NCLAT (2025.12.01) in Zameer Pawan Kumar Agarwal & Ors vs Pankaj Prabhudayal Goenka, RP of Personal Guarantor & Ors.[(2025) ibclaw.in 1044 NCLAT, Comp. App. (AT) (Ins) No. 1118, 1120 & 1121 of 2025] held that;-
These appeals have been filed against the order dated 16.05.2025 by which Section 94 application filed by the Appellant has been dismissed as barred by time.
The Limitation against the Appellant to file or take steps for resolution under IBC, arose atleast from the date when recovery certificate was issued. The mere facts that the Appellant gave and OTS proposal to BoB shall not give any benefit under Section 18 to the Appellant for computing the Limitation from 12.06.2017.
The application which was filed on 14.03.2023 was clearly barred by time. We do not find any error in the order of the Adjudicating Authority rejecting Section 94 application as barred by time.
Blogger’s comments; The bigger question is,-
“Whether limitation is required to be looked into in an application filed under section 94 of the IBC.”
Hon’ble Supreme Court (1992.04.20) in Punjab National Bank And Ors vs Surendra Prasad Sinha (Criminal Appeal No. 254 of 1992.) held that;
"The rules of limitation are not meant to destroy the rights of the parties. Section 3 of the Limitation Act only bars the remedy, but does not destroy the right which the remedy relates to. The right to the debt continues to exist notwithstanding the remedy is barred by the limitation. Only exception in which the remedy also becomes barred by limitation is the right is destroyed. Though the right to enforce the debt by judicial process is barred, the right to debt remains. The time barred debt does not cease to exist by reason of s.3. That right can be exercised in any other manner than by means of a suit. The debt is not extinguished, but the remedy to enforce the liability is destroyed. What s.3. refers only to the remedy but not to the right of the creditors. Such debt continues to subsists so long as it is not paid. It is not obligatory to file a suit to recover the debt."
Hon’ble Supreme Court (2018.10.11) in B.K. Educational Services Private Limited Vs. Parag Gupta and Associates [Civil Appeal No.23988 of 2017] has in length noted the difference between debt “due and payable” from debts “due and recoverable”. ;
# 19. Shri Dholakia also referred to and relied upon Section 60 and 61 of the Contract Act which are set out hereunder:
“60. Application of payment where debt to be discharged is not indicated.—Where the debtor has omitted to intimate, and there are no other circumstances indicating to which debt the payment is to be applied, the creditor may apply it at his discretion to any lawful debt actually due and payable to him from the debtor, whether its recovery is or is not barred by the law in force for the time being as to the limitation of suits.
61. Application of payment where neither party appropriates.—Where neither party makes any appropriation the payment shall be applied in discharge of the debts in order of time, whether they are or are not barred by the law in force for the time being as to the limitation of suits. If the debts are of equal standing, the payment shall be applied in discharge of each proportionably.”
These Sections also recognize the fact that limitation bars the remedy but not the right. In the context in which Section 60 appears, it is interesting to note that Section 60 uses the phrase “actually due and payable to him….” whether its recovery is or is not barred by the limitation law. The expression “actually” makes it clear that in fact a debt must be due and payable notwithstanding the law of limitation. From this, it is very difficult to infer that in the context of the Contract Act, the expression “due and payable” by itself would connote an amount that may be due even though it is time-barred, for otherwise, it would be unnecessary for Section 60 to contain the word “actually” together with the later words, “whether its recovery is or is not barred by the law in force for the time being as to the limitation of suits”.
# 20. Shri Dholakia went on to cite Bhimsen Gupta v. Bishwanath Prasad Gupta, (2004) 4 SCC 95, and In re Sir Harilal Nemchand Gosalia, AIR 1950 Bom 74, for the proposition that debts “due and payable” must be differentiated from debts “due and recoverable”. .
In the former case, Section 11(1)(d) of the Bihar Buildings (Lease, Rent and Eviction) Control Act, 1982 provided for eviction of a tenant where the amount of two months’ rent “lawfully payable by the tenant and due from him” was in arrears. This Court followed Bombay Dyeing (Bombay Dyeing & Mfg. Co. Ltd. v. State of Bombay, AIR 1958 SC 328 ), stating as follows:
“6. Section 11 of the said Act, 1982 deals with eviction of tenants. It begins with non obstante clause. It states that notwithstanding anything contained in any contract or law to the contrary, no tenant shall be liable to be evicted except in execution of a decree passed by the court on one or more of the grounds mentioned in Sections 11(1)(a) to (f). In this case we are concerned with the ground of default which falls under Section 11(1)(d) and which states that where the amount of two months’ rent, lawfully payable by the tenant and due from him is in arrears by reason of non-payment within the time fixed by the contract or in the absence of such contract by the last day of the month next following that for which rent is payable then such default would constitute ground for eviction. It is interesting to note that the expression used in Section 11(1)(d) is “lawfully payable” and not “lawfully recoverable” and therefore, Section 11(1) (d) has nothing to do with recovery of arrears of rent. On the contrary, Section 11(1)(d) provides a ground for eviction of the tenant in the eviction suit. It is well settled that law of limitation bars the remedy of the claimant to recover the rent for the period beyond three years prior to the institution of the suit, but that cannot be a ground for defeating the claim of the landlord for decree of eviction on satisfaction of the ingredients of Section 11(1)(d) of the said Act, 1982. In the case of Bombay Dyeing & Mfg. Co. Ltd. v. State of Bombay [AIR 1958 SC 328] it has been held that when the debt becomes time-barred the amount is not recoverable lawfully through the process of the court, but it will not mean that the amount has become not lawfully payable. Law does not bar a debtor to pay nor a creditor to accept a barred debt.”
Excerpts of the Order;
(Hybrid Mode) 01.12.2025 Heard Ld. Counsel for the Appellant and the Respondent.
These appeals have been filed against the order dated 16.05.2025 by which Section 94 application filed by the Appellant has been dismissed as barred by time.
Brief facts necessary for deciding the appeals are: the Appellants are Personal Guarantor to the Corporate Debtor namely the "Roselabs Bioscience Limited", various financial facilities were extended to the CD to which the Appellants stood as Personal Guarantors. There was default by CD. Financial Creditor issued the demand notice under Section 13(2) and thereafter filed an application under Section 19 of the Debt Recovery Act, 1993 and the Debt Recovery Tribunal allowed the application in O.A. No. 437 of 2025 on 12.06.2017, recovery certificate was also issued. The Appellant filed Section 94 application on 14.03.2023.
In the application Resolution Professional was appointed who recommended for admission of Section 94 application. The Personal Guarantor (Appellant) also filed an affidavit opposing the application. Adjudicating Authority heard the parties, by the impugned order it held that application having been filed beyond the Limitation is to be rejected.
Ld. Counsel for the Appellant challenging the order submits that the Appellant has given a settlement proposal to Bank of Baroda on 23.02.2022, hence the application filed on 14.03.2023 cannot be barred by Limitation. He further submitted that after recovery certificate which was issued on 12.06.2017, three years period expired during the period under Section 10A, hence the Appellant shall also be entitled to benefit of the order of the Hon'ble Supreme Court in Suo Moto Writ Petition 3 of 2020.
Ld. Counsel for the Bank refuting the submission submits that the application was barred by time the cause of action to the Appellant to pray for its resolution under Section 94 arose when demand notice was issued in 2015 and when recovery certificate was issued on 12.06.2017. Within three years period, the Appellant did not initiate the proceedings, he further submits that even after giving the benefit of period from 25.03.2020 to 28.02.2022 the application is still barred by time. He submits that the OTS given by Bank of Baroda shall not give an extension of Limitation under Section 18 of the Limitation Act to the Appellant.
We have considered the submissions of the parties and perused the record.
Ld. Counsel for the Respondent submitted that infact the demand notice was issued on 24.08.2015. It is true that the Appellant defaulted in re-payment when the demand notice was issued in the year of 2015 by the Financial Institution, however, even accepting the case of the Appellant that he will have further 3 years period after the recovery certificate was issued on 12.06.2017, we need to examine as to whether application filed on 14.03.2023 is within time, giving the benefit of date 12.06.2017 when recovery certificate was issued.
Section 18 of the Limitation Act provides effect of acknowledgement in writing.
Section 18(1) provides as follows: -
Where, before the expiration of the prescribed period for a suit or application in respect of any property or right, an acknowledgment of liability in respect of such property or right has been made in writing signed by the party against whom such property or right is claimed, or by any person through whom he derives his title or liability, a fresh period of limitation shall be computed from the time when the acknowledgment was so signed.
OTS proposal is given by the Appellant to Bank of Baroda. Section 18 cannot be applicable in extending the Limitation against the BoB. The Limitation against the Appellant to file or take steps for resolution under IBC, arose atleast from the date when recovery certificate was issued. The mere facts that the Appellant gave and OTS proposal to BoB shall not give any benefit under Section 18 to the Appellant for computing the Limitation from 12.06.2017. By giving the benefit of the period under the order of the Hon'ble Supreme Court in Suo moto Writ Petition the Limitation shall expire in 2022.
The application which was filed on 14.03.2023 was clearly barred by time. We do not find any error in the order of the Adjudicating Authority rejecting Section 94 application as barred by time. We do not find any merit in these appeals.
Appeals are dismissed accordingly.
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