TaxTMI 
TaxTMI 
2026 (8) TMI 1524
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....h (Adjudicating Authority) in CP No. 295 of 2025, whereby the petition filed by the Appellant under Section 94 of the Insolvency and Bankruptcy Code, 2016 (Code) was dismissed on the grounds that the same is barred by limitation. 2. During the pendency of the instant appeal the Liquidator has issued an auction notice for the purpose of inviting bids for the auction of the leasehold rights in the subject property, along with the building constructed thereon, at a reserve price of Rs. 49 Crores 50 Lakhs. The Appellant has also moved IA No. 4477 of 2026 challenging the said auction notice. 3. Brief facts necessary for the disposal of this appeal appears to be that the appellant is the personal guarantor of the loan made available to the corporate debtor, namely M/s OSIL Exports Limited, which had availed credit facilities from five banks under a consortium arrangement, namely: • Bank of India, being the lead bank • State Bank of India • State Bank of Bikaner and Jaipur • State Bank of Patiala • Oriental Bank of Commerce Appellant had extended personal guarantees, which is evident from the deeds of guarantee date....
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....yet happened, as the recovery certificate was not issued. Elaborating further, it is submitted that the limitation for taking proceedings under Section 94 would commence from the cause of action. However, the cause of action in this case has arisen on 27/6/2016, when Section 13(2) notice was issued and ultimately a recovery certificate was issued on 18/2/2019. Thereafter, the OTS proposals was submitted to the creditors, and having regard to Section 18 of the Limitation Act, the acknowledgement made by way of these OTS proposals had extended the limitation period for another three years. 10. It is further submitted that the DRT proceedings are still pending against the Appellant, which has not culminated till date, and therefore the underlying borrower's guaranteed debt is still subsisting and enforceable. Therefore, the rejection of the Section 94 petition by the Ld. Adjudicating Authority is erroneous on the score that: • the underlying debt recovery is still underway and pending • the recovery certificate has still not been issued • the corporate debtor is still continuing in liquidation, of which the residual debt is liable to be pa....
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....025 SCC Online NCLAT 1354 has held that the limitation for the sake of filing an application under Section 94 of the Code has to be filed within a period of 3 years of the commencement of default (i.e., from the invocation of guarantee). 16. It is further submitted that this contention of the Appellant is patently wrong that, by virtue of the OTS proposals proposed by Appellant and rejected by the Bank, the same would result in extension of limitation under Section 18 of the Limitation Act. The law is well settled that once limitation starts, it runs continuously and cannot be stopped. Further, the appellant cannot seek any benefit under Section 18 of the Limitation Act by way of its own acknowledgment, which has been disputed by the respondent, against whom such right is being claimed. It is also highlighted that Section 18 categorically states that the acknowledgement of liability has to be signed by the party against whom such right is being claimed. While there is no such signed document available with the Appellant, which may extend the limitation under Section 18 of the Limitation Act. 17. It is further submitted that Section 94 application was moved to abuse the proces....
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....the answering respondent was appointed as the liquidator for the purpose of conducting the liquidation process. 23. It is further submitted that during the liquidation process, the Respondent initiated proceedings under the SARAFAESI Act, 2002 by issuing the demand notice under Section 13(2) of SARFAESI Act on 10/09/2019, and a possession notice under Section 13(4) in respect of the subject property was also given. It was during the pendency of this liquidation proceedings Appellant filed an application under Section 94 of the Code on 3rd December 2025, consequently RP was appointed by the Ld. Adjudicating Authority under Section 97 of the Code, who submitted report under Section 99 recommending admission of the application on the ground that the Appellant's OTS proposal dated 16 April 2021 and 3rd April 2023 extended limitation under Section 18 of the Limitation Act. Respondent bank has taken objection that the application is barred by limitation and also that there is no valid acknowledgement. Accordingly, the application filed by the appellant under Section 94 of the Code was dismissed by passing the impugned order on the ground of being barred by limitation. The liquidat....
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.... to maximize the value. In this regard, the law laid down by the Hon'ble Supreme Court in Victory Iron Works Limited v. Jitender Lohia and others, (2023) 7 SCC 227, has been relied. 28. Before proceeding further, it is clarified that on 31st July 2026, we have noted that the Respondent No. 1 has filed the reply. It was also informed that the Respondent No. 1 is the lead bank, while Respondent No. 2 and 3 are members of the consortium. Therefore, the reply filed by the Respondent No. 1 may also be deemed to be the reply filed by the respondent No. 2 and 3. In this regard, the statement made by the counsel for respondent No. 1 was recorded. We have to place on record that, vide order dated 22nd July 2026, we permitted the appellant to file amended memo of parties, which has been filed. Now, having regard to the amended memo of parties, the Bank of India, Punjab National Bank, Rare Assets Reconstruction Limited, Mr. Diwan Asparan Nabi, and OSIL Exports Limited have been arrayed as Respondent No. 1 to 5, respectively. 29. We also place on record that on 31st July 2026, we have heard the submissions made by Ld. Counsel for the Appellant as well as Ld. Counsel appearing for the res....
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....g OTS proposals dated 16-04-2021 and revised proposal on 03-04-2023 within the period of limitation of three years since invocation of guarantee on 10.09.2019, the same would constitute valid acknowledgement of liability under Section 18 of the Limitation Act, 1963 and a fresh period of three years would commence from such acknowledgement in writing and thus period till 03.04.2026 was available to the guarantor to file petition. 36. Ld. Counsels for the Respondents have contended that Section 94 application was moved with mala fide intent and was not a bona fide invocation of the insolvency process and it is a calculated attempt to obstruct realization of assets by the banks. It is highlighted that 20th meeting of the SCC was held on 03/12/2025, wherein a proposal for joint auction of the assets of the CD and of the personal guarantor was under consideration. On the very same day, the appellant hurriedly filed the application under Section 94 of the code only for the purpose of triggering the interim moratorium under Section 96 and it was not a sincere effort for submitting any repayment plan. 37. It was also highlighted that the guarantee was invoked in the year 2019, and th....
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....ion Act, the provision could be widely abused. It could be different issue if the creditor i.e. Bank of India, had accepted the proposal and then the debtor/PG subsequently committed default in repaying the amount of debt (settled amount). However, such is not the position in the present case. Indubitably, Account of the principal debtor was declared as NPA on 31.12.2015 and the notice under Section 13(2) of SARFAESI Act, 2002 was issued on 10.09.2019, thus the debtor had period of limitation available to him to file petition under Section 94 of IBC, 2016 till 09.09.2022. The petition preferred under Section 94 of the Code in the year 2025, is barred by limitation and deserves to be rejected. In the wake, the recommendation/report given by the RP as annexed and the petition preferred under Section 94 of IBC are rejected. IA(IBC)/195(CH) 2026 and CP(IB) No.295/Chd/Hry/2025 are accordingly disposed of". 39. We at the outset record that the view adopted by Ld. Adjudicating Authority is in accordance with law and in our considered opinion also, the appellant by any unilateral act cannot enhance or extend the limitation. Section 18 (1) of the Limitation Act, 1963, provides a....