgments are quashed and set aside,” the Court concluded.
The appeals were allowed, with no order as to costs.
Case Details
Case Title: Shankar Khandelwal v. Omkara Asset Reconstruction Pvt. Ltd. & Anr.
Case Number: Civil Appeal Nos. 13158–13159 of 2025
Bench: Justice Pamidighantam Sri Narasimha and Justice Alok Aradhe
Decision Date: April 29, 2026
