Accounting Standard 29 defines contingent liability as a possible obligation that arises from past events and the existence of which will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the enterprise. Further, it is a present obligation that arises from past events but is not recognized because it is not probable that an outflow of resources embodying economic benefits will be required to settle the obligation, or a reliable estimate of the amount of the obligation cannot be made.

Contingent liability should not be recognized but disclosed if the possibility of an outflow of resources embodying economic benefits is not remote and the amount of obligation cannot be measured with sufficient reliability to be recognized as a provision.

The Contingent Liabilities have to be presented in notes to accounts as per Schedule III of the Companies Act, 2013