TRMONTHLY TRIBUNAL ARCHIVE

National Company Law Appellate Tribunal Decisions in February 2026: Case Law Digest

Read 58 LawLens analyses of National Company Law Appellate Tribunal decisions published in February 2026, covering key rulings, legal principles and case law.

← BACK TO NCLAT REPORT

PERMANENT MONTHLY EDITIONS

Browse by month

AUTOMATICALLY UPDATED

February 2026 Decisions

58 ARTICLES · NEWEST FIRST
### Entries in Audited Balance Sheets and Settlement Offers Constitute Valid Acknowledgment of Debt Extending Limitation Summary of the Judgment: The National Company Law Appellate Tribunal (NCLAT) upheld the admission of a Section 7 application against HIL (India) Ltd., a Government of India enterprise. The Appellant challenged the admission on the grounds of limitation, arguing that the default originated decades ago. Key Findings: * Limitation & Recovery Certificate: The Tribunal reaffirmed that the issuance of a Recovery Certificate by the Debt Recovery Tribunal (DRT) grants a fresh three-year period of limitation. * Acknowledgment under Section 18: Following the Supreme Court's ratio in *Asset Reconstruction Co. (India) Ltd. v. Bishal Jaiswal*, the NCLAT held that entries in the Corporate Debtor’s audited balance sheets (FY 2019-20 and 2020-21) acknowledging the corporate guarantee constituted a valid acknowledgment of debt under Section 18 of the Limitation Act, 1963. * Settlement Offers: Letters issued by the Corporate Debtor offering a settlement (OTS) within the extended limitation period (including the benefit of the Supreme Court's *Suo Moto* extension during COVID-19) further served as valid acknowledgments to extend limitation. * Post-Admission Settlement: While the parties reached a settlement during the appeal, the NCLAT maintained that the CIRP remains in rem and cannot be closed through a simple withdrawal of appeal. It directed the parties to follow the Section 12A procedure via the IRP for the formal withdrawal of the insolvency proceedings through the NCLT.. D.N.V. Srinivasa Raju vs. IDBI Bank Ltd. & Anr. [Company Appeal (AT) (Insolvency) No. 1189 of 2025]. NCLAT. LawLens

NCLAT·

Insolvency and Bankruptcy LawCivil Procedure and Evidence

### Entries in Audited Balance Sheets and Settlement Offers Constitute Valid Acknowledgment of Debt Extending Limitation Summary of the Judgment: The National Company Law Appellate Tribunal (NCLAT) upheld the admission of a Section 7 application against HIL (India) Ltd., a Government of India enterprise. The Appellant challenged the admission on the grounds of limitation, arguing that the default originated decades ago. Key Findings: * Limitation & Recovery Certificate: The Tribunal reaffirmed that the issuance of a Recovery Certificate by the Debt Recovery Tribunal (DRT) grants a fresh three-year period of limitation. * Acknowledgment under Section 18: Following the Supreme Court's ratio in *Asset Reconstruction Co. (India) Ltd. v. Bishal Jaiswal*, the NCLAT held that entries in the Corporate Debtor’s audited balance sheets (FY 2019-20 and 2020-21) acknowledging the corporate guarantee constituted a valid acknowledgment of debt under Section 18 of the Limitation Act, 1963. * Settlement Offers: Letters issued by the Corporate Debtor offering a settlement (OTS) within the extended limitation period (including the benefit of the Supreme Court's *Suo Moto* extension during COVID-19) further served as valid acknowledgments to extend limitation. * Post-Admission Settlement: While the parties reached a settlement during the appeal, the NCLAT maintained that the CIRP remains in rem and cannot be closed through a simple withdrawal of appeal. It directed the parties to follow the Section 12A procedure via the IRP for the formal withdrawal of the insolvency proceedings through the NCLT.

The Appellant, a suspended director of M/s. HIL (India) Ltd. (Corporate Debtor), challenged an order dated 30.07.2025 passed by the NCLT admitting a Section 7 application under the IBC filed by IDBI Bank.

3 MIN READ

### Minimum Threshold Of Rupees One Crore Under Section 4 IBC Must Be Met On The Initiation Date Case Summary: Legal Principle: The mandatory threshold limit of ₹1 crore under Section 4(1) of the IBC must be satisfied on the "initiation date" (the date of filing the application) rather than the date of the Section 8 demand notice. Furthermore, unilateral part-payments by a Corporate Debtor before the filing of a Section 9 application that reduce the debt below the threshold render the petition non-maintainable. Fact Matrix: The Operational Creditor (Appellant) entered into an agreement to procure molasses from the Corporate Debtor (Respondent) and paid an advance of over ₹2 crore. Following the cancellation of the sale order, the Appellant sought a refund of ₹1,08,02,731 and issued a Section 8 demand notice. Prior to the Appellant filing the Section 9 application, the Corporate Debtor transferred ₹13,13,886 (claimed as salvage value for destroyed stock), bringing the outstanding principal to ₹94,88,845. The Adjudicating Authority dismissed the petition for failing to meet the ₹1 crore threshold. Key Findings: 1. Threshold Date: Under Section 5(11), the status of the debt is evaluated on the date the petition is filed. Since the debt fell below ₹1 crore before the filing date, Section 9 was not invokable. 2. Exclusion of Interest: Interest cannot be clubbed with the principal to reach the threshold unless it is explicitly stipulated in a contract or invoice; in this case, no such agreement existed. 3. Pre-existing Dispute: The court found a *bona fide* dispute regarding the destruction of goods by spontaneous combustion and regulatory revocation of lifting permissions, which existed prior to the demand notice. 4. Nature of IBC: The Tribunal reiterated that the IBC is for insolvency resolution and cannot be used as a substitute for a recovery mechanism for dues below the statutory limit.. Mosco International Commodities Private Limited v. SBEC Sugar Limited [Company Appeal (AT) (Insolvency) No. 860 of 2024]. NCLAT. LawLens

NCLAT·

Insolvency and Bankruptcy LawContract Law

### Minimum Threshold Of Rupees One Crore Under Section 4 IBC Must Be Met On The Initiation Date Case Summary: Legal Principle: The mandatory threshold limit of ₹1 crore under Section 4(1) of the IBC must be satisfied on the "initiation date" (the date of filing the application) rather than the date of the Section 8 demand notice. Furthermore, unilateral part-payments by a Corporate Debtor before the filing of a Section 9 application that reduce the debt below the threshold render the petition non-maintainable. Fact Matrix: The Operational Creditor (Appellant) entered into an agreement to procure molasses from the Corporate Debtor (Respondent) and paid an advance of over ₹2 crore. Following the cancellation of the sale order, the Appellant sought a refund of ₹1,08,02,731 and issued a Section 8 demand notice. Prior to the Appellant filing the Section 9 application, the Corporate Debtor transferred ₹13,13,886 (claimed as salvage value for destroyed stock), bringing the outstanding principal to ₹94,88,845. The Adjudicating Authority dismissed the petition for failing to meet the ₹1 crore threshold. Key Findings: 1. Threshold Date: Under Section 5(11), the status of the debt is evaluated on the date the petition is filed. Since the debt fell below ₹1 crore before the filing date, Section 9 was not invokable. 2. Exclusion of Interest: Interest cannot be clubbed with the principal to reach the threshold unless it is explicitly stipulated in a contract or invoice; in this case, no such agreement existed. 3. Pre-existing Dispute: The court found a *bona fide* dispute regarding the destruction of goods by spontaneous combustion and regulatory revocation of lifting permissions, which existed prior to the demand notice. 4. Nature of IBC: The Tribunal reiterated that the IBC is for insolvency resolution and cannot be used as a substitute for a recovery mechanism for dues below the statutory limit.

The Appellant (Operational Creditor) entered into an agreement with the Respondent (Corporate Debtor) for the procurement of 55,000 quintals of molasses

2 MIN READ

### Entries in Audited Balance Sheets and Settlement Offers Constitute Valid Acknowledgment of Debt Extending Limitation Period Summary of the Judgment: The NCLAT dismissed the appeal of a Suspended Director against the admission of a Section 7 application under the IBC. The Tribunal held that despite the original guarantee being invoked decades ago, the issuance of a Recovery Certificate by the DRT in 2018 triggered a fresh period of limitation. Crucially, the Tribunal ruled that specific entries in the Corporate Debtor’s balance sheets (Notes on Accounts acknowledging counter-guarantees) and subsequent settlement offer letters (OTS) constituted valid acknowledgments under Section 18 of the Limitation Act, 1963. These entries, combined with the benefit of the Supreme Court’s *Suo Motu* extension of limitation during the COVID-19 pandemic, ensured the application filed in 2024 was within time. Having upheld the admission order, the Tribunal permitted the withdrawal of the appeal following a settlement with the Financial Creditor, directing the parties to follow the Section 12A withdrawal process.. D.N.V. Srinivasa Raju, Suspended Director HIL (India) Ltd. vs. IDBI Bank Ltd. & Anr. [Company Appeal (AT) (Insolvency) No. 1189 of 2025]. NCLAT. LawLens

NCLAT·

Insolvency and Bankruptcy LawCivil Procedure and Evidence

### Entries in Audited Balance Sheets and Settlement Offers Constitute Valid Acknowledgment of Debt Extending Limitation Period Summary of the Judgment: The NCLAT dismissed the appeal of a Suspended Director against the admission of a Section 7 application under the IBC. The Tribunal held that despite the original guarantee being invoked decades ago, the issuance of a Recovery Certificate by the DRT in 2018 triggered a fresh period of limitation. Crucially, the Tribunal ruled that specific entries in the Corporate Debtor’s balance sheets (Notes on Accounts acknowledging counter-guarantees) and subsequent settlement offer letters (OTS) constituted valid acknowledgments under Section 18 of the Limitation Act, 1963. These entries, combined with the benefit of the Supreme Court’s *Suo Motu* extension of limitation during the COVID-19 pandemic, ensured the application filed in 2024 was within time. Having upheld the admission order, the Tribunal permitted the withdrawal of the appeal following a settlement with the Financial Creditor, directing the parties to follow the Section 12A withdrawal process.

The Corporate Debtor (HIL India Ltd.) executed a Deed of Guarantee on 21.11.1988 for loans availed by its subsidiary, SPCL, from IDBI Bank.

2 MIN READ

### Committee of Creditors possesses locus to litigate in its name but is not a necessary party regarding membership disputes. SUMMARY: Facts: The Resolution Professional (RP) of Think and Learn Pvt. Ltd. reconstituted the Committee of Creditors (CoC) by removing GLAS Trust LLC and Aditya Birla Capital Ltd. The NCLT later restored these members. Subsequently, a suspended director filed an application (IA 466/2025) to remove GLAS Trust from the CoC. The CoC sought to implead itself in this proceeding, which the NCLT denied, ruling that the CoC lacks legal character and can only be represented by the RP. Issues: 1. Whether the CoC has the legal character or juristic personality to litigate in its own name under the IBC. 2. Whether the RP is the sole authorized representative of the CoC in legal proceedings. 3. Whether the CoC is a necessary or proper party in a dispute concerning the removal of an individual member. Ruling: The NCLAT held that while the CoC is not a "juristic person" in the classical sense, it is a statutory entity under Section 3(23)(g) of the IBC. For functional efficacy, the CoC may litigate in its own name, provided that in multi-member setups, all individual members are arrayed as respondents to prevent procedural prejudice. The Court rejected the view that only the RP can represent the CoC, noting they are distinct entities with separate statutory roles. However, the appeal was dismissed because the CoC is neither a necessary nor a proper party to a dispute regarding the validity of a specific financial creditor's claim; such disputes are personal to the individual member and the Corporate Debtor.. Committee of Creditors of Think and Learn Pvt. Ltd. v. Riju Ravindran & Ors. [Company Appeal (AT) (CH) (Ins) No.475/2025]. NCLAT. LawLens

NCLAT·

Insolvency and Bankruptcy LawCivil Procedure and Evidence

### Committee of Creditors possesses locus to litigate in its name but is not a necessary party regarding membership disputes. SUMMARY: Facts: The Resolution Professional (RP) of Think and Learn Pvt. Ltd. reconstituted the Committee of Creditors (CoC) by removing GLAS Trust LLC and Aditya Birla Capital Ltd. The NCLT later restored these members. Subsequently, a suspended director filed an application (IA 466/2025) to remove GLAS Trust from the CoC. The CoC sought to implead itself in this proceeding, which the NCLT denied, ruling that the CoC lacks legal character and can only be represented by the RP. Issues: 1. Whether the CoC has the legal character or juristic personality to litigate in its own name under the IBC. 2. Whether the RP is the sole authorized representative of the CoC in legal proceedings. 3. Whether the CoC is a necessary or proper party in a dispute concerning the removal of an individual member. Ruling: The NCLAT held that while the CoC is not a "juristic person" in the classical sense, it is a statutory entity under Section 3(23)(g) of the IBC. For functional efficacy, the CoC may litigate in its own name, provided that in multi-member setups, all individual members are arrayed as respondents to prevent procedural prejudice. The Court rejected the view that only the RP can represent the CoC, noting they are distinct entities with separate statutory roles. However, the appeal was dismissed because the CoC is neither a necessary nor a proper party to a dispute regarding the validity of a specific financial creditor's claim; such disputes are personal to the individual member and the Corporate Debtor.

The Corporate Debtor (CD), M/s. Think and Learn Pvt. Ltd., was admitted into CIRP under Section 9 of the IBC.

3 MIN READ

### Direct Covenant to Pay in Third-Party Mortgage Constitutes a Guarantee and Qualifies as Financial Debt Case Summary: 1. Context: The Appellant (Debenture Trustee) filed a claim against the Corporate Debtor (CD) after it failed to satisfy obligations under a Debenture Trust Deed (DTD). Although the CD was not a signatory to the original DTD, it executed Supplemental Indentures of Mortgage containing a "Covenant to Pay." The Resolution Professional and the NCLT classified the Appellant as an "Other Secured Creditor," arguing that no funds were disbursed directly to the CD. 2. Key Legal Issues: * Whether direct disbursement to the Corporate Debtor is a prerequisite for "Financial Debt" under Section 5(8) of the IBC. * Whether a "Covenant to Pay" in a mortgage deed transforms a security interest into a contract of guarantee. 3. Tribunal’s Holding: * Disbursement: Direct disbursement to the CD is not a *sine qua non* for financial debt; it is sufficient if money is disbursed against the time value of money for the CD's benefit or via a guarantee. * Covenant to Pay: The "Covenant to Pay" in the Supplemental Mortgages created a primary, unconditional obligation to discharge "Secured Obligations." This transformed the CD into a surety under Section 126 of the Indian Contract Act. * Classification: Relying on the Supreme Court’s ruling in *China Development Bank v. Doha Bank*, the Tribunal held that a mortgage containing an express covenant to pay shortfall or debt constitutes a guarantee. Consequently, the Appellant is a Secured Financial Creditor, not merely an "other" secured creditor. 4. Conclusion: The Appellate Tribunal set aside the NCLT order and directed the claim to be admitted as a Secured Financial Debt.. Vistra ITCL (India) Limited v. Vithal Madhukar Dahake & Ors., Comp. App. (AT) (Ins) No. 1110 of 2024. NCLAT. LawLens

NCLAT·

Insolvency and Bankruptcy LawContract Law

### Direct Covenant to Pay in Third-Party Mortgage Constitutes a Guarantee and Qualifies as Financial Debt Case Summary: 1. Context: The Appellant (Debenture Trustee) filed a claim against the Corporate Debtor (CD) after it failed to satisfy obligations under a Debenture Trust Deed (DTD). Although the CD was not a signatory to the original DTD, it executed Supplemental Indentures of Mortgage containing a "Covenant to Pay." The Resolution Professional and the NCLT classified the Appellant as an "Other Secured Creditor," arguing that no funds were disbursed directly to the CD. 2. Key Legal Issues: * Whether direct disbursement to the Corporate Debtor is a prerequisite for "Financial Debt" under Section 5(8) of the IBC. * Whether a "Covenant to Pay" in a mortgage deed transforms a security interest into a contract of guarantee. 3. Tribunal’s Holding: * Disbursement: Direct disbursement to the CD is not a *sine qua non* for financial debt; it is sufficient if money is disbursed against the time value of money for the CD's benefit or via a guarantee. * Covenant to Pay: The "Covenant to Pay" in the Supplemental Mortgages created a primary, unconditional obligation to discharge "Secured Obligations." This transformed the CD into a surety under Section 126 of the Indian Contract Act. * Classification: Relying on the Supreme Court’s ruling in *China Development Bank v. Doha Bank*, the Tribunal held that a mortgage containing an express covenant to pay shortfall or debt constitutes a guarantee. Consequently, the Appellant is a Secured Financial Creditor, not merely an "other" secured creditor. 4. Conclusion: The Appellate Tribunal set aside the NCLT order and directed the claim to be admitted as a Secured Financial Debt.

The Appellant, acting as a debenture trustee, entered into a Debenture Trust Deed (DTD) dated 03.08.2018 with Aaditri Constructions Pvt. Ltd. (ACPL/Borrower) for the issuance of debentures worth Rs. 395 crores.

3 MIN READ

### IBC Section 9 Application Inadmissible Where Pre-Existing Dispute Regarding Genuineness of Debt and Services Exists Summary: The NCLAT affirmed the rejection of a Section 9 petition, holding that a "pre-existing dispute" was established because the Corporate Debtor had questioned the veracity of the claim and requested substantiating evidence of the alleged services prior to the issuance of the statutory demand notice. The Tribunal reiterated that under the *Mobilox* standard, the Adjudicating Authority need only determine the existence of a plausible, non-spurious dispute and is not required to examine the merits or the likelihood of the defense's success. Significant factors included the absence of a written agreement, stereotype invoices lacking customer details, and the proximity of the invoices to a management takeover.. Shashi Beriwal & Company Pvt. Ltd. v. Laxmi Foils Pvt. Ltd. [Company Appeal (AT) (Insolvency) No. 762 of 2024]. NCLAT. LawLens

NCLAT·

Insolvency and Bankruptcy LawContract Law

### IBC Section 9 Application Inadmissible Where Pre-Existing Dispute Regarding Genuineness of Debt and Services Exists Summary: The NCLAT affirmed the rejection of a Section 9 petition, holding that a "pre-existing dispute" was established because the Corporate Debtor had questioned the veracity of the claim and requested substantiating evidence of the alleged services prior to the issuance of the statutory demand notice. The Tribunal reiterated that under the *Mobilox* standard, the Adjudicating Authority need only determine the existence of a plausible, non-spurious dispute and is not required to examine the merits or the likelihood of the defense's success. Significant factors included the absence of a written agreement, stereotype invoices lacking customer details, and the proximity of the invoices to a management takeover.

The Appellant (Operational Creditor/OC) claimed it entered into an oral agreement with the Respondent (Corporate Debtor/CD) on 01.04.2021 to introduce customers for a 3% commission.

2 MIN READ