/2022 INSC 0238/
NON­REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO.4228 OF  2020
SVG FASHIONS PVT. LTD. (EARLIER KNOWN AS 
SVG FASHIONS LTD.                               …APPELLANT(S)
VERSUS
RITU MURLI MANOHAR GOYAL & ANR. …RESPONDENT(S)
J U D G M E N T
V.RAMASUBRAMANIAN, J.
1. Aggrieved   by   the   order   of   the   National   Company   Law   Appellate
Tribunal (for short “ NCLAT ”), reversing the order of ‘Admission’ passed
by the National Company Law Tribunal (for short “NCLT”) and holding
that   their   application   under   Section   9   of   the   Insolvency   and
Bankruptcy   Code,   2016   (for   short   “the   Code” )   was   barred   by
1

limitation,   the   operational   creditor   has   come   up   with   the   present
appeal.
2. We have heard the learned counsel for the appellant­operational
creditor; the learned counsel for the first respondent­shareholder and
Director   of   the   corporate­debtor   and   the   learned   counsel   for   the
second respondent­Interim Resolution Professional. 
3. The   appellant   herein   filed   an   application   under   Section   9   of   the
Code   on   20.04.2018   against   M/S   Arpita   Filaments   Private   Limited,
contending   inter   alia:   that   the   corporate­debtor   started   having
business   dealings   with   them   from   2013;   that   they   sold   and   delivered
various fabrics to the corporate­debtor;   that   the corporate­debtor was
irregular   in   making   payments   as   per   the   bills;   and   that   the   demand
notice   issued   by   them   under   Section   8   of   the   Code   read   with   Rule   5
did not invoke any response.
4. Before   NCLT ,   the   corporate­debtor   raised   four   major   objections,
one   of   which   was   that   the   claim   was   barred   by   limitation.   But   NCLT
found   on   the   basis   of   a   letter   dated   28.09.2015   produced   by   the
2

operational creditor that six cheques had been issued in favour of the
operational   creditor.   These   cheques   returned   dishonoured   when
presented   for   payment.   The   stand   taken   by   the   corporate­debtor   was
that   those   six   cheques   were   lost   by   the   corporate­debtor   in   March
2017 and that they  had already issued “ stop payment  instructions ” to
the   bank   on   4.03.2017.   The   corporate­debtor   also   claimed   that   the
letter   dated   28.09.2015   relied   upon   by   the   operational   creditor   was
issued by Shree Adeshwar Textiles and that therefore, the operational
creditor cannot rely upon the same to save limitation.
5. However, the NCLT, by an order dated 26.09.2019 overruled the
objections and  held  that  there was an acknowledgment  of liability  on
the   part   of   the   corporate­debtor   and   that   therefore,   the   application
was   within   the   period   of   limitation.   Consequently,   the   NCLT   ordered
the admission of the application under Section 9 of the Code and also
declared moratorium in terms of Section 14.
6. On   an   appeal   filed   by   the   appellant,   the   NCLAT   held   that   the
debt arose during the period from 11.08.2013 to 02.09.2013 and that
the   six   cheques   purportedly   issued   towards   part   payment   of   the
3

liability having been issued on 5.12.2017, will not save limitation. The
NCLAT   further   held   that   even   if   the   date   of   default   is   taken   to   be
7.10.2013 as pleaded by the operational creditor, the acknowledgment
of  liability   in   terms   of   Section   18   of   the   Limitation   Act   ought   to   have
happened   on   or   before   07.10.2016.   But   the   cheques   were   dated
December 2017 and hence NCLAT reversed the decision of NCLT and
dismissed the application of the operational creditor.
7. But   we   find   from   the   order   of   NCLAT   that   there   was   no
discussion   at   all   about   the   letter   dated   28.09.2015.   According   to   the
operational   creditor,   the   six   cheques   in   question   were   handed   over
along with the letter  dated 28.09.2015. The cheque numbers and the
bank   on   which   the   cheques   were   drawn,   given   in   the   letter   dated
28.09.2015   tallied   with   the   particulars   of   those   six   cheques   allegedly
lost   by   the   corporate   debtor   in   March   2017.   Though   the   first
respondent   herein   clamed   in   his  affidavit  in   reply   that  the  corporate­
debtor   had   issued   stop   payment   instructions,   he   conceded   that   the
acknowledgment issued by the banker contained the date 01.01.2018.
4

The   following   extract   from   the   affidavit   in   reply/objections   of   the
Director of the corporate­debtor makes an interesting reading:
“...Hereto annexed and marked collectively as  Annexure­C
are   copies   of   the   intimation   issued   by   the   banker   of   the
Corporate   Debtor   duly   recording   the   instruction   of   stop
payment   qua   the   cheques   in   question   taking   record   that
the cheques had been lost. It is submitted that the banker
of   the   Corporate   Debtor   has   issued   such   notices
acknowledging stop payment instruction on account of loss
of the cheques on 04/03/2017, however inadvertently due
to the error in the computers of the banker, the date on the
top   right   shows   as   01/01/2018.   the   Corporate   Debtor   in
the process of obtaining appropriate letter from the banker
of   the   Corporate   Debtor   to   the   effect   that   the   error   in   the
date has occurred due to some problem in the computers of
the   banker,   and   the   Corporate   Debtor   craves   leave   to
produce   copy   of   the   same   as   and   when   referred   to   and
relied   upon   and   available   with   the   Corporate   Debtor   from
the banker.”
8. Unfortunately   NCLAT   completely   overlooked   the   pleadings
revolving   around   the   letter   dated   28.09.2015   and   the   six   cheques.
The failure of the NCLAT as the first appellate authority to look into a
very vital aspect such as this, vitiates its order, especially when NCLT
has recorded a specific finding of fact on this.
9. It is needless to point out that the law relating to the applicability
of   Section   18   of   the   Limitation   Act,   1963   is   fairly   well   settled.   In
5

Jignesh   Shah   and   Another   vs.   Union   of   India   and   Another 1
,  this
Court   pointed   out   that   when   time   begins   to   run,   it   can   only   be
extended in the manner provided in the Limitation Act. For holding so
this   Court   made   a   reference   to   Section   18   of   the   Limitation   Act.
Though   in   Babu   Lal   Vardharji   Gurjar   vs.   Veer   Gurjar   Aluminium
Industries   Private   Limited   and   Another 2
,   a   two   member   Bench   of
this Court held that the reference in  Jignesh Shah  (supra) to Section
18 of the Limitation Act was only illustrative and that the ratio in  B.K.
Educational   Services   Private   Limited   vs.   Parag   Gupta   and
Associates 3
  did   not   stand   altered   by   Jignesh   Shah ,   no   discordant
note was struck. But the cloud of doubt created by   Babu Lal   (supra)
was   cleared   subsequently   in   Laxmi   Pat   Surana   vs .   Union   Bank   of
India   And   Another 4
.   In   Asset   Reconstruction   Company   (India)
Limited  vs.  Bishal Jaiswal and Another 5
, this Court, while applying
Section   18   of   the   Limitation   Act,   even   went   to   the   extent   of   holding
that   an   entry   in   the   balance   sheet   of   the   company   could   also   be
1    (2019) 10 SCC 750
2    (2020) 15 SCC 1
3    (2019) 11 SCC 633
4    (2021) 8 SCC 481
5    (2021) 6 SCC 366
6

treated   as   an   acknowledgment   in   writing,   subject   however   to   any
caveat found in the accompanying reports.
10. The law as it has developed on the applicability of Section 18 of
the   Limitation   Act   and   the   circumstances   in   which   it   would   apply,
have also not been examined by NCLAT. Therefore, the order of NCLAT
is liable to be set aside and the matter liable to be remanded back for
a   fresh   consideration.   Accordingly,   the   appeal   is   allowed,   the
impugned order of NCLAT is set aside and the matter remanded back
to NCLAT for a fresh consideration in the light of the observations and
the   principles   of   law   indicated   above.   There   will   be   no   order   as   to
costs.   
…………………………….J.
(Hemant Gupta)
…………………………….J.
(V. Ramasubramanian)
New Delhi
March  29, 2022.
7