The National Company Law Appellate Tribunal (NCLAT) dismisses appeals challenging the admission of SBI's claim in insolvency proceedings due to a prior decree by the Debt Recovery Tribunal.
In a significant ruling, the National Company Law Appellate Tribunal (NCLAT) has dismissed the appeals filed by Rakeshkumar Hariram Agarwal, challenging the admission of State Bank of India's (SBI) claim in insolvency proceedings initiated under Section 10 of the Insolvency and Bankruptcy Code (IBC), 2016. The judgment, pronounced by Justice Ashok Bhushan, Chairperson, and Barun Mitra, Member (Technical), on December 16, 2025, emphasizes the binding nature of the Debt Recovery Tribunal's (DRT) decree against the corporate debtor and its guarantors, thereby nullifying the appellant’s argument of the claim being time-barred.
The appeals, numbered Comp. App. (AT) (Ins) No. 1992 of 2025, along with Comp. App. (AT) (Ins) No. 1914 & 1915 of 2025, were filed against orders dated November 17, 2025, and December 3, 2025. These orders pertained to the replacement of the Resolution Professional and the rejection of the appellant's plea to stay the Corporate Insolvency Resolution Process (CIRP).
Rakeshkumar Hariram Agarwal, the suspended director of the corporate debtor, initiated insolvency proceedings for its own debts, citing a default amount of Rs. 116,11,26,634.56 owed to SBI. The application, admitted by the Adjudicating Authority on September 9, 2025, led to the appointment of an Interim Resolution Professional (IRP) and the constitution of the Committee of Creditors (CoC), with SBI as the sole financial creditor.
The appellant contested the validity of SBI’s claim, arguing it was barred by limitation, referencing a notice issued under Section 13(2) of the IBC in 2013. However, SBI countered this claim, highlighting the existence of a DRT decree from 2023 against entities where the corporate debtor acted as a guarantor, thereby reinforcing the legitimacy of their claim.
The NCLAT, in its detailed judgment, underscored the appellant’s contradiction in challenging the debt after initiating insolvency proceedings based on the same debt. It further noted the undisputed decree by the DRT, which fortified SBI's claim, rendering the appellant’s challenge unsustainable.
The tribunal's decision reinforces the principle that once a financial creditor's claim is substantiated by a decree, it cannot be deemed time-barred in subsequent insolvency proceedings. This judgment serves as a precedent in insolvency law, illustrating the interplay between adjudicated debts and the limitation challenges in corporate insolvency cases.
Bottom Line:
Insolvency proceedings initiated under Section 10 of the Insolvency and Bankruptcy Code (IBC) cannot later be challenged by the applicant on grounds of time-barred claims by the financial creditor, especially when a decree has already been passed by the Debt Recovery Tribunal (DRT) against the corporate debtor or its guarantors.
Statutory provision(s): Insolvency and Bankruptcy Code, 2016 - Section 10
