Confirmation of debt under the Insolvency and Bankruptcy Code, 2016

 Confirmation of debt under the Insolvency and Bankruptcy Code, 2016 (IBC) refers to an acknowledgment by the debtor of an existing liability or debt owed to the creditor. While the IBC itself does not explicitly define "confirmation of debt," the concept plays a crucial evidentiary role in insolvency proceedings, especially under Section 7 (financial creditors) and Section 9 (operational creditors).

Legal Basis and Importance:

1. Under the Indian Evidence Act, 1872 (Section 18 & 19):

   • An acknowledgment or confirmation of debt can be treated as an admission, which is relevant in proving the existence of a debt.

2. Under the Limitation Act, 1963 (Section 18):

   • A written and signed acknowledgment of debt made before the expiry of the limitation period resets the limitation clock, giving the creditor fresh time to initiate legal proceedings under IBC.

3. Judicial Interpretation:

   • Indian courts and tribunals (including NCLT and NCLAT) have accepted balance sheets, email correspondence, payment of part amounts, and settlement proposals as forms of acknowledgment or confirmation of debt.

Common Forms of Confirmation:

• Signed balance sheets by the corporate debtor showing the debt.

• Emails or letters from the debtor acknowledging the liability.

• Part payments or cheques towards the outstanding amount.

• Any formal settlement proposals or restructuring requests.

Relevance in IBC Proceedings:

• It strengthens the evidence of default for the creditor.

• It can extend the limitation period to file an insolvency petition.

• Helps establish the existence of a financial or operational debt.