Authority: National Company Law Tribunal Chandigarh Bench, Court-I

Order Date: 10.07.2026

Case Overview

The National Company Law Tribunal (NCLT) Chandigarh heard an application (I.A. No.83 of 2026) filed by Asset Reconstruction Company (India) Limited (ARCIL) acting as trustee of Arcil-JCT III Trust against the Resolution Professional and Committee of Creditors of JCT Limited. The application sought to quash the Resolution Professional's letter dated 07.01.2026 that rejected ARCIL's financial claim of Rs 34,82,31,36,084 (Three Thousand Four Hundred Eighty-Two Crores Thirty-One Lakhs Thirty-Six Thousand Eighty-Four Rupees) in the Corporate Insolvency Resolution Process (CIRP) of JCT Limited.

The dispute originated from credit facilities availed by JCT Electronics Limited (JCTEL), a subsidiary of JCT Limited, from IFCI Limited between 1993-1998. JCT Limited had executed corporate guarantees for these facilities. The loan account was classified as NPA on 14.10.2001, and IFCI invoked the corporate guarantees on 25.01.2002, demanding repayment. IFCI filed recovery proceedings (OA No. 23 of 2002) before the Debts Recovery Tribunal, Chandigarh on 31.01.2002.

JCTEL was declared a sick company by BIFR on 12.12.2005, and a rehabilitation scheme was sanctioned on 12.03.2007. IFCI assigned the debt to ARCIL on 13.05.2015. The BIFR declared the rehabilitation scheme failed on 08.07.2015 and 14.10.2015, recommending winding up of JCTEL, which was ordered by the Punjab and Haryana High Court on 26.08.2016.

ARCIL filed its claim in the CIRP of JCT Limited on 21.01.2025. The Interim Resolution Professional provisionally admitted only the principal component of Rs 56,68,92,019 while keeping interest and other components under verification. After Mr. Umesh Garg was appointed as Resolution Professional, and despite tribunal directions to complete verification, the RP ultimately rejected the entire claim on 07.01.2026.

The RP rejected the claim on grounds including: no authenticated statement of account provided, date of default not disclosed, copy of Modified Draft Rehabilitation Scheme not furnished, no BIFR order reverting to original loan terms produced, no implementation report provided, and no document establishing the debt is within limitation.

The Tribunal examined three key issues: (1) Whether the RP acted within statutory mandate in rejecting the claim, (2) Whether the claim was within limitation, and (3) Whether balance sheet entries constituted valid acknowledgments of liability.

On the first issue, the Tribunal found the RP acted lawfully within his verification mandate under Section 18(1)(b) of IBC and Regulations 13-14 of CIRP Regulations. The court noted ARCIL failed to provide an authenticated statement of account that could segregate guaranteed from unguaranteed debt, despite repeated requests and a tribunal order.

On the second issue, the Tribunal found the claim time-barred. Limitation commenced from the guarantee invocation on 25.01.2002 or at latest from April 2011 when JCTEL defaulted on rehabilitation scheme payments. The three-year limitation period expired in April 2014, making the claim filed in January 2025 time-barred.

On the third issue, the Tribunal ruled that JCT Limited's balance sheet entries from FY 2014-15 to 2022-23, which contained express caveats disputing the legal sustainability of ARCIL's claim, did not constitute valid acknowledgments under Section 18 of the Limitation Act, 1963.

Final Outcome

The Tribunal dismissed ARCIL's application and upheld the Resolution Professional's rejection of the Rs 3482 crore claim. The court found the claim was lawfully rejected due to documentary deficiencies and being time-barred. The provisional admission of the principal amount was not final and could be revised under Regulation 14(2) of CIRP Regulations. The balance sheet entries with disputing caveats did not extend the limitation period.

Topics: Corporate Guarantee, Limitation Law, Claim Verification