NCLAT Upholds Rejection of Insolvency Application Against Concast Morena Road Projects on Limitation Grounds
Tribunal Affirms Dismissal Due to Time-Barred Claims Despite Evidence of Debt Disbursement
The National Company Law Appellate Tribunal (NCLAT) has upheld the decision of the National Company Law Tribunal (NCLT), Kolkata Bench, dismissing the Section 7 application filed by United Bank of India (now Punjab National Bank) against Concast Morena Road Projects Pvt. Ltd. The appeal was dismissed on October 7, 2025, by a principal bench comprising Justice Ashok Bhushan, Chairperson, and Arun Baroka, Member (Technical).
The NCLAT's ruling centered around the issue of limitation, determining that the application was filed beyond the three-year period from the date of default, which occurred on September 19, 2015. The appellant bank had attempted to initiate the Corporate Insolvency Resolution Process (CIRP) in December 2019, which the tribunal found to be time-barred. Despite the appellant's argument that deposits made in the corporate debtor's account could extend the limitation period, the tribunal concluded these deposits did not alter the timeline significantly enough to impact the limitation period.
The bank also sought to invoke Section 14 of the Limitation Act, 1963, to exclude the time spent in proceedings under Section 19 of the Recovery of Debt and Bankruptcy Act, 1993. However, the NCLAT emphasized that Section 14 could not be applied unless it was demonstrated that the proceedings were initiated in a forum without jurisdiction or suffered from a jurisdictional defect. The bank's reliance on the Supreme Court judgment in Sesh Nath Singh & Anr. v. Baidyabati Sheoraphuli Co-operative Bank Ltd. & Anr., which involved proceedings under the SARFAESI Act, did not apply to their case, as the circumstances differed significantly.
The tribunal acknowledged the appellant's assertion regarding the sufficiency of proof of debt disbursement, supported by NeSL certificates and bank statements, which were not disputed by the corporate debtor. Nonetheless, this did not affect the ruling due to the overriding limitation issue.
The NCLAT's decision underscores the importance of adhering to statutory limitation periods in insolvency proceedings, reinforcing that applications must be filed within the prescribed timeframe unless exceptional circumstances justify the extension. The judgment serves as a reminder of the stringent requirements for invoking Section 14 of the Limitation Act, highlighting the necessity of demonstrating a lack of jurisdiction or jurisdictional defect in prior proceedings.
The appellant's legal team, led by Mr. Rajesh Kumar Gautam, expressed disappointment over the dismissal but acknowledged the tribunal's adherence to legal principles governing limitation and jurisdiction.
Bottom Line:
Section 14 of the Limitation Act cannot be invoked to exclude the time spent in proceedings under Section 19 of the Recovery of Debt and Bankruptcy Act, 1993, unless it is shown that such proceedings were initiated in a forum without jurisdiction or suffered from a defect of jurisdiction.
Statutory provision(s): Insolvency and Bankruptcy Code, 2016 Section 7, Limitation Act, 1963 Section 14, Recovery of Debt and Bankruptcy Act, 1993 Section 19
