A Full bench of the Hon’ble Supreme Court of India in Asset Reconstruction Company (India) Limited v. Bishal Jaiswal, while addressing the question as to whether an entry made in a balance sheet of a corporate debtor would amount to an acknowledgement of liability under Section 18 of the Limitation Act, held today that the acknowledgement of liability made in a balance sheet can amount to an acknowledgement of debt.
The SC observed that while there is a legal compulsion to prepare a balance sheet, there is no such compulsion to make any acknowledgment of debt therein (an entry in a balance sheet qua any particular creditor can also be made with caveats). Accordingly, the SC, relying on its earlier rulings in Mahabir Cold Storage (1991 Supp (1) SCC 402), A.V. Murthy ((2002) 2 SCC 642) as well as Calcutta HC’s ruling in Bengal Silk Mills (AIR 1962 Cal 115), set aside NCLAT’s majority decision in V. Padmakumar and affirmed the minority judgment of Justice A.I.S. Cheema therein.