NCLAT Upholds Dismissal of Personal Guarantor's Insolvency Petition as Time-Barred

Authority: National Company Law Appellate Tribunal, Principal Bench, New Delhi

Order Date: 21 August 2026

Bench: Justice Mohd. Faiz Alam Khan (Member-Judicial) and Naresh Salecha (Member-Technical)

Case Overview

The appeal was filed by Kanta Gupta, personal guarantor for corporate debtor OSIL Exports Limited, against the order dated 26 May 2026 passed by the National Company Law Tribunal, Chandigarh Bench, which dismissed her petition under Section 94 of the Insolvency and Bankruptcy Code, 2016 on grounds of limitation.

The appellant had executed personal guarantee deeds dated 21 May 2014 and 21 February 2015 for credit facilities availed by OSIL Exports Limited from a consortium of five banks led by Bank of India. The loan account was declared NPA on 31 December 2015. Bank of India initiated CIRP against the corporate debtor under Section 7 of IBC, which was admitted on 31 January 2018. As no resolution plan was received, liquidation was ordered on 17 October 2019.

Bank of India invoked the personal guarantee through SARFAESI Act notice under Section 13(2) on 10 September 2019 and took symbolic possession of assets on 25 November 2019. The appellant submitted OTS proposals on 16 April 2021 (Rs. 22 crore offer) and a revised proposal on 3 April 2023, both rejected by the bank.

The appellant filed the Section 94 petition on 18 December 2025, claiming that the OTS proposals constituted acknowledgment under Section 18 of Limitation Act, extending the limitation period. The Resolution Professional appointed by NCLT recommended admission, but the bank objected on limitation grounds.

Legal Dispute and Tribunal's Reasoning

The core legal question was whether a debtor's own OTS proposals can extend limitation under Section 18 of Limitation Act, which requires acknowledgment "signed by the party against whom such property or right is claimed."

The NCLAT upheld the NCLT's view that:

  • Section 18 of Limitation Act requires acknowledgment by the creditor, not the debtor
  • A debtor cannot use their own acknowledgments to extend limitation period
  • The limitation period for filing Section 94 application commenced from invocation of guarantee on 10 September 2019
  • The three-year limitation period expired on 9 September 2022, making the December 2025 petition time-barred

The tribunal cited its previous judgments in Suyog Jain v. Aravind Kumar (2025), Ashwani Kumar Oberoi v. SBI (2026), and Zameer Pawan Kumar Agarwal v. Pankaj Prabhudayal Goenka (2025) which established that limitation for personal guarantor insolvency starts from guarantee invocation date.

Auction Notice Challenge

The appellant had also challenged the liquidator's auction notice dated 30 June 2026 for leasehold rights of the subject property with building at reserve price of Rs. 49.5 crores through IA No. 4477 of 2026. The NCLAT dismissed this application, noting that jurisdiction over SARFAESI auctions lies with DRT, not NCLAT.

Final Outcome

The NCLAT dismissed the appeal and all connected applications, upholding the NCLT's order that the Section 94 petition was barred by limitation. The tribunal found no merit in the appellant's contention that OTS proposals extended the limitation period, and confirmed that the personal guarantor's insolvency proceeding was not maintainable due to being filed over six years after guarantee invocation.

Topics: Personal Guarantee, Limitation Law, Insolvency Proceedings