VIDYASAGAR PRASAD versus UCO BANK & ANR.
[2024] 10 S.C.R. 1462, Supreme Court of India, 2024
Outcome: Dismissed (Dismissed)
Segment: Issues
[2024] 10 S.C.R. 1462 : 2024 INSC 810
Vidyasagar Prasad 
v.  
UCO Bank & Anr.
(Civil Appeal No. 1031 of 2022)
22 October 2024
[Pamidighantam Sri Narasimha* and Sandeep Mehta, JJ.]
Issue for Consideration
Whether specific and clear acknowledgement of debt by the 
Corporate Debtor in its balance sheet is necessary while considering 
limitation under Section 18 of the Limitation Act, 1963.
Headnotes†
Insolvency and Bankruptcy Code, 2016 – s.238A – s.18 of 
Limitation Act – No specific and clear acknowledge of debt in 
the balance sheet entries necessary while computing limitation 
u/s.18 Limitation Act r/w s.238A of the IBC:
Held: It was contended by the Appellant that there is no 
unequivocal, unambiguous and specific acknowledgement of debt 
owed to Respondent – Financial Creditor in the balance sheet 
entries of Corporate Debtor for the years 2017 and 2019 – The 
CIRP was admitted by the NCLT on the ground that there is 
acknowledgement of debt in the balance sheet entries as well 
as Auditors Report for the year ending 31.01.2017 – The order 
of admission of CIRP affirmed by the NCLAT – The Appellant 
contended that the name of Financial Creditor in question is not 
specifically mentioned in the relied upon entry in the balance 
sheet – It was contended that in the absence of clear demarcation 
as to what the Corporate Debtor owes to the Financial Creditor 
in question, the balance sheet entries cannot be relied on for the 
purpose of extending the period of limitation in
terms of Section 
18 of the Limitation Act – By relying on Asset Reconstruction 
Company (India) Ltd. v. Bishal Jaiswal [2021] 3 SCR 524, the Civil 
Appeal filed by the Appellant was dismissed – The contention of 
the Financial Creditor that there was no compulsion for Companies 
to make any particular admissions in the balance sheet was 
accepted by the Court – The entry made in the balance sheet 
* Author
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Vidyasagar Prasad v. UCO Bank & Anr.
coupled with the note of the auditor of the Appellant clearly 
amounts to acknowledgement of the liability – The Court noted 
that the Corporate Debtor’s proposal of One Time Settlement 
(OTS) also fortifies the case against the Appellant – The Civil 
Appeal dismissed accordingly. [Paras 8-13]
List of Acts
Insolvency and Bankruptcy Code, 2016; Limitation Act, 1963
List of Keywords
Acknowledgement of debt; Limitation; CIRP; Admission of CIRP; 
Balance-Sheet; Entries in Balance Sheet.
Case Arising From
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 1031 of 2022
From the Judgment and Order dated 04.10.2021 of the National 
Company Law Appellate Tribunal, New Delhi in Company 
Appeal (AT) (Insolvency) No. 238 of 2020
Appearances for Parties
Balbir Singh, Sr. Adv., Sandeep Bajaj, Soayib Qureshi, Devansh 
Jain, Naman Tandon, Ms. Vasudha Chadha, Advs. for the Appellant.
Partha Sil, Tavish Bhushan Prasad, Ms. Sayani Bhattacharya, 
Abhiraj Chaudhary, Srijit Datta, Gopal Prasad, Ms. Shalya Agarwal, 
Dhananjaya Sud, Advs. for the Respondents.
Judgment / Order of the Supreme Court
Judgment
Pamidighantam Sri Narasimha, J.
1.	
By the present appeal, the suspended director of the Corporate 
Debtor assails the order of the NCLAT1 affirming the order of the 
Adjudicating Authority2 admitting the application under Section 7 
1	
National Company Law Appellate Tribunal in Company Appeal (AT) (Insolvency) No. 238 of 2020, dated
04.10.2021.
2	
Adjudicating Authority/National Company Law Tribunal, Kolkata Bench, Kolkata order dated 13.12.2019 
in CP No. 254/KB/2019.
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of IBC3 for initiating CIRP4 proceedings against the Corporate 
Debtor.
2.	
The undisputed facts before us are that the Corporate Debtor 
(respondent No. 2 herein), now represented by its Insolvency 
Resolution Professional (IRP), availed loan and credit facilities from 
UCO Bank (respondent No. 1 herein) and other consortium of banks 
under agreements dated 21.06.2010, 30.08.2012, 19.07.2012 and 
31.12.2012. The said loan and other credit facilities were availed for 
funding of Corporate Debtor’s Thermal Power Plant.
2.1	 Having defaulted on repayment of principal as well as interest 
levied thereupon, Corporate Debtor’s account was declared 
as Non-Performing Asset (NPA) on 05.11.2014. Further, 
proceedings under SARFAESI5 Act and DRT6 for recovery of 
dues were also initiated. However, we are not concerned with 
these proceedings for disposal of the present appeal. 
3.	
The root of the present controversy arose on 13.02.2019 when UCO 
Bank filed an application under Section 7 of the Code to initiate CIRP 
proceeding against the Corporate Debtor before the Adjudicating 
Authority (NCLT, Kolkata Bench). These proceedings were resisted 
by the Corporate Debtor, primarily on the grounds of limitation. 
Additionally, the Section 7 application was also challenged on the 
grounds that it was not signed by a competent person and also that 
there is no liability to pay as per the terms of the agreement and as 
such there is no
debt.
4.	
On the issue of competency of the Bank to file the petition under 
Section 7, the Adjudicating Authority held that the General Manager 
of Bank was legally authorized as attorney to do all acts and also act 
on behalf of the Bank and he had the authority to sign the application. 
On the issue relating to the existence of debt, the Adjudicating 
Authority, examined the contract, the terms and conditions of sanction 
letter as well as the relevant credit agreements in detail and came 
to the conclusion that the amount was disbursed as a loan and the 
Corporate Debtor had in-fact defaulted in repayment of principal as 
3	
Insolvency and Bankruptcy Code, 2016.
4	
Corporate Insolvency Resolution Process.
5	
Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest. 
6	
Debts Recovery Tribunal.
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Vidyasagar Prasad v. UCO Bank & Anr.
well as interest levied thereupon. Thus, the contention that there 
was no debt was also rejected.
4.1	 The main objection to the initiation of CIRP proceedings on the 
ground of limitation was rejected by the Adjudicating Authority 
on the ground that there is an acknowledgement of debt in 
the financial statements as well as auditor’s report of the 
Corporate Debtor for the year ending on 31.03.2017. On the 
basis of Section 238A of the Code, incorporating the Limitation 
Act, the Adjudicating Authority relied on Section 18 of the 
Limitation Act to reckon the period of limitation from the date of 
acknowledgement of the debt and concluded that the institution 
of CIRP on 13.02.2019 is within the period of limitation. The 
further contention of the Corporate Debtor that name of UCO 
Bank, the financial creditor, is not specifically mentioned in the 
relied upon entry in the balance sheet was rejected by NCLT 
by referring to the Explanation to Section 7(1) of the Code 
providing that the proceedings thereunder get triggered even 
in the case of a default by debtor in respect of any financial 
creditor other than the applicant. 
5.	
Aggrieved by the admission of Section 7 application, initiation of 
CIRP and appointment of IRP, the appellant preferred an appeal to 
the NCLAT, Principal Bench. The same arguments were advanced 
before the NCLAT and having considered the same in detail, the 
NCLAT dismissed the
appeal with the following reasoning:
“11.5 Therefore, in the instant case, the balance sheet that 
has been brought on record in the instant case before the 
Adjudicating Authority shall be taken into consideration 
while deciding the question of limitation and default on the 
part of the Corporate Debtor. The said documents cannot 
be ignored simply on the premise that it is not pleaded in 
the Application filed in Form-1 for initiation of the Corporate 
Insolvency Process. 
11.6 We find that the balance sheet for the financial year 
ending on March 31 2017, was part of the record before 
the learned Adjudicating Authority and was annexed with 
Section 7 Application, which was also duly admitted by the 
Appellant during the hearing. Subsequently, the balance 
sheet for the financial year ending will March 31 2019,
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was annexed with the reply filed by Respondent No. 1 
before this Hon’ble Tribunal on March 02, 2020. However, 
as the practice and procedure of this Hon’ble Tribunal, 
the same was not accepted at the filing counter without 
the specific mention of this Hon’ble Tribunal. Accordingly, 
a copy of the Application for the additional document is 
also annexed as Annexure A. Subsequently; this Hon’ble 
Tribunal permitted such additional documents to be taken 
on record vide its Order dated July 15 2020.
11.7 The Company’s balance sheet is prepared in the 
statutory format as per Schedule 3rd of the Companies 
Act 2013, which does not provide for giving the specific 
name of every secured or unsecured creditor.
11.8 It is further observed that the Corporate Debtor has 
not denied that there are no outstanding dues to the UCO 
Bank. A perusal of extract of register of charges submitted 
with ROC, at Sr. No. 3, shows that a charge of rupees one 
hundred and seventy-five crores created by the Corporate 
Debtor has not been satisfied and remains outstanding.
11.9 After the judgement of Hon’ble Supreme Court in 
case Asset Reconstruction Company (India) Limited v. 
Bishal Jaiswal (supra), it is settled that entries in books 
of accounts and/or balance sheets of a Corporate Debtor 
would amount to an acknowledgement under Section 18.
11.10 In the instant case, we also find that the Corporate 
Debtor issued a letter dated June 07 2016
(Annexure A 
Page 11 of their reply affidavit of R-1) wherein it has given 
OTS proposal. Based on the ratio of the judgement of 
Hon’ble Supreme Court in the case of Lakshmirattan Cotton 
Mills Co Ltd and further reiterated in Dena Bank’s case 
(supra) that there is an acknowledgement of subsisting 
liability of the Corporate Debtor. However, it may not 
necessarily specify the exact nature of the liability. But 
it indicates the jural relation between the parties, and in 
any event, the same can also be derived by implication. 
Further, the said Letter is not “without prejudice” basis and, 
therefore, amounts to an unequivocal acknowledgement 
of liability of the Corporate Debtor. A reading of the
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documents above reveals that the Corporate Debtor has 
acknowledged/subsisting liability to attract the provisions 
of Section 18 of the Limitation Act, 1963. 
11.11 Based on the discussion as above, we think that the 
present Appeal is liable to be dismissed, and the interim 
Order dated April 07, 2020, is exposed to vacated.”
6.	
Mr. Balbir Singh, senior counsel appearing on behalf of the appellant 
has emphatically argued only one point before us. It is that there 
is no clear and unequivocal acknowledgement of debt of the 
Corporate Debtor in the entries of the balance sheets. If this is true, 
it is submitted, then the financial creditor cannot have the benefit 
of Section 18 of the Limitation Act to extend the period of limitation 
which commenced on 05.11.2014.
7.	
The commencement of a fresh period of limitation from the time of 
acknowledgement of the debt is part of the statutory scheme. Section 
238A of the Code extends the applicability of the provisions of the 
Limitation Act to the proceedings under the Code. With the extension 
of Limitation Act to the provisions of the Code, the benefit of Section 
18 of the Limitation Act dealing with the effect of acknowledgement 
of a debt in writing applies. Considering the same issue in Laxmi 
Pat Surana v. Union Bank of India7, the Court observed:
“42. Notably, the provisions of the Limitation Act have been 
made applicable to the proceedings under the Code,
as far 
as may be applicable. For, Section 238-A predicates that 
the provisions of the Limitation Act shall, as far as may be, 
apply to the proceedings or appeals before the adjudicating 
authority, NCLAT, the DRT or the Debt Recovery Appellate 
Tribunal, as the case may be. After enactment of Section 
238-A IBC on 6-6-2018, validity whereof has been upheld 
by this Court, it is not open to contend that the limitation for 
filing application under Section 7 IBC would be limited to 
Article 137 of the Limitation Act and extension of prescribed 
period in certain cases could be only under Section 5 of 
the Limitation Act. There is no reason to exclude the effect 
of Section 18 of the Limitation Act to the proceedings 
initiated under the Code.
7	
(2021) 8 SCC 481.
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43. Ordinarily, upon declaration of the loan account/
debt as NPA that date can be reckoned as the date of 
default to enable the financial creditor to initiate action 
under Section 7 IBC. However, Section 7 comes into play 
when the corporate debtor commits “default”. Section 7, 
consciously uses the expression “default” — not the date 
of notifying the loan account of the corporate person as 
NPA. Further, the expression “default” has been defined 
in Section 3(12) to mean non-payment of “debt” when 
whole or any part or instalment of the amount of debt has 
become due and payable and is not paid by the debtor or 
the corporate debtor, as the case may be. In cases where 
the corporate person had offered guarantee in respect 
of loan transaction, the right of the financial creditor to 
initiate action against such entity being a corporate debtor 
(corporate guarantor), would get triggered the moment the 
principal borrower commits default due to non-payment 
of debt. Thus, when the principal borrower and/or the 
(corporate) guarantor admit and acknowledge their liability 
after declaration of NPA but before the expiration of three 
years therefrom including the fresh period of limitation 
due to (successive) acknowledgments, it is not possible 
to extricate them from the renewed limitation accruing 
due to the effect of Section 18 of the Limitation Act. 
Section 18 of the Limitation Act gets attracted the moment
acknowledgment in writing signed by the party against 
whom such right to initiate resolution process under Section 
7 IBC enures. Section 18 of the Limitation Act would come 
into play every time when the principal borrower and/or 
the corporate guarantor (corporate debtor), as the case 
may be, acknowledge their liability to pay the debt. Such 
acknowledgment, however, must be before the expiration 
of the prescribed period of limitation including the fresh 
period of limitation due to acknowledgment of the debt, 
from time to time, for institution of the proceedings under 
Section 7 IBC. Further, the acknowledgment must be of a 
liability in respect of which the financial creditor can initiate 
action under Section 7 IBC.”
(emphasis supplied)
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Vidyasagar Prasad v. UCO Bank & Anr.
7.1	 In Dena Bank v. C. Shivakumar Reddy8 after reviewing the case 
law on the subject, this Court held;
“138. While it is true that default in payment of a debt 
triggers the right to initiate the corporate resolution process, 
and a petition under Section 7 or 9 IBC is required to be 
filed within the period of limitation prescribed by law, which 
in this case would be three years from the date of default 
by virtue of Section 238-A IBC read with Article 137 of the 
Schedule to the Limitation Act, the delay in filing a petition 
in the NCLT is condonable under Section 5 of the Limitation 
Act unlike delay in filing a suit. Furthermore, as observed 
above Sections 14 and 18 of the Limitation Act are also 
applicable to proceedings under the IBC.
…………
140. To sum up, in our considered opinion an application 
under Section 7 IBC would not be barred by limitation, 
on the ground that it had been filed beyond a period 
of three years from the date of declaration of the loan 
account of the corporate debtor as NPA, if there were 
an acknowledgment of the debt by the corporate debtor 
before expiry of the period of limitation of three years, in 
which case the period of limitation would get extended by 
a further period of three years.”
(emphasis supplied)
7.2	 A reference must also be made to a three Judge Bench decision 
in Rajendra Narottamdas Sheth v. Chandra Prakash Jain9 which 
succinctly observed;
“27. It is no
more res integra that Section 18 of the Limitation 
Act is applicable to applications filed under Section 7 of 
the Code. In case the application under Section 7 is filed 
beyond the period of three years from the date of default 
and the financial creditor furnishes the required information 
relating to the acknowledgment of debt, in writing by the 
8	
[2021] 8 SCR 1061 : (2021) 10 SCC 330
9	
[2021] 7 SCR 838 : (2022) 5 SCC 600
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corporate debtor, before the adjudicating authority, with 
such acknowledgment having taken place within the initial 
period of three years from the date of default, a fresh 
period of limitation commences and the application can 
be entertained, if filed within this extended period.”
(emphasis supplied)
8.	
In view of the above referred principles, we will now consider the 
nuanced arguments advanced by Mr. Balbir Singh that there is no 
unequivocal, unambiguous and specific acknowledgement of debt 
owed to UCO Bank in the balance sheet entries of Corporate Debtor 
for the years 2017 and 2019. In the absence of clear demarcation as 
to what the Corporate Debtor owes to the UCO Bank, the said entries 
cannot be relied on for the purpose of extending the period of limitation 
in terms of Section 18 of the Limitation Act. Mr. Balbir Singh further 
argues that even if said entry is taken to be an acknowledgment of 
debt, the same cannot aid respondent No.1’s case since it fails to 
mention the name of financial creditor.
8.1	 Mr. Partha Sil, counsel on behalf of respondent No. 1-Bank 
submitted that the Balance Sheets of a company are prepared 
in the prescribed statutory format as per Section 129, read 
with Schedule III of the Companies Act 2013, which does not 
provide for giving specific names of each and every Secured 
and Unsecured creditor. In support of his submission, Mr. Partha 
Sil referred to the judgment in Asset
Reconstruction Company 
(India) Ltd. v. Bishal Jaiswal10 where it was observed that there 
was no compulsion for Companies to make any particular 
admissions in the balance sheet, except for what is prescribed.
9.	
A three Judge Bench of this Court in Bishal Jaiswal (Supra) has 
addressed and clarified this issue by holding that;
“35. A perusal of the aforesaid sections would show that 
there is no doubt that the filing of a balance sheet in 
accordance with the provisions of the Companies Act is 
mandatory, any transgression of the same being punishable 
by law. However, what is of importance is that notes that 
are annexed to or forming part of such financial statements 
10	
[2021] 3 SCR 524 : (2021) 6 SCC 366.
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Vidyasagar Prasad v. UCO Bank & Anr.
are expressly recognised by Section 134(7). Equally, the 
auditor’s report may also enter caveats with regard to 
acknowledgments made in the books of accounts including 
the balance sheet. A perusal of the aforesaid would show 
that the statement of law contained in Bengal Silk Mills Co. 
v. Ismail Golam Hossain Ariff, that there is a compulsion 
in law to prepare a balance sheet but no compulsion to 
make any particular admission, is correct in law as it 
would depend on the facts of each case as to whether an 
entry made in a balance sheet qua any particular creditor 
is unequivocal or has been entered into with caveats, 
which then has to be examined on a case by case basis 
to establish whether an acknowledgment of liability has, 
in fact, been made, thereby extending limitation under 
Section 18 of the Limitation Act.”
(emphasis supplied)
10.	 Having considered the specific facts and circumstances of this case, 
the Adjudicating Authority as well as the NCLAT have concurrently held 
that the entries in the balance sheets amount to clear acknowledgment 
of debt. We agree with the findings. Further, Note 3.4 appended to 
said balance sheet entry dated 31.03.2017 mentions that “company 
has made certain defaults in the repayment of term loans and interest.” 
It further mentions of a continuing default. The entry also mentions 
long-term borrowings. The conclusions of NCLT and NCLAT that 
there is acknowledgment
of debt are unimpeachable. 
10.1	Following the principles as expounded in the case of Bishal 
Jaiswal (Supra), the Adjudicating Authority as well as the 
NCLAT have examined the case in detail and have come to the 
conclusion that the entry made in the balance sheet coupled 
with the note of the auditor of the appellant clearly amounts to 
acknowledgement of the liability. We see no reason whatsoever 
to take a different view of the matter. Their findings are fortified 
when we examine the matter from another perspective.
11.	 Adjudicating Authority and NCLAT have also considered the Corporate 
Debtor’s proposal of One Time Settlement (OTS) to UCO Bank. The 
proposal made by letter dated 07.06.2016 acknowledges that there 
were prior debts owed to UCO Bank. To substantiate the argument 
that such OTS constituted acknowledgment of debt since it relates
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to present and subsisting liability and indicates existence of a jural 
relationship between the parties, UCO Bank relied on judgment of 
this Court in Lakshmirattan Cotton Mills Co. Ltd. and Messrs Behari 
Lal Ram Charan v. Aluminium Corporation of India Limited11. The 
implication of a statement about a present and subsisting debt of a 
Corporate Debtor is articulated by this Court in the following manner;
“9. It is clear that the statement on which the plea of 
acknowledgment is founded must relate to a subsisting 
liability as the section requires that it must be made before 
the expiration of the period prescribed under the Act. It 
need not, however, amount to a promise to pay, for, an 
acknowledgment does not create a new right of action but 
merely extends the period of limitation. The statement need 
not indicate the exact nature or the specific character of 
the liability. The words used in the statement in question, 
however, must relate to a present subsisting liability and 
indicate the existence of jural relationship between the 
parties, such as, for instance, that of a debtor and a 
creditor and the intention to admit such jural relationship. 
Such an intention need not be in express terms and can 
be inferred by implication from the nature of the admission 
and the surrounding circumstances. Generally speaking, 
a liberal construction of the statement in question should 
be given. That of course does not
mean that where a 
statement is made without intending to admit the existence 
of jural relationship, such intention should be fastened on 
the person making the statement by an involved and far-
fetched reasoning…” 
(emphasis supplied) 
11.1	It is also relevant to refer to judgment in Dena Bank (Supra) 
which held as follows:
“139. Section 18 of the Limitation Act cannot also be 
construed with pedantic rigidity in relation to proceedings 
under the IBC. This Court sees no reason why an offer 
of one-time settlement of a live claim, made within the 
11	
(1971) 1 SCC 67
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Vidyasagar Prasad v. UCO Bank & Anr.
period of limitation, should not also be construed as an 
acknowledgment to attract Section 18 of the Limitation 
Act…”
(emphasis supplied)
12.	 Both these factors, acknowledgment of debt in the balance sheet as 
well as in the OTS proposal, have been considered by NCLAT while 
dismissing the appeal. The relevant portion of the NCLAT findings, 
after considering balance sheet entries and OTS letter are as follows:
“11.7 The Company’s balance sheet is prepared in the 
statutory format as per Schedule 3rd of the Companies 
Act 2013, which does not provide for giving the specific 
name of every secured or unsecured creditor. 
11.8 It is further observed that the Corporate Debtor has 
not denied that there are no outstanding dues to the UCO 
Bank. A perusal of extract of register of charges submitted 
with ROC, at Sr. No. 3, shows that a charge of rupees one 
hundred and seventy-five crores created by the Corporate 
Debtor has not been satisfied and remains outstanding. 
11.10 In the instant case, we also find that the Corporate 
Debtor issued a letter dated June 07 2016 (Annexure A 
Page 11 of their reply affidavit of R-1) wherein it has given 
OTS proposal. Based on the ratio of the judgement of 
Hon’ble Supreme Court in the case of Lakshmirattan Cotton 
Mills Co Ltd and further reiterated in Dena Bank’s case 
(supra) that there is an acknowledgement of subsisting 
liability of the Corporate Debtor. However, it may
not 
necessarily specify the exact nature of the liability. But 
it indicates the jural relation between the parties, and in 
any event, the same can also be derived by implication. 
Further, the said Letter is not “without prejudice” basis and, 
therefore, amounts to an unequivocal acknowledgement 
of liability of the Corporate Debtor. A reading of the 
documents above reveals that the Corporate Debtor has 
acknowledged/subsisting liability to attract the provisions 
of Section 18 of the Limitation Act, 1963.” 
13.	 Having examined the matter in detail, we are of the opinion that 
the findings arrived at by the Adjudicating Authority and NCLAT are

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correct in law and fact. We find no merit in the appeal. The Civil 
Appeal No. 1031 of 2022 arising out of the NCLAT order dated 
04.10.2021 (Company Appeal (AT) (Insolvency) No. 238 of 2020) 
is dismissed accordingly. 
14.	 No order as to costs.
Result of the Case: Appeal dismissed.
†Headnotes prepared by: Mukund P Unny, Hony. Associate Editor 
(Verified by: Liz Mathew, Sr. Adv.)