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

Order Date: 06 November 2026

Case Overview

The appeal was filed by Omesh Sethi, Suspended Director of Standard Pharmaceuticals Ltd., against an order of the Adjudicating Authority that admitted JM Financial Asset Reconstruction Company Ltd.'s insolvency petition under Section 7 of the Insolvency and Bankruptcy Code, 2016.

The appellant's primary contention is that the petition was barred by Section 10A of the IBC, which prohibits the filing of applications for the initiation of corporate insolvency resolution process for any default arising during the specified period (March 25, 2020, to March 24, 2021). The appellant argued that the financial creditor invoked the guarantee during the Section 10A period through a recall notice dated January 27, 2021.

The appellant also challenged the validity of the guarantee invocation itself and offered to pay the outstanding debt amount of ₹7.41 crore as shown in Part IV of the financial creditor's application.

The financial creditor countered that the corporate debtor's liability was actually higher than ₹7.41 crore, being the higher of either that amount or the market value of the mortgaged property offered as security. They further argued that the default occurred on February 25, 2023, when the guarantee was invoked through a letter dated February 15, 2023 (served on February 18, 2023), and the petition was filed on January 29, 2024, well within the limitation period and outside the Section 10A restrictions.

The Adjudicating Authority, in paragraph 29 of the impugned judgment, had noted that the petition was based on the invocation of guarantee on February 15, 2023, and was therefore not barred by Section 10A.

Final Outcome

The NCLAT bench comprising Justice Mohammad Faiz Alam Khan (Member-Judicial) and Naresh Salecha (Member-Technical) declined to grant any interim directions or protection to the appellant at this stage. However, the court found that the matter requires consideration and issued notice in both the main appeal (Comp. App. (AT) (Ins) No. 2175 of 2026) and the stay application (No. 8128 of 2026).

Respondent No. 1 (JM Financial Asset Reconstruction) was granted time until November 17, 2026, to file their response. The appellant may file a rejoinder within four days after receiving the response. The matter has been listed for further hearing on November 23, 2026.

Topics: Corporate Insolvency, Guarantee Dispute, Section 10A IBC