State Bank of India and Ors. Vs. Doha Bank Q.P.S.C. and Anr. - A Constitution Bench of this Court9 has held that “Non stamping or improper stamping does not result in the instrument becoming invalid. The Stamp Act does not render such an instrument void. The non-payment of stamp duty is accurately characterized as a curable defect.”

 SCI (2026.04.28) in State Bank of India and Ors. Vs. Doha Bank Q.P.S.C. and Anr. [(2026) ibclaw.in 234 SC, Civil Appeal No. 8527 of 2022] held that;-

• Section 5(8) of the Code stipulates that the essential ingredient of a financial debt is disbursal against consideration for the time value of money5. A liability arising from the corporate guarantee squarely falls within the ambit of financial debt as defined under Section 5(8) of the Code.

• The amount of any liability in respect of any of the guarantees for money borrowed against the payment of interest is a “financial debt” within Section 5(8) of the Code6. It is well settled legal proposition that a guarantor incurs a coextensive liability with that of a principal borrower and such liability is enforceable in law.

• Thus, it is evident that the corporate guarantees were executed before declaration of account of the CD as NPA and, therefore, the timing and manner of the corporate guarantees could not be questioned on the ground that the CD and the holding company were already in default.

• It is well-settled that an appeal is a continuation of original proceeding. The documents which are relevant to deciding the lis can be produced at the stage of appeal. The corporate guarantees were produced before the NCLAT. Therefore, merely because they were not produced before the NCLT, no adverse inference can be drawn with regard to the genuineness of the corporate guarantees.

• In any case, the legal position governing the effect of insufficiently stamped document is no longer res integra and the same does not become void or unenforceable merely on that account7. The defect of insufficient stamping of the document is curable in nature and does not go to the root of validity of the instrument.

• A Constitution Bench of this Court9 has held that “Non stamping or improper stamping does not result in the instrument becoming invalid. The Stamp Act does not render such an instrument void. The non-payment of stamp duty is accurately characterized as a curable defect.”

• It is well-settled legal proposition that this Court would not choose to re-appreciate a matter on facts when jurisdictional NCLT and in appeal NCLAT have recorded concurrent findings of fact. The exception to this self-imposed rule is where findings of fact are shown to be perverse10

Excerpts of the Order;

# 1. This appeal under Section 62 of the Insolvency and Bankruptcy Code, 2016 (Code) has been preferred by SBI Consortium comprising State Bank of India, Bank of India, UCO Bank, Syndicate Bank, Oriental Bank of Commerce and Indian Overseas Bank. The appeal arises from the order dated 14.10.2022 passed by the National Company Law Appellate Tribunal (NCLAT), whereby the order dated 02.03.2021 passed by National Company Law Tribunal (NCLT) was affirmed and the appeal was dismissed.

# 2. This appeal raises important question regarding validity and enforceability of corporate guarantees within the framework of the Code. The challenge mounted by respondents to the validity of the said corporate guarantees has been made on several grounds, namely, the timing and circumstances of the execution of guarantee, the alleged absence of proper disclosure in financial statements, the manner of their verification, the corporate insolvency resolution process and to their alleged insufficiency of stamping. These objections call for careful scrutiny to determine whether such grounds can legitimately defeat the recognition of a “financial debt” and status of a “financial creditor” under the Code.

FACTUAL BACKGROUND

# 3. The material facts giving rise to filing of this appeal, are as follows:

On 19.03.2010, a Facility Agreement was executed between Respondent No. 1, Doha Bank and Reliance Infratel Limited (RITL), namely Corporate Debtor (CD), whereby a foreign currency loan of USD 250 million was extended. Thereafter, on 04.03.2011, a Security Trustee Agreement was executed between the Consortium Lenders and Axis Trustee Services Ltd., appointing it as Security Trustee in respect of loan to Reliance Communications Ltd., (RCOM) and Reliance Telecom Ltd., (RTL).

# 4. The appellants, as members of a consortium of Banks, extended the rupee loan facilities of ₹6,015 crores to Reliance Communications Limited (RCOM) and ₹735 crores to Reliance Telecom Limited (RTL). On 20.02.2015, a deed of hypothecation was executed by the CD, in the favour of Security Trustee to secure the consortium lending pursuant to which a charge was created and duly registered.

# 5. On 26.08.2016, the accounts of RCOM, RTL and CD were classified as Non-Performing Assets (NPA) indicating default in repayment obligations. Subsequently, on 05.09.2016 and 04.12.2016, Reinstatement Agreements were executed between Doha Bank and the CD, restructuring the repayment obligations and extending repayment schedule ultimately up to 05.06.2017.

# 6. On 03.03.2017, the CD executed Corporate guarantees in favour of consortium lenders to secure loans extended to its group entities, namely RCOM & RTL. On 22.12.2017, the account of RITL was declared as NPA with retrospective effect from 26.08.2016.

INSOLVENCY PROCEEDINGS

# 7. On 15.05.2018, NCLT Mumbai initiated Corporate Insolvency Resolution Process (CIRP) against the CD. An Interim Resolution Professional (IRP) was appointed on 18.05.2018 to take over the management and invite claims from creditors. A public announcement was issued on 21.05.2018. The Security Trustee invoked the Corporate Guarantee executed by CD.

# 8. On 28.02.2019, Doha Bank disputed existence of such guarantees and called upon Security Trustee to withdraw the invocation. By communications dated 06.03.2019 and 18.03.2019, the Security Trustee asserted the existence and validity of the guarantees and declined interference by External Commercial Borrowings (ECB) lenders.

# 9. The Security Trustee, by a communication dated 18.03.2019, informed the ECB lenders that they should pursue their grievance with the borrowers and had no right to question rights of SBI consortium. The Advocates for the RITL advised the counsel of Doha Bank admitting the execution of the guarantees and stating that the existence of such guarantees had been disclosed by RCOM in their financial statements/annual reports.

# 10. On 30.04.2019, the NCLAT allowed the withdrawal of the appeal and directed NCLT to proceed with CIRP. On 07.05.2019, the IRP issued fresh public announcement inviting claims.

CLAIMS AND PROCEEDINGS BEFORE NCLT

# 11. On 17.05.2019, the appellant submitted a claim to IRP in Form ‘C’ for ₹3,628.67 crores. On 24.05.2019, the IRP issued notices to financial creditors and members of the suspended Board of Directors of CD to attend the first meeting of Committee of Creditors (CoC) scheduled on 30.05.2019.

# 12. By a communication dated 28.05.2019, Doha Bank sought a declaration from IRP that the corporate guarantees were preferential, undervalued and fraudulent as contemplated under Sections 43, 45 and 66 of the Code and requested derecognition of consortium as financial creditors. On 29.05.2019, the IRP rejected the objections, stating that claims have been verified based on legally valid documents.

# 13. Doha Bank filed an interlocutory application before NCLT seeking similar declarations. The appellants filed a reply on 10.06.2019 relying on the letter dated 19.03.2019 of the Advocates from CD admitting execution of corporate guarantees. On 12.08.2020, an additional affidavit was filed stating that the CD’s account has been classified as NPA on 22.12.2017 with effect from 26.08.2016, as per the RBI circular and that the corporate guarantees are kept in safe custody of security trustee who has certified the same.

# 14. By an order dated 02.03.2021, the NCLT inter alia held that (i) there was no material to show submission of proof of claims with corporate guarantees (ii) verification by Resolution Professional at New Delhi did not satisfy the statutory requirements (iii) that claims were admitted without proper documentation and (iv) consortium lenders were not financial creditors. Consequently, the Committee of Creditors was directed to be reconstituted.

PROCEEDINGS BEFORE NCLAT

# 15. The appellants preferred an appeal before the NCLAT. By an order dated 14.10.2022, NCLAT held as follows: (i) the corporate guarantees were executed when CD was in default of his obligation and was suffering from severe financial constraints; (ii) there is no documentary evidence to show that there was disclosure regarding the guarantees by the beneficiary lenders of the related party of the CD during restructuring of the debt of corporate debtor; (iii) the guarantees were not reflected in the financial statements of CD for financial year 2016-17 and 2017-18 or were produced before the NCLT; (iv) there is no pleading on record to establish that the guarantees were verified at New Delhi by the IRP/RP apart from brief reply affidavit of the RP; (v) the CD was declared NPA on 22.12.2017 w.e.f. from 26.08.2016 indicating that CD was in default for at least 90 days prior to 26.08.2016; (vi) it was obligatory under the law to produce a document duly stamped in accordance with provisions of Maharashtra Stamp Act, 1958; (vii) the timing and manner of the corporate guarantees were questionable as corporate debtor and holding companies were already in default. Accordingly, the appeal was dismissed. In the aforesaid factual background, this appeal arises for our consideration.

SUBMISSIONS

# 16. Learned senior counsel for the appellant submitted that the appellants are financial creditors of the CD on the basis of Corporate Guarantees and a Deed of Hypothecation. It is contended that liabilities arising from the guarantees constitute financial debt under Section 5(8) of the IBC and the claims of the appellant were verified by the Financial Creditors leading to formation of Committee of Creditors (CoC). It is pointed out that counsel for CD has admitted execution of the Corporate Guarantee and that disclosures have been made by them in their financial statements on an ongoing basis. It is contended that the present corporate guarantee is not covered under Section 85 of the Companies Act.

# 17. It is pointed out that as per RBI Circular dated 01.07.2015, relating to asset classification and provisioning pertains to advances, in case of restructuring, the asset classification will be reckoned from the date, it became NPA on the first occasion. It is submitted that the Corporate Guarantees were executed in the New Delhi office of the Security Trustee and stamp duty at applicable rates in New Delhi has duly been paid. It is submitted that the concurrent finding of the tribunals are perverse and the issue involved in the appeal is no longer res integra and is covered by the decision of this Court1. In support of the aforesaid submissions, reliance has been placed on the decisions of this Court2.

# 18. On the other hand, learned senior counsel for the respondents submitted that the alleged corporate guarantees are non-existent, invalid and unenforceable in law. It is submitted that the corporate guarantees executed on 02.03.2017 are highly suspicious, due to their timing and manner of execution, as the corporate debtor and its group companies were already classified as NPA on 26.08.2016.

# 19. It is contented that the corporate guarantees were not disclosed in the financial statements for financial year 2016-17 and 2017-18 and were deliberately withheld before the NCLT and introduced only at the appellate stage which is impermissible in law. It is contended that the corporate guarantees are insufficiently stamped and are inadmissible. It is argued that the alleged corporate guarantees were created in breach of the facility agreement and Section 186 of the Companies Act, 2013 as no special resolution was passed despite the large value of guarantee. It is contended that the concurrent findings of facts have been recorded by the Tribunals which do not call for any interference in this appeal. In support of the aforesaid submissions reliance has been placed on the decisions of Rajasthan High Court and the decision of NCLAT3.

ISSUES

# 20. We have considered the rival submissions made on both sides and have perused the record.

# 21. The following issues arise for consideration:

• (i) whether the Corporate Guarantees executed by the Corporate Debtor constitute “financial debt” within the meaning of Section 5(8) of the Code.

• (ii) Whether the claims of the appellants were liable to be rejected for non-submission or improper verification of documents.

• (iii) Whether the findings recorded by the tribunals warrant interference under Section 62 of the Code.

ANALYSIS

# 22. At the outset, it is apposite to note that for a debt to become “financial debt” for the purpose of Part II of the Code, the essential elements of disbursal, and that too against the consideration for time value of money, needs to be found in the genesis of any debt before it may be treated as “financial debt” within the meaning of Section 5(8) of the Code. This debt may be of any nature but a part of it is always required to be carried, or corresponding to, or at least having some traces of disbursal against consideration for the time value of money4. Under Section 5(7) of the Code, a person can be categorized as a financial creditor if a financial debt is owed to it. Section 5(8) of the Code stipulates that the essential ingredient of a financial debt is disbursal against consideration for the time value of money5. A liability arising from the corporate guarantee squarely falls within the ambit of financial debt as defined under Section 5(8) of the Code. The amount of any liability in respect of any of the guarantees for money borrowed against the payment of interest is a “financial debt” within Section 5(8) of the Code6. It is well settled legal proposition that a guarantor incurs a coextensive liability with that of a principal borrower and such liability is enforceable in law.

# 23. In the present case, the execution of the corporate guarantee executed by CD in favour of Security Trustee for and on behalf of the appellants has not been disputed by the CD which is evident from the communication dated 19.03.2019 sent by the counsel of the CD. Paras 2 and 4 of the said communication are extracted below for the facility of reference:

• “2. At the outset our clients deny all allegations made by you in the letter with respect to the alleged conspiracy and defrauding of Emirates NBD Bank PJSC, Industrial and Commercial Bank of China Limited, Doha Bank Q.P.S.C. and VTB Capital Plc (collectively, the “ECB Lenders”). The information regarding the Guarantees (as defined in the Letter) has always been available to the public including the ECB Lenders and adequate disclosures have been made on an ongoing basis under the financial statements and annual reports of the borrower group.

• 4. As the Information of the Guarantees have always been publicly available, the ECB Lenders had full access to such information and the allegations are therefore false and denied. In light of the above submission and classification, we request you to look into the supporting documents provided under Annexure A and withdrew your allegations made under the Letter.”

Thus, the execution of the guarantees is beyond any pale of doubt.

# 24. So far as timing of execution of the corporate guarantee is concerned, the account of the CD was first declared NPA on 22.08.2016. However, the same was subsequently restructured by the consortium of banks, in lieu thereof, the CD executed the corporate guarantee on 03.03.2017. However, despite such restructuring, the account once again became NPA on 20.12.2017. The Reserve Bank of India has issued a master circular dated 01.07.2015, which provides for prudential norms on income recognition or NPA Classification, and provisioning pertaining to advances. Clause 17.2.6 of the said circular reads as under:

• “17.2.6 If a restructured asset, which is a standard asset on restructuring in terms of para 20.2, is subjected to restructuring on a subsequent occasion, it should be classified as substandard. If the restructured asset is a sub-standard or a doubtful asset and is subjected to restructuring, on a subsequent occasion, its asset classification will be reckoned from the date when it became NPA on the first occasion. However, such advances restructured on second or more occasion may be allowed to be upgraded to standard category after the specified period (Annexure-5) in terms of the current restructuring package, subject to satisfactory performance.”

The said master circular mandates that in case of restructured assets, its asset classification will be reckoned from the date it became NPA on the first occasion. The appellants, therefore, declared the account of the CD as NPA w.e.f. 26.08.2016. Thus, it is evident that the corporate guarantees were executed before declaration of account of the CD as NPA and, therefore, the timing and manner of the corporate guarantees could not be questioned on the ground that the CD and the holding company were already in default.

# 25. It is pertinent to note that in the communication dated 19.03.2019 sent by the counsel of the CD, it is stated that disclosures about the corporate guarantees have been made by the CD in their financial statements on an ongoing basis. In any case, mere non-disclosure of corporate guarantee in the financial statements of CD for financial years 2016-17 and 2017-18, cannot deprive the appellants from making a claim on the basis of the said guarantees. At best, it could be treated as default committed by the CD.

# 26. In exercise of the powers conferred under the Code, the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 have been framed. Regulation 10 of the Regulations deals with substantiation of claims, whereas Regulation 13 provides for verification of the claims. Regulation 10 of the said Regulations provides that IRP or RP may call for such other evidence or clarification as he deems fit from a creditor for substantiating the whole or part of its claim. The corporate debtor has admitted execution of the corporate guarantee. The appellant had produced a letter dated 06.03.2019 before the NCLT issued by the security trustee wherein the said trustee confirmed that the executed and stamped version of corporate guarantees is in their custody in New Delhi. The RP inspected the aforesaid guarantees and verified the same by visiting the office of Security Trustee in New Delhi. Therefore, the finding recorded by the NCLAT that there is no pleading on record to establish that guarantees were verified by IRP/RP is perverse.

# 27. It is well-settled that an appeal is a continuation of original proceeding. The documents which are relevant to deciding the lis can be produced at the stage of appeal. The corporate guarantees were produced before the NCLAT. Therefore, merely because they were not produced before the NCLT, no adverse inference can be drawn with regard to the genuineness of the corporate guarantees.

# 28. The corporate guarantees were executed in the New Delhi office of Security Trustee and the Stamp Duty as per applicable rates in New Delhi has been paid. The same were produced before the NCLAT, Principal Bench at New Delhi. The production of corporate guarantees in a proceeding in New Delhi, does not attract the provisions of Maharashtra Stamp Duty Act, 1958. In any case, the legal position governing the effect of insufficiently stamped document is no longer res integra and the same does not become void or unenforceable merely on that account7. The defect of insufficient stamping of the document is curable in nature and does not go to the root of validity of the instrument. Even otherwise, the Stamp Act is a fiscal measure enacted to secure revenue for the State on certain classes of instrument. It is not intended to be used as a weapon by a litigant to defeat the cause of the opponent8. A Constitution Bench of this Court9 has held that “Non stamping or improper stamping does not result in the instrument becoming invalid. The Stamp Act does not render such an instrument void. The non-payment of stamp duty is accurately characterized as a curable defect.” Therefore, the contention that the corporate guarantees were not duly stamped as Stamp Duty under the Maharashtra Stamp Duty Act, 1958 was not paid is sans substance.

# 29. For the aforementioned reasons, issue no.(i) is answered in the affirmative where as issue no (ii) is answered in the negative.

# 30. It is well-settled legal proposition that this Court would not choose to re-appreciate a matter on facts when jurisdictional NCLT and in appeal NCLAT have recorded concurrent findings of fact. The exception to this self-imposed rule is where findings of fact are shown to be perverse10. It is pertinent to note that NCLT had rejected the plea of respondents with regard to preferential transactions and fraud under Sections 43 and 66 of the Code respectively. Merely because the corporate guarantees were not filed along with Form-C, the claim of the appellants could not have been negated. The tribunals at the instance of a lender grossly erred in rejecting the claim raised by the consortium of lenders. For the reasons already assigned by us, in our considered opinion, the perversity of the findings of the tribunals are glaring and manifest, beseeching interference by this Court in second appellate jurisdiction. Accordingly, issue no. (iii) is answered in the affirmative.

CONCLUSION

# 31. For the reasons aforesaid, it is held that :-

• (i) the corporate guarantees executed by the corporate debtor constitute “financial debt” within the meaning of Section 5(8) of the Code. The appellants are entitled to be recognized as financial creditors.

• (ii) The rejection of claims of the appellants, by the NCLT and NCLAT are legally unsustainable.

• (iii) The impugned orders suffer from perversity and warrant interference by this Court.

OPERATIVE DIRECTIONS

# 32. The judgments dated 14.10.2022 and 02.03.2021 passed by NCLAT and NCLT are quashed and set aside. All consequential actions taken in pursuance of impugned orders are set aside. The appellants are recognised as “financial creditors” of the Corporate Debtor. The Resolution Professional is directed to reconstitute the committee of creditors by including the appellants and to proceed with the corporate insolvency resolution process in accordance with law.

# 33. In the result, the appeal is allowed. However, there shall be no order as to costs.

---

References:

1. China Development Bank v. Doha Bank Q.P.S.C. & Ors., [(2024) ibclaw.in 340 SC] : (2025) 7 SCC 729. 

2. Interplay Between Arbitration Agreements under Arbitration & Conciliation Act, 1996 and Stamp Act, 1899, IN RE, [(2023) ibclaw.in 153 SC] : (2024) 6 SCC 1; Union of India v. M/s. Chaturbhai M. Patel & Co., (1976) 1 SCC 747; Dhirajlal Girdharlal v. Commissioner of Income Tax, Bombay, (1954) 2 SCC 557; Omar Salay Mohamed Sait v. Commissioner of Income Tax, Madras, (1959) SCC OnLine SC 71; Avantha Holdings Ltd. & Anr. v. Abhilash Lal, Resolution Professional for Jhabua Power Ltd. & Ors.; [(2022) ibclaw.in 476 NCLAT] : 2022 SCC OnLine NCLAT 4352; UOI v. M/s Chaturbhai M. Patel & Co. (1976) 1 SCC 747; Interplay between Arbitration Agreements under Arbitration and Conciliation Act, 1996 and Stamp Act, 1899 in Re, [(2023) ibclaw.in 153 SC] : (2024) 6 SCC 1; Hindustan Steel Ltd. v. Dilip Construction Company, (1969) 1 SCC 597; Dena Bank v. C. Shivakumar Reddy & Anr. [(2021) ibclaw.in 69 SC] : (2021) 10 SCC 330; Axis Bank Ltd. v. Naren Shet & Anr., [(2023) ibclaw.in 103 SC] : (2024) 1 SCC 679

3. Ram Narain v. Lt. Col. Hari Singh; 1963 SCC OnLine Raj 55 and Dr. Anupam Jain v. CS Chhaya Gupta and Another; [(2025) ibclaw.in 827 NCLAT] : 2025 SCC OnLine NCLAT 1629

4. Anuj Jain, Interim Resolution Professional for Jaypee Infratech Ltd. v. Axis Bank Ltd. & Ors.; [(2020) ibclaw.in 06 SC] : (2020) 8 SCC 401

5. Phoenix ARC (P) Ltd. v. Spade Financial Services Ltd. & Ors.; [(2021) ibclaw.in 03 SC] : (2021) 3 SCC 475

6. China Development Bank (supra)

7. Hindustan Steel Ltd. (supra)

8. NN Global Mercantile (P) Ltd. v. Indo Unique Flame Ltd. & Ors.; [(2023) ibclaw.in 56 SC] : (2023) 7 SCC 1

9. Interplay Between Arbitration Agreements under Arbitration & Conciliation Act, 1996 and Stamp Act, 1899 (supra)

10. Catalyst Trysteeship Ltd. v. Ecstasy Realt (P) Ltd.; [(2026) ibclaw.in 104 SC] : (2026) SCC OnLine SC 300 and SBI & Ors. v. The Consortium of Mr. Murari Lal Jalan and Mr. Florian Fritsch & Anr.; [(2024) ibclaw.in 290 SC] : 2024 INSC 852

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Dineshbhai Premjibhai Lathidadia Vs. Sarvodaya Sahakari Bank Ltd. and Anr. - “The right to sue”, therefore, accrues when a default occurs. If the default has occurred over three years prior to the date of filing of the application, the application would be barred under Article 137 of the Limitation Act, save and except in those cases where, in the facts of the case, Section 5 of the Limitation Act may be applied to condone the delay in filing such application.

  NCLAT (2026.04.24) in Dineshbhai Premjibhai Lathidadia Vs. Sarvodaya Sahakari Bank Ltd. and Anr. [(2026) ibclaw.in 558 NCLAT, Company Appeal (AT) (Ins) No. 2147 of 2024 with Company Appeal (AT) (Ins) No. 621 of 2025] held that;-

• There is therefore, little difficulty in holding that the date of admission of a Claim by the IRP grants a fresh date for commencement of limitation and when the Claims are subsequently updated it pushes the date of terminus a quo to that date.

• An Acknowledgment for liability itself is sufficient and it need not necessarily be accompanied by a promise to pay as per decision in Hetal Enterprises v. New India Assurance Company Ltd. 2012 (1CCC 458 Bom). Further, an acknowledgment under Section 18 of the Limitation Act, 1963 can be with respect to not only the property or Right, but it can be even in regard to the Liability.

• There is a distinction between acknowledgment under Section 18 of the Limitation Act, 1963 and a promise within the meaning of Section 25 of the Contract Act. Both promise and acknowledgment in writing, signed by a party or its agent authorised in that behalf, have the effect of creating a fresh starting of limitation.

• In view of the foregoing discussion, we are not persuaded to accept the submission of the Appellant that Notice under Rule 7 (1) issued in Form-B to the Guarantor, demanding repayment of the default amount, has to be treated as Notice for invoking guarantee. Default before issuance of Notice under Rule 7(1), must exist on the part of the Guarantor.

• Secondly, we notice that there is no dispute between the parties pertaining to the invocation of guarantee on 11.08.2016, filing of summary suit before the JR on 24.10.2016 and passing of decree by the JR on 15.09.2017 and this period was admittedly expiring on 14.09.2020 and in our considered opinion the decree passed by the JR would provide a fresh cause of action of three years which would conclude in ordinary way on 14.09.2020.

• “The right to sue”, therefore, accrues when a default occurs. If the default has occurred over three years prior to the date of filing of the application, the application would be barred under Article 137 of the Limitation Act, save and except in those cases where, in the facts of the case, Section 5 of the Limitation Act may be applied to condone the delay in filing such application.

Excerpts of the Order;

Both above placed appeals are connected with each other and the issue involved in both the appeals is identical, therefore for the sake of convenience and for the purpose of appreciation of evidence, both these appeals are being disposed of by passing this common judgment.

Analysis and Findings

# 31. Having heard Ld. Counsel for the parties and having perused the record a short question which arise for adjudicating is as to whether the application filed by the Respondent no. 1 under Section 95 of the Code was within the limitation period and secondly, as to whether if the civil court has passed a decree during the commencement of the original period of limitation of three years whether the same would provide a fresh cause of action starting the three years’ limitation a fresh.

# 32. We also notice that almost all the facts pertaining to the happening of events appears to be admitted to the parties and in this regard a timeline prepared by the RP and has also been filed through its written submissions appears to be the true depiction of the facts and is reproduced as under for our convenience:

# 33. We notice that the factual matrix barring some minor facts is admitted to the parties. It appears to be an admitted fact as is also reflected from the petition filed by the Respondent No. 1 under Section 95 of the Code before the Ld. Adjudicating Authority that the guarantee advanced by the appellants was invoked on 11.08.2016 and thereafter on 24.10.2016 a summary suit no. 144 of 2016 was filed under Section 99 (4) of the Gujarat Co-operative Societies Act (Act) before Ld. Joint Registrar and Member, Board of nominees, Surat, Gujarat, JR.

# 34. It is also an admitted fact that the above mentioned suit was decreed on 15.09.2017 directing repayment of Rs. 28,865,468.35/- along with 13% compound interest thereon payable by the CD and all personal guarantors, including appellants to the Respondent No.1.

# 35. It also appears to be an admitted fact that no amount after the passing of this decree has been paid by the Appellants to the Respondent Bank.

# 36. It also appears to be an admitted fact that on 01.07.2022, a demand notice under Section 95 (4) (b) of the Code was issued by the Respondent Bank to the appellants which is stated to have been returned by the appellants and it is claimed by the Respondent Bank that this notice was again delivered to the appellants through email on 14.07.2022 and 16.07.2022.

# 37. It also appears to be an admitted fact that the Respondent Bank has filed petition under Section 95 of the IBC before the Ld. Adjudicating Authority on 14.11.2022 which was registered on 11.01.2023, however was dismissed on 22.12.2023 as defective with the liberty to file fresh petition and it was thereafter on 18.06.2024, petition under Section 95 of the Code was filed by the Respondent Bank whereon, after appointment of the Resolution Professional and having perused its reports the impugned orders have been passed by the Ld. Adjudicating Authority admitting the petitions filed by the Respondent Bank under Section 95 of the Code.

# 38. It is to be recalled that part I of the Code is placed under the heading preliminary which contains definition clause and under Section 3, subsection (11) of it the “debt” has been defined as under: –

(11) “debt” means a liability or obligation in respect of a claim which is due from any person and includes a financial debt and operational debt;

# 39. It is also fruitful to mention here the manner in which the “default” has been defined under the Code under Section 3(12) of the Code which is also reproduced as under: –

(12) “default” means non-payment of debt when whole or any part or instalment of the amount of debt has become due and payable and is not 1[Paid] by the debtor or the corporate debtor, as the case may be;

# 40. In part II of the Code which is dedicated to insolvency resolution and liquidation for corporate persons in Section 5(22) “personal guarantor” has been defined as under: –

(22) “personal guarantor” means an individual who is the surety in a contract of guarantee to a corporate debtor;

# 41. Since, the application has been filed by the Respondent No. 1/ Financial Creditor under Section 95 of the code, therefore, the same is also reproduced as under: – . . . 

# 42. This Appellate Tribunal in IDBI Bank vs. Hemangi Patel [(2025) ibclaw.in 599 NCLAT] : 2025 SCC OnLine NCLAT 1263 Opined as under:

• 8. Hon’ble Supreme Court, however, held that claim of acknowledgment under Section 18 on basis of letter dated 29.01.2020 cannot be accepted since the said acknowledgement was subsequent to expiry of 3 years. Hon’ble Supreme Court relied on earlier judgment of Hon’ble Supreme Court in the matter of ‘B.K. Educational Services Pvt. Ltd.’ v. ‘Parag Gupta & Associates’, [(2019) 11 SCC 633], where Article 137 of the Limitation Act was held to be applicable and limitation as 3 years. Hon’ble Supreme Court held that recovery certificate will give a fresh cause of action and application brought within 3 years of issue of recovery certificate is well within time. With regard to two recovery certificates, with respect to which Section 7 was initiated within 3 years, Hon’ble Supreme Court held the same to be within limitation relying on Article 137 of the Limitation Act. In the above context, following was laid down in paragraph 24:

• “24. What has been filed before NCLT is a composite application based on three recovery certificates, two of which have been instituted within the three-year period as postulated in Article 137 of the Limitation Act. The third recovery certificate was issued in the year 2015. Thus, there is more than three years’ gap between the date of issue thereof and the date of filing of the application before NCLT. But a recovery certificate under the 1993 Act is also clothed with the character of a deemed decree. The provisions of Section 19 (22-A) of the 1993 Act specifies:

• “19. Application to the Tribunal.—(1)-(22) * * * (22-A) Any recovery certificate issued by the Presiding Officer under sub-section (22) shall be deemed to be decree or order of the Court for the purposes of initiation of winding-up proceedings against a company registered under the Companies Act, 2013 (18 of 2013) or limited liability partnership registered under the Limited Liability Partnership Act, 2008 (6 of 2009) or insolvency proceedings against any individual or partnership firm under any law for the time being in force, as the case may be.”

• 10. From the above it is clear that Hon’ble Supreme Court in the above case which is relied by the appellant relying on the earlier judgment in the matter of ‘Kotak Mahindra Bank Ltd.’ (Supra) held that limitation for filing Section 7 application is only 3 years as per Article 137. We, thus are of the view that submission of the appellant relying on the above judgment that Hon’ble Supreme Court held that limitation will be 12 years with respect to a decree is wholly incorrect and is not borne out from the judgment.

• 13. We thus do not find any substance in the submission of the counsel for the appellant that for filing an application under IBC 12 years limitation will apply. The judgment relied by the counsel for the appellant in ‘Tottempudi Salalith’ (Supra) also does not lay down any such proposition as contended by the counsel for the appellant. The adjudicating authority in the impugned order come to the conclusion that Section 95 application filed by the IDBI Bank was filed after expiry of three years period of limitation even after giving the benefit of judgment of the Hon’ble Supreme Court in Suo Motu WP (Civil) No. 3 of 2022 in ‘Re: Cognizance for Extension of Limitation’.

• 14. We do not find any error in the order of the adjudicating authority rejecting Section 95 application filed by the appellant as barred by time. There is no merit in the appeals. Both the appeals are dismissed.

# 43. In Shankar Khandelwal v. Omkara Asset Reconstruction Pvt. Ltd. and Anr., (2025) ibclaw.in 845 NCLAT, it is Observed as under:

• 19. There is therefore, little difficulty in holding that the date of admission of a Claim by the IRP grants a fresh date for commencement of limitation and when the Claims are subsequently updated it pushes the date of terminus a quo to that date.

# 44. In State Bank of India vs. Gourishankar Poddar & Anr. (2025) ibclaw.in 17 NCLAT this Appellate Tribunal held as under:

• 48. The last issue relates to the limitation in filing the CIRP petition. In this regard it is a settled law that the liability of the Corporate Debtor and the guarantor being Respondent No. 1 are co-terminus. Thus, liability for Respondent No. 1 would arise only when amounts became and went due by the Corporate Debtor. Consequently, any acknowledgement of debt by the principal borrower is also considered an acknowledgement by the guarantor under the Act of 1963. This position has been upheld by this Appellate Tribunal in E.M. Najeeb Ellias Mohammed, Promoter of Air Travel Enterprises India Ltd. v. Union Bank of India [2024 SCC OnLine NCLAT 254]. Relevant paras 65 to 67 are extracted below:

• “65. An Acknowledgment for liability itself is sufficient and it need not necessarily be accompanied by a promise to pay as per decision in Hetal Enterprises v. New India Assurance Company Ltd. 2012 (1CCC 458 Bom). Further, an acknowledgment under Section 18 of the Limitation Act, 1963 can be with respect to not only the property or Right, but it can be even in regard to the Liability.

• 66. An Acknowledgment of a liability made by the Principal Borrower should be considered as an acknowledgment of liability, on behalf of Guarantor.

• 67. A Revival Letter/ an acknowledgment, executed by the Principal Borrower on the authorization binds the Guarantor.”

# 45. The Hon’ble Supreme Court again in Kotak Mahindra Bank Ltd. vs. Key Precision Parts Pvt. Ltd. & Ors. [(2022) ibclaw.in 99 SC] : 2022 SCC OnLine SC 978 observed as under:

• 31. Under Section 25(3), a debtor can enter into an agreement in writing, to pay the whole or part of a debt, which the creditor might have enforced, but for the limitation of a suit in law. A written promise to pay the barred debt is a valid contract. Such a promise constitutes novation and can form the basis of a suit independent of the original debt, for it is well settled that the debt is not extinguished, the remedy gets barred by passage of time as held by this Court in Bombay Dyeing & Mfg. Co. Ltd. v. State of Bombay.

• 33. There is a distinction between acknowledgment under Section 18 of the Limitation Act, 1963 and a promise within the meaning of Section 25 of the Contract Act. Both promise and acknowledgment in writing, signed by a party or its agent authorised in that behalf, have the effect of creating a fresh starting of limitation. The difference is that an acknowledgment under Section 18 of the Limitation Act has to be made within the period of limitation and need not be accompanied by any promise to pay. If an acknowledgment shows existence of jural relationship, it may extend limitation even though there may be a denial to pay. On the other hand, Section 25(3) is only attracted when there is an express promise to pay a debt that is time-barred or any part thereof. Promise to pay can be inferred on scrutinising the document. Only the promise should be clear and unconditional.

# 46. The Hon’ble Supreme Court in Laxmi Pat Surana vs Union Bank of India & Anr. [(2021) ibclaw.in 53 SC] : (2021) SCC OnLine SC 267 Opined as under:

• 43. Ordinarily, upon declaration of the loan account/debt as NPA that date can be reckoned as the date of default to enable the financial creditor to initiate action under Section 7 IBC. However, Section 7 comes into play when the corporate debtor commits “default”. Section 7, consciously uses the expression “default” – not the date of notifying the loan account of the corporate person as NPA. Further, the expression “default” has been defined in Section 3(12) to mean non-payment of “debt” when whole or any part or instalment of the amount of debt has become due and payable and is not paid by the debtor or the corporate debtor, as the case may be. In cases where the corporate person had offered guarantee in respect of loan transaction, the right of the financial creditor to initiate action against such entity being a corporate debtor (corporate guarantor), would get triggered the moment the principal borrower commits default due to non-payment of debt. Thus, when the principal borrower and/or the (corporate) guarantor admit and acknowledge their liability after declaration of NPA but before the expiration of three years therefrom including the fresh period of limitation due to (successive) acknowledgments, it is not possible to extricate them from the renewed limitation accruing due to the effect of Section 18 of the Limitation Act. Section 18 of the Limitation Act gets attracted the moment acknowledgment in writing signed by the party against whom such right to initiate resolution process under Section 7 IBC enures. Section 18 of the Limitation Act would come into play every time when the principal borrower and/or the corporate guarantor (corporate debtor), as the case may be, acknowledge their liability to pay the debt. Such acknowledgment, however, must be before the expiration of the prescribed period of limitation including the fresh period of limitation due to acknowledgment of the debt, from time to time, for institution of the proceedings under Section 7 IBC. Further, the acknowledgment must be of a liability in respect of which the financial creditor can initiate action under Section 7 IBC.

# 47. The Hon’ble Supreme Court again in Order dated 10.01.2022 passed in Suo Motu W.P. (C) No. 03/2020 exempting limitation during Covid-19. Held as under:

• 5. Taking into consideration the arguments advanced by learned counsel and the impact of the surge of the virus on public health and adversities faced by litigants in the prevailing conditions, we deem it appropriate to dispose of the M.A. No. 21 of 2022 with the following directions:

• I. The order dated 23.03.2020 is restored and in continuation of the subsequent orders dated 08.03.2021, 27.04.2021 and 23.09.2021, it is directed that the period from 15.03.2020 till 28.02.2022 shall stand excluded for the purposes of limitation as may be prescribed under any general or special laws in respect of all judicial or quasi-judicial proceedings.

• II. Consequently, the balance period of limitation remaining as on 03.10.2021, if any, shall become available with effect from 01.03.2022.

• III. In cases where the limitation would have expired during the period between 15.03.2020 till 28.02.2022, notwithstanding the actual balance period of limitation remaining, all persons shall have a limitation period of 90 days from 01.03.2022. In the event the actual balance period of limitation remaining, with effect from 01.03.2022 is greater than 90 days, that longer period shall apply.

• IV. It is further clarified that the period from 15.03.2020 till 28.02.2022 shall also stand excluded in computing the periods prescribed under Sections 23 (4) and 29A of the Arbitration and Conciliation Act, 1996, Section 12A of the Commercial Courts Act, 2015 and provisos (b) and (c) of Section 138 of the Negotiable Instruments Act, 1881 and any other laws, which prescribe period(s) of limitation for instituting proceedings, outer limits (within which the court or tribunal can condone delay) and termination of proceedings. As prayed for by learned Senior Counsel, M.A. No. 29 of 2022 is dismissed as withdrawn.

# 48. The only issue which has been raised by the appellant in this appeal is pertaining to the fact that both the petitions are barred by limitation. According to the appellants the personal guarantee given by the appellants was invoked on 11.08.2016 and summary suit was filed on 24.10.2016 whereon a decree was passed on 15.09.2017 and the demand notices to the personal guarantors under Form B was issued on 11.07.2022 and 14.07.2022 and the earlier petitions CP (IB) No. 13 of 2023 and CP (IB) No. 11 of 2023 were filed on 14.11.2022 dismissed on 22.12.2023 being defective, with the liberty to file a fresh petitions and thereafter the fresh petitions have been filed whereon the impugned orders have been passed.

# 49. At this juncture, it is also important to see as to how the Ld. Adjudicating Authority has disposed of the petitions filed by the Respondent Bank and in both the impugned orders the relevant paragraph no. 18 to 22 are identical and therefore reproduced below for the purpose of convenience.

• “18. As regards limitation aspect is concerned, in the present case admittedly Corporate Debtor after availing Credit facilities committed default. Consequently, the loan accounts of the Corporate Debtor were classified as NPA on 30.07.2016. Thereafter, on 24.10.2016 the Applicant Bank filed Summary Suit No.144/2016 U/s 99(4) of the Gujarat Co-Operative Societies Act against the Corporate Debtor, Respondent/PG & others for recovery which was allowed vide order dated 15.09.2017. On non-payment/fresh default, gave fresh cause of auction. Thus, the period of Limitation was stand extended for three years w.e.f. order dated 15.09.2017 to 14.09.2020 in terms of section 18 of the Limitation Act, 1963.

• 19. However, in view of the COVID pandemic period, Hon’ble Supreme Court in Suo Motu WP (Civil) No. 3 of 2022 in Re: Cognizance for Extension of Limitation as well as in the matter of M/s Arif Azim Co. Ltd. v. M/s Aptech Ltd. (2024 INSC 155) dated 01.03.2024 held that the period i.e. 15.03.2020 to 28.02.2022 is liable to be excluded for the purpose of calculating the period of limitation. It is also held that in the event the actual balance period of limitation remaining, with effect from 01.03.2022 is greater than 90 days, that longer period shall apply.

• 20. In the present case the said excluded period comes to total number of 531 days. In ordinary circumstances the limitation period would have come to an end on 14.09.2020. However, after exclusion of 531 days, the three years’ limitation period would come to an end on 16.08.2024. Thereby meaning that the limitation period available to the Applicant Bank for invoking the personal guarantee would come to an end on 16.08.2024.

• 21. In the present case the Applicant Bank has invoked the personal guarantee by serving Form-B being Demand Notice dated 01.07.2022 Section 95(4) (b) of the IBC, 2016 r.w. Rule 7(1) of the I&B (AAA for IRP for PGCD) Rules, 2019 after fresh default in terms of order dated 15.09.2017 passed in the Summary Suit No.144/2016 U/s 99(4) of the Gujarat Co-Operative Societies Act with in period of limitation in terms of section 18 of the Limitation Act, 1963.

• 22. Hence, in our view, even taking the date of invocation of Guarantee dated 01.07.2022 applying the judgment of Hon’ble Supreme Court in Suo Motu WP (Civil) No. 3 of 2022 (should be 2020) In Re: Cognizance for Extension of Limitation as well as in the matter of M/s Arif Azim Co. Ltd. v. M/s Aptech Ltd. (2024 INSC 155) dated 01.03.2024, the present Petition filed on 19.06.2024 is very much within limitation as period of limitation for the same is available to the Applicant Bank till 16.08.2024”.

# 50. Perusal of the impugned orders passed by the Ld. Adjudicating Authority would reveal that Ld. Adjudicating Authority has taken the date i.e. 30.07.2016 as the date on which the loan account of the CD was classified as NPA and thereafter considered the decree passed by the Ld. JR under the Section 99 (4) of the Act on 15.09.2017 and goes on to hold that non-payment/ fresh default provided fresh cause of action and thus found the period of limitation extended for three years with effect from order of the JR dated 15.09.2017 which is to end on 14.09.2020 and thereafter by the implication of the happening of the Covid Pandemic and in view of the Suo Motu- WP (Civil) No. 3 of 2020 In Re: Cognizance for extension of limitation dated 10.01.2022 as well as the law laid down in M/s Arif Azim Company Ltd. vs. M/s Aptech Ltd. [(2024) ibclaw.in 80 SC] : (2024 INSC 155) dated 01.03.2024 held that the period from 15.03.2020 to 28.02.2022 is liable to be excluded from calculating the period of limitation and that when the actual balance period of limitation is remaining w.e.f. 01.03.2022 is greater than 90 days than longer period shall apply and has calculated that period as of 531 days and found that this period (after exclusion of 531 days) was ending on 16.08.2024 and thus hold that the limitation period available to the applicant bank for invoking the personal guarantee would come to an end on 16.08.2024.

# 51. It was further held by Ld. Adjudicating Authority that the bank has invoked personal guarantee by serving Form-B (demand notice on 01.07.2022) under Section 95 (4) (b) of the Code read with Rule 7 (1) of the PG to CD Rules, 2019 and found that in terms of decree dated 15.09.2017 passed by the JR the petitions are within limitation.

# 52. We notice that the Ld. Adjudicating Authority has committed a manifest illegality in taking the guarantee invocation date as 01.07.2022 by issuance of demand notice on 01.07.2022 under Section 95 (4) (b) of the Code read with Rule 7 (1) of the PG to CD Rules, 2019 while the guarantee had already been invoked by the Respondent Bank admittedly on 11.08.2016. It appears to be a settled law that by issuance of notice under Form-B the guarantee may not be invoked and in this regard the law laid down by a Co-ordinate Bench of this Appellate tribunal in SBI vs. Deepak Kumar Singhania, (2025) ibclaw.in 153 NCLAT may be recalled and relevant part of the same is reproduced as under:

• “17. The Notice, thus, contemplate demanding payment of the amount of default. The above Rule clearly indicate that Demand Notice has to be issued, demanding payment of the amount in default. Thus, the default by Guarantor has to exist on the date when Notice in Form-B is being issued. When we read Section 95, sub-section (4) and Rule 7 of 2019 Rules, the above is the only intendment of the legislative scheme, i.e. default on the part of Guarantor should exist on the date when Notice in Form-B has to be issued. We have noticed the definitions of ‘debt’ and ‘default’ in Section 3 (11) and (12) of the IBC. Default shall arise on account of non-payment of debt, when whole or part of it become due. ‘Debt’ means a liability or obligation in respect of a claim which is due from any person. Thus, for a default, debt has to be due and Debtor shall be only that person, to whom debt is due. A Personal Guarantor becomes a Debtor only when guarantee is invoked, making him liable to make the payment to the Lender. We have noticed Clause 2 and Clause 21 of the Deed of Guarantee in the foregoing paragraphs of this judgment, which clearly contemplate that liability on Guarantor shall arise only when demand is made by the Lender, in event Principal Borrower fails to repay the amount. In the present case, there is no case setup by the Appellant that at any point of time guarantee was invoked, except issuance of Notice in Form-B, which is claimed by the Appellant to be treated as Notice for invocation of guarantee. Further, we have noticed the definition of ‘Guarantor’ under Rule 3(1)(e), which while defining a ‘Guarantor’ contain two conditions, i.e. (i) who is a Personal Guarantor to a Corporate Debtor; and (ii) in respect of whom, guarantee has been invoked by the Creditor and remains unpaid in full or part. Learned Counsel for the Appellant has contended that expression ‘and’ used in Rule 3 (1)(e) needs to be read as ‘or’ to make the provision workable and to avoid producing an unintelligible and absurd result. Learned Counsel for the Appellant has relied on two judgments of the Hon’ble Supreme Court in support of the above submission, i.e. AIR 1968 SC 1450 – Ishwar Singh Bindra and Ors. vs. State of U.P. The Hon’ble Supreme Court in the above case had occasion to consider the definition of ‘drug’ contained in Section 3(b)(i) of Drugs Act 1940. Expression ‘and’ used in Section 3(b)(1) of the Drugs Act was considered in the said case and in paragraph 11 of the judgment, following was laid down:

• “11. Now if the expression “substances” is to be taken to mean something other than “medicine” as has been held in our previous decision it becomes difficult to understand how the word “and” as used in the definition of drug in Section 3(b)(i) between “medicines” and “substances” could have been intended to have been used conjunctively. It would be much more appropriate in the context to read it disconjunctively. In Stroud’s Judicial Dictionary, 3rd Edn. it is stated at p. 135 that “and” has generally a cumulative sense, requiring the fulfilment of all the conditions that it joins together, and herein it is the antithesis of or. Sometimes, however, even in such a connection, it is, by force of a contexts, read as “or”. Similarly, in Maxwell on Interpretation of Statutes, 11th Edn., it has been accepted that “to carry out the intention of the legislature it is occasionally found necessary to read the conjunctions ‘or’ and ‘and’ one for the other”.

• The coordinate bench of this Appellate Tribunal in the above noted case further opined as under: –

• “20. The above judgment reiterates that one of the basic principles of interpretation of statutes is to construe them according to plain, literal and grammatical meaning of the words. When we look into definition of ‘Guarantor’ in Rule 3(1)(e), fulfilment of both the condition that Debtor is a Personal Guarantor to a Corporate Debtor and in respect of whom guarantee has been invoked, has been cumulatively used. The submission of the Appellant that use of the expression ‘and’ has to be read as ‘or’, shall not further the statutory object and purpose. Guarantor with regard to whom guarantee has not been invoked, shall not be a Debtor and no default can be committed by Guarantor, unless guarantee is invoked as per the terms of Deed of Guarantee. Thus, the insolvency resolution process against a Guarantor, against whom debt has not become due, is not understandable. We, thus, reject the submission of the Appellant that word ‘and’ used in Rule 3(1)(e) has to be read as ‘or’. Reading of word ‘or’ in place of ‘and’ shall be not in accordance with the statutory scheme and shall be against the statutory intendment.

• 22. The requirement of date, when the default occurred, itself contemplate the default by Guarantor, when Application is filed against Guarantor. Obviously, the default has to be of the Guarantor and mentioning of date when the default occurred, itself contemplate default on the part of Guarantor, i.e. invocation of guarantee as per Deed of Guarantee. Thus, non-mention of requirement of whether guarantee has been invoked and proof thereof, is inconsequential, since the date when default occurred is specifically asked for.

• It was further held that default shall arise on the part of Guarantor only when Demand Notice is issued, as contemplated in the Deed of Guarantee in following words: –

• “27. In view of the foregoing discussion, we are not persuaded to accept the submission of the Appellant that Notice under Rule 7 (1) issued in Form-B to the Guarantor, demanding repayment of the default amount, has to be treated as Notice for invoking guarantee. Default before issuance of Notice under Rule 7(1), must exist on the part of the Guarantor. Hence, we reject the submission of the Appellant that Notice under Rule 7, sub-rule (1) is a Notice, invoking the guarantee. We, thus, do not find any error in the order of the Adjudicating Authority, rejecting Section 95 Application filed by the SBI. There is no merit in the Appeal. The Appeal is dismissed. There shall be no order as to costs.”

• The aforesaid law propounded by a Bench of this Appellate Tribunal comprising three Hon’ble Members has clearly laid down the law that it would be mandatory on the part of the Financial creditor to invoke the guarantee before issuing a notice under Rule 7(1) in Form B of 2019 Rules and also that default before issuance of such notice must exist on the part of the guarantor and has therefore rejected the submissions as canvassed by Ld. Counsel for the Appellant by holding that the notice given under Rule 7(1) of 2019 Rules is not a notice for the purpose of invoking the guarantee.

# 53. Secondly, we notice that there is no dispute between the parties pertaining to the invocation of guarantee on 11.08.2016, filing of summary suit before the JR on 24.10.2016 and passing of decree by the JR on 15.09.2017 and this period was admittedly expiring on 14.09.2020 and in our considered opinion the decree passed by the JR would provide a fresh cause of action of three years which would conclude in ordinary way on 14.09.2020. In this regard the law laid down by this Appellate tribunal in IDBI Bank vs. Hemangi Patel (supra) and by the Hon’ble Supreme Court in B.K. Educational Services Pvt. Ltd. vs. Parag Gupta and Associates [(2018) ibclaw.in 32 SC] may be recalled and relevant part of these judgments is reproduced as under:

• 41. Shri Dholakia argued that the Code being complete in itself, an intruder such as the Limitation Act must be shut out also by application of Section 238 of the Code which provides that, “notwithstanding anything inconsistent therewith contained in any other law for the time being in force”, the provisions of the Code would override such laws. In fact, Section 60(6) of the Code specifically states as follows: “60. Adjudicating authority for corporate persons. – (1)- (5) * * * (6) Notwithstanding anything contained in the Limitation Act, 1963 (36 of 1963) or in any other law for the time being in force, in computing the period of limitation specified for any suit or application by or against a corporate debtor for which an order of moratorium has been made under this Part, the period during which such moratorium is in place shall be excluded.” This provision would have been wholly unnecessary if the Limitation Act was otherwise excluded either by reason of the Code being complete in itself or by virtue of Section 238 of the Code. Both, Section 433 of the Companies Act as well as Section 238-A of the Code, apply the provisions of the Limitation Act “as far as may be”. Obviously, therefore, where periods of limitation have been laid down in the Code, these periods will apply notwithstanding anything to the contrary contained in the Limitation Act. From this, it does not follow that the baby must be thrown out with the bathwater. This argument, therefore, must also be rejected.

• 42. It is thus clear that since the Limitation Act is applicable to applications filed under Sections 7 and 9 of the Code from the inception of the Code, Article 137 of the Limitation Act gets attracted. “The right to sue”, therefore, accrues when a default occurs. If the default has occurred over three years prior to the date of filing of the application, the application would be barred under Article 137 of the Limitation Act, save and except in those cases where, in the facts of the case, Section 5 of the Limitation Act may be applied to condone the delay in filing such application.

# 54. In Dena Bank vs. C. Shivakumar Reddy [(2021) ibclaw.in 69 SC] : (2021) 10 SCC 330 Hon’ble Supreme Court held as under:

• “141. Moreover, a judgment and/or decree for money in favour of the financial creditor, passed by the DRT, or any other tribunal or court, or the issuance of a certificate of recovery in favour of the financial creditor, would give rise to a fresh cause of action for the financial creditor, to initiate proceedings under Section 7 IBC for initiation of the corporate insolvency resolution process, within three years from the date of the judgment and/or decree or within three years from the date of issuance of the certificate of recovery, if the dues of the corporate debtor to the financial debtor, under the judgment and/or decree and/or in terms of the certificate of recovery, or any part thereof remained unpaid”.

# 55. Ld. Adjudicating Authority after holding that the period of limitation to file a petition was available till 14.09.2020 calculated that 531 days in view of the judgment of the Hon’ble Supreme Court In Re: Cognizance for extension of limitation dated 10.01.2022, would be excluded from counting the limitation period and in this way the limitation period would come to end on 16.08.2024.

# 56. We are of the considered view that Ld. Adjudicating authority has also committed patent illegality in computing the period which may be excluded from counting the limitation period as according to the law laid down by the Hon’ble Supreme Court In Re: Cognizance for extension of limitation dated 10.01.2022 and M/s Arif Azim Company Ltd. vs. M/s Aptech Ltd. [(2024) ibclaw.in 80 SC] : (2024 INSC 155), the period from 15.03.2020 to 28.02.2022 could only be excluded however where the limitation period has expired before 28.02.2022 is greater than 90 days that longer period would be available to the petitioner from 01.03.2022.

# 57. The appellant in their written submissions filed before us has calculated this period from 15.03.2020 to 14.09.2020 as 182 days while the Respondent No. 1 in his written submissions has counted this period from 15.03.2020 to 14.09.2020 (184 days) and by such computation the period was to expire on 31.08.2022 and according to the appellants this period was to expire on 30.08.2022. We are unable to understand as to on what basis Ld. Adjudicating Authority has calculated the period which may be excluded in view of the order of the Hon’ble Supreme Court In Re: Cognizance for extension of limitation as 531 days, therefore in his regard also Ld. Adjudicating Authority has committed an illegality.

# 58. Ld. Counsel for the Respondent no. 1 has submitted that even if the period of limitation was to expire on 31.08.2022 but the same has extended first on the score that a letter has been written by the appellants to the Respondent Bank on 17.03.2022 unconditionally promising and undertaking to pay 77% of the principal debt owed to the appellants and by this acknowledgment in writing the period of limitation has further extended for another three years.

# 59. Secondly, it is also argued by the Respondent Bank that another letter of date 12.07.2022 was send by the appellant to pay entire principal debt amount owed to him which would further extend the limitation period from another three years in view of Section 18 of the Indian Limitation Act and the petitions filed by the Respondent No. 1 on 14.11.2022 and thus the same were within limitation.

# 60. Another argument which has been taken by the Ld. Counsel for the Respondent No. 1 is in terms that the claim of the Bank was admitted in the CIRP of the CD on 02.03.2020 and keeping in view the law laid down by the Co-ordinate Bench of this Appellate tribunal in Shankar Khandelwal (supra) and SBI vs. Gauri Shankar Poddar it will amount to an acknowledgment by which the limitation has further extended for another three years and since by writing letters dated 17.03.2022, 12.07.2022 unconditional promise to pay the debt has been acknowledged by the appellants the same would amount to acknowledgment in writing under Section 18 of the limitation act and thus the limitation has extended till 12.07.2025. Reliance in this regard has been placed on Kotak Mahindra Bank Ltd. vs. Key Precision(supra).

# 61. It appears to be prima facie true that since the decree was passed by the JR on 15.09.2017 the limitation period according to this decree which has provided a fresh cause of action would have extended the limitation period till 14.09.2020 and keeping in view the order of the Hon’ble Supreme Court In Re: Cognizance for extension of limitation dated 10.01.2022 the period of 184 days would have been excluded from counting the limitation period and by such exclusion the limitation would have expired on 31.08.2022. Keeping in view the communication of the appellants dated 17.03.2022 and 12.07.2022 a copy of which has been placed at (page no. 256 to 265) (268 to 269) of the appeal paper book of CA (AT) (Ins) No. 2147 of 2024 the same may amount to an acknowledgment in writing and this acknowledgment would have extended the limitation for a further period of three years from such date and the petition appears to have been filed within this period.

# 62. However, we notice that in none of the impugned order Ld. Adjudicating Authority has discussed anything about the filing of claim by the Respondent Bank before the IRP or the RP in the CIRP of the CD nor any discussion has been made pertaining to the letters dated 17.03.2022 and 12.07.2022 written by the appellants to Respondent No. 1 acknowledging the debt and therefore in absence of the same we are not in a position to dispose of the issue of limitation emerging between the parties and therefore there appears no option before us except to remand the matter again to the Ld. Adjudicating Authority for deciding it afresh.

# 63. Keeping in view all the facts and circumstances of the case and for the reasons given herein before the impugned order may not with stand the test of law and therefore are set aside.

# 64. Resultantly, the appeals filed by the appellants are allowed. The matter is remanded back to Ld. Adjudicating Authority for deciding it afresh after providing an opportunity by passing a reasoned order. For this purpose, the CP (IB) No. 249/NCLT/AHM/2024 with I.A. No. 1563/NCLT/AHM/2024 and CP (IB) No. 231/NCLT/AHM/2024 with I.A. No. 1270/NCLT/AHM/2024 is revived on the board of the Ld. Adjudicating Authority.

# 65. The parties shall appear before Ld. Adjudicating Authority on 12.05.2026. There is no order as to costs.

# 66. Pending I.A.’s if any is also disposed of.

# 67. We request the Ld. Adjudicating authority to make all endeavor to dispose of the aforesaid matter afresh within two months from appearance of the party before it.

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