Can legal notices demanding payment, sent by an operational creditor without any written acknowledgment of liability by the corporate debtor, extend the period of limitation under Section 18 of the Limitation Act, 1963 for a Section 9 application under the Insolvency and Bankruptcy Code, 2016?

No. Section 18 requires an acknowledgment of liability in writing by the party against whom the claim is made before expiry of the prescribed period; mere service of a demand notice, without such acknowledgment, neither revives a time-barred claim nor gives rise to a fresh cause of action.

Insolvency and Bankruptcy Code, 2016 — s.9 — s.3(12) — s.5(21) — Operational debt — Pre-existing dispute — Limitation — Effluxion of time — Frustration of contract — Indian Contract Act, 1872 — s.56 — Insolvency and Bankruptcy Code, 2016 — s.3(12) — "Default" — Continuing cause of action — Limitation Act, 1963 — s.18 — Acknowledgment — Held: Default under Section 3(12) occurs at a singular point in time when debt becomes due, payable and unpaid, not a continuing cause of action; absent acknowledgment under Section 18, Limitation Act, 1963, legal notices could not reset limitation, and the application was time-barred. (¶72, 82, 100) Insolvency and Bankruptcy Code, 2016 — s.9 — Effluxion of time — Frustration of contract — Self-induced frustration — Held further: Effluxion of time describes a contract's natural close, and frustration requires a supervening impossibility, not self-induced frustration arising from a party's own election; neither party having terminated it, the EPC contract continued to subsist. (¶40, 44, 47) Insolvency and Bankruptcy Code, 2016 — s.5(21) — Operational debt — Pre-existing dispute — Genuineness — Held further: Amounts under the EPC contract's payment schedule qualified as operational debt, though suspension and demobilization charges remained damages until assessed and crystallized by adjudication; the appellant's total, consistent silence across every legal notice showed no dispute that was spurious, hypothetical or illusory, so no pre-existing dispute barred the claim. (¶54, 60, 64, 93, 96) Insolvency and Bankruptcy Code, 2016 — s.9 — Appeal allowed — Liberty granted — Held further: The appeal was allowed and the NCLAT's and NCLT's orders admitting the Section 9 application were set aside; liberty was given to the respondent to approach the appropriate dispute resolution forum under the EPC contract to contest its claims. (¶101, 102)

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