A BALANCE SHEET ENTRY CAN RESTART LIMITATION: SUPREME COURT'S IMPORTANT RULING

 A BALANCE SHEET ENTRY CAN RESTART LIMITATION: SUPREME COURT'S IMPORTANT RULING

YUSUF V. VIGYAPAN LOKE DELHI ADVERTISING CGHS LTD.,

In Yusuf v. Vigyapan Loke Delhi Advertising CGHS Ltd., reported as 2026 INSC 1207, decided on 06.11.2026, the Hon'ble Supreme Court examined the evidentiary significance of balance sheet entries and their effect on limitation under Section 18 of the Limitation Act, 1963.

IMPORTANT POINTS LINGERING YOUR MIND

·       Can a company escape liability merely because its balance sheet does not mention the creditor's name?

·       Should auditors pay greater attention to long-pending sundry creditor balances?

·       Can carrying forward an outstanding liability year after year affect the limitation period?

·       Can a bank reconciliation statement become critical evidence in civil litigation?

·       Are companies adequately reviewing old outstanding balances before approving annual financial statements?

SEVEN IMPORTANT LEGAL AND CORPORATE GOVERNANCE ANGLE

No.		Significance
1	Unnamed creditor	Express identification of creditor is not mandatory in every acknowledgment.
2	Successive balance sheets	Carry-forward entries may renew limitation when statutory conditions are met.
3	Bank reconciliation	Cheque details can connect an otherwise unidentified liability to a creditor.
4	Auditor's responsibility	Qualifications and explanatory notes require careful examination.
5	Section 18	Written acknowledgment must be made before expiry of limitation.
6	Order VII Rule 11 CPC	A court should not conduct a full evidentiary trial while deciding plaint rejection.
7	Corporate records	Financial disclosures can have consequences beyond accounting and auditing.

WHAT THE SUPREME COURT ESTABLISHED

- An acknowledgment need not expressly identify the creditor.

- No prescribed format is required.

- Surrounding circumstances may establish the subsisting jural relationship.

- Successive qualifying acknowledgments can generate fresh limitation periods.

A BALANCE SHEET IS NOT MERELY AN ACCOUNTING DOCUMENT. IT CAN ALSO BECOME A SIGNIFICANT LEGAL DOCUMENT.

The Supreme Court's decision in Yusuf v. Vigyapan Loke Delhi Advertising CGHS Ltd. (2026 INSC 1207) demonstrates why companies, directors, auditors and Company Secretaries must carefully examine outstanding liabilities and their supporting financial records.

A liability carried forward in successive financial statements may have consequences under Section 18 of the Limitation Act, 1963.

KEY TAKEAWAYS

Position this as a Corporate Governance and Financial Reporting case study, rather than merely a limitation-law judgment. This will make it relevant to Company Secretaries, CFOs, statutory auditors, directors and legal professionals.

The strongest takeaway is: An accounting entry may become a legal acknowledgment when the surrounding documentary evidence establishes the creditor–debtor relationship.

# R V SECKAR, FCS, LLB 79047 19295,

RBI FORM A2 UPDATE 2026

 RBI FORM A2 UPDATE 2026

WHAT IS RBI FORM-A2 UNDER FEMA

Form A-2 is required whenever an individual or entity in India wishes to make an outward remittance (send money) or purchase foreign exchange for non-trade (current account) transactions

REMOVAL OF REMITTANCE LIMITS:

 RBI Circular No. 23 dated 1 October 2026 reiterates that Form A2 can be submitted online or physically for cross-border foreign exchange remittances, irrespective of the transaction amount.

REVISED APPROVAL MECHANISM:

Authorized Dealer (AD) Category-I banks and AD Category-II entities can now frame internal guidelines with approval from their Board, Board Committee or Management Committee.

CONTINUED COMPLIANCE OBLIGATIONS:

AD banks must continue to ensure FEMA compliance, KYC verification, supporting documentation and applicable TDS requirements before processing outward remittances.

NEW INCOME TAX FORMS REPLACING FORM 15CA & 15CB:

 From 1 April 2026, Form 145 replaces 15CA and Form 146 replaces Form 15CB under the Income-tax Act, 2025. The applicable filing requirements and tax compliance obligations continue.

# R V SECKAR, FCS, LLB 79047 19295,

GST DEADLINE REMINDER THE DUE DATE FOR FILING GSTR-9 FOR FY 2025-26 IS 31ST DECEMBER 2026.

                                 GST DEADLINE REMINDER

THE DUE DATE FOR FILING GSTR-9 FOR FY 2025-26 IS 31ST DECEMBER 2026.

Taxpayers with aggregate turnover exceeding ₹5 crore must also file GSTR-9C, the self-certified reconciliation statement, by the same deadline.

GSTR-9 is mandatory for eligible taxpayers with turnover above ₹2 crore.

Taxpayers with turnover up to ₹2 crore are exempt, subject to applicable conditions.

All pending GSTR-1 and GSTR-3B returns must be filed before accessing GSTR-9.

GSTR-9 cannot be revised once submitted

# R V SECKAR, FCS, LLB 79047 19295,

DATE FOR DETERMINING ''FAIR MARKET VALUE'' FOR FURTHER ISSUANCE OF SHARES

 DATE FOR DETERMINING ''FAIR MARKET VALUE'' FOR FURTHER ISSUANCE OF SHARES

VIOLATION OF RULE 14 OF THE COMPANIES (PROSPECTUS AND ALLOTMENT OF SECURITIES) RULES, 2014.

IN THE MATTER OF ROC, CHENNAI VS M/S VALUEPLUS TECHNOLOGIES PRIVATE LIMITED

Relevant Date for determining ''Fair Market Value'' of shares of the Company, as per the Valuation Report obtained from Registered Valuer, must be at least 30 days prior to the date of the General Meeting approving the issuance of equity shares.

However, the Company failed to do so, result in a violation of Rule 14 of the Companies (Prospectus and Allotment of Securities) Rules, 2014.

Failure to file Valuation Report within 30 days from date of EGM resulted in ROC Chennai imposing a penalty of ₹15,000 on the company and its directors.

# R V SECKAR, FCS, LLB 79047 19295,

DIRECTOR'S REMOVAL WITHOUT MANDATORY SPECIAL NOTICE VIOLATES COMPANIES ACT

DIRECTOR'S REMOVAL WITHOUT MANDATORY SPECIAL NOTICE VIOLATES COMPANIES ACT

SH-4, THE SECURITIES TRANSFER FORM, WAS EXECUTED AND BORE THE PETITIONER'S SIGNATURE ON A DATE IN WHICH PETITIONER WAS NOT IN INDIA.

NCLT NEW DELHI FOR SUBH GUATAM  VS KREZON SPECIALTIES PRIVATE LIMITED

FACTS OF THE CASE

The petitioner, Shubh Gautam, challenged his removal as a director of Krezon Specialities Private Limited and questioned the validity of the transfer of his shares.

THE PRINCIPAL ALLEGATIONS WERE:

1.  ILLEGAL REMOVAL OF A DIRECTOR:

The company failed to establish that the petitioner had been served the requisite notice for the Extraordinary General Meeting (EGM) at which he was removed.

2.  QUESTIONABLE SHARE TRANSFER:

The petitioner disputed the execution and validity of the share transfer documents.

3.  DISPUTED FORM SH-4:

The securities transfer form was dated 5 August 2017 and purportedly carried the petitioner's signature.

4.  PETITIONER WAS OUTSIDE INDIA:

The petitioner produced flight tickets and immigration stamps establishing that he was outside India from 25 July 2017 to 6 August 2017.

Consequently, the Tribunal found that the petitioner could not have executed Form SH-4 in India on 5 August 2017, as alleged.

KEY FINDINGS OF NCLT

A. REMOVAL OF DIRECTOR WITHOUT SPECIAL NOTICE

The Tribunal held that Section 169 of the Companies Act, 2013 makes special notice mandatory for a resolution seeking removal of a director.

The company failed to produce evidence establishing that the petitioner had been duly served notice of the EGM.

The Tribunal therefore held that the removal was unlawful.

B. INVALIDITY OF SHARE TRANSFER

The Tribunal examined Form SH-4 and the supporting travel and immigration records.

The date of execution of Form SH-4 was 5 August 2017, whereas the petitioner's documentary evidence established that he was outside India on that date.

The Tribunal also considered the statutory requirements governing share transfers and the company's Articles of Association.

NCLT REFERRED SUPREME COURT VERDICT

The Tribunal also referred to the Supreme Court's decision in John Tinson & Co. Pvt. Ltd. & Ors. v. Mrs. Surjeet Malhan & Anr., (1997) 9 SCC 651, which held that the transfer of shares in a private limited company requires the prior sanction of its directors.

KEY TAKEAWAY

The case highlights two fundamental principles of corporate governance:

First: Procedural compliance under Section 169 is not a mere formality. It is a statutory safeguard against arbitrary removal of directors.

Second: The integrity of the register of members depends upon the authenticity of share transfer instruments. A company cannot disregard credible documentary evidence that puts the execution of a transfer instrument in doubt.

A Board resolution cannot override mandatory statutory safeguards under the Companies Act, 2013.

# R V SECKAR, FCS, LLB 79047 19295,

RBI EASES FOREX REPORTING RULES FOR SMALL SERVICE EXPORTERS & IMPORTERS

 RBI EASES FOREX REPORTING RULES FOR SMALL SERVICE EXPORTERS & IMPORTERS

KEY REGULATORY CHANGES:

1. Resident individual service exporters: EDF deemed filed upon submission of payment-credit information to the authorised dealer bank.

2. Other service exporters: Simplified EDF treatment for inward remittances up to ₹10 lakh per service.

3. Service imports: IDPMS reporting applies only to non-individual resident importers where invoice/contract value exceeds ₹10 lakh.

4. Bank reporting timeline: Five working days after receipt of relevant information.

Regulatory reference: FEMA (Export and Import of Goods and Services) (Second Amendment) Regulations, 2026.

# R V SECKAR, FCS, LLB 79047 19295

OLD TDS DEFAULTS CAN NOW FREEZ YOUR BANK ACCOUNT!

 OLD TDS DEFAULTS CAN NOW FREEZ YOUR BANK ACCOUNT!

A historical TDS default can trigger direct recovery action against your bank account under Section 416(5) of the Income-tax Act, 2025.

This is a serious development for companies, directors, CFOs and tax professionals.

The Income Tax Department can issue a written notice directly to a bank holding money on behalf of an assessee, requiring it to remit money towards outstanding tax arrears.

WHY SHOULD COMPANIES BE CONCERNED?

1️ BANK ACCOUNTS EXPOSED TO RECOVERY PROCEEDINGS

The Department can invoke the garnishee mechanism and direct the bank to remit amounts towards outstanding tax arrears. This can disrupt salaries, vendor payments and working capital.

2️ HISTORICAL DEFAULTS CAN CREATE CONTINUING COMPLIANCE PROBLEMS

Unresolved TDS defaults may prevent proper reconciliation and correction of earlier statements, increasing the risk of further demands.

3️ TDS CORRECTION DEADLINES HAVE BECOME CRITICAL

Section 397(3)(f) of the Income-tax Act, 2025 prescribes a two-year correction window.

The Income Tax Department has specifically advised that correction statements for:

FY 2018–19: Quarter 4

FY 2019–20 to FY 2022–23: All quarters

FY 2023–24: Quarters 1 to 3

were to be filed by 31 March 2026.

These specified periods are now time-barred for ordinary correction statement filing.

4️ DOCUMENTARY EVIDENCE BECOMES CRUCIAL

For historical demands, companies should preserve:

·       TDS challan and payment proofs.

·       Vendor confirmations and declarations.

·       PAN and transaction records.

·       Evidence that the recipient/payee has paid the applicable tax, wherever relevant.

5️ INTEREST CAN SUBSTANTIALLY INCREASE THE LIABILITY

Under Section 411(3), interest at 1% per month or part thereof may apply to unpaid demand amounts.

Section 411(7) provides a mechanism to seek reduction or waiver of interest, subject to prescribed conditions, including genuine hardship and circumstances beyond the assessee's control.

WHAT SHOULD COMPANIES DO IMMEDIATELY?

✅ Download year-wise TDS defaults from TRACES.

✅ Reconcile Form 26AS, challans and TDS returns.

✅ Identify short deduction, short payment and interest defaults.

✅ Obtain documentary evidence for disputed historical demands.

✅ Pay admitted liabilities and examine eligibility for interest waiver.

✅ If a bank attachment notice is received, immediately obtain the notice and verify the demand with the jurisdictional officer.

✅ Where an appeal has been filed, seek appropriate protection under Section 411(12), which permits the Assessing Officer, at their discretion, to treat the assessee as not being in default in respect of the disputed amount.

CORPORATE GOVERNANCE TAKEAWAY

TDS compliance is no longer merely a quarterly filing obligation.

It is a matter of financial discipline, internal controls, treasury management and board-level oversight.

An old TDS default can become a present-day cash-flow crisis. Prevention, reconciliation and documentary evidence are essential.

# R V SECKAR, FCS, LLB, 79047 19295