In the case of Vidyasagar Prasad vs. UCO Bank & Anr. 2024 INSC 810, the Supreme Court upheld the initiation of the Corporate Insolvency Resolution Process (CIRP) against a Corporate Debtor that defaulted on loan repayments to UCO Bank. The NCLT had approved the CIRP application, prompting the Corporate Debtor to appeal to the NCLAT. The Debtor argued that the absence of the financial creditor’s name in the balance sheet indicated a lack of acknowledgment of debt, which they claimed invalidated the extension of the limitation period under Section 18 of the Limitation Act, rendering the CIRP application time-barred.
The Supreme Court rejected these arguments, asserting that the entries in the balance sheet, along with the auditor’s notes and a One-Time Settlement (OTS) proposal, constituted a clear acknowledgment of the debt owed to the bank. Citing precedents from Asset Reconstruction Company (India) Ltd. v. Bishal Jaiswal and Lakshmirattan Cotton Mills Co. Ltd. v. Aluminium Corporation of India Ltd., the Court affirmed that a company’s balance sheet does not need to list every creditor by name to acknowledge debts. Consequently, the appeal was dismissed, reinforcing the principle that other documentation can suffice to establish acknowledgment for extending limitation periods.
