NCLAT Holds IBC S.9 Claim Time-Barred, Rejects Interest Addition to Cross ₹1 Cr Threshold u/s 4 [Read Order]

In a significant ruling, the National Company Law Appellate Tribunal (NCLAT), Principal Bench, New Delhi, has quashed the admission of an insolvency application filed under Section 9 of the Insolvency and Bankruptcy Code, 2016 (IBC) against the appellant as time- barred. The appeal arose from an order of the National Company Law Tribunal (NCLT), which had admitted the petition for default of ₹1.71 crore, comprising a principal sum of ₹84.88 lakh and interest of ₹86.39 lakh.

The corporate debtor, Ahio Overseas LLP, challenged the admission on two primary grounds: limitation and threshold maintainability. On limitation, the counsel for Ahio Overseas argued that the operational creditor’s claim was based on its last invoice dated 07.11.2016, and therefore the right to apply accrued on that date.

Since the Section 9 application was filed on 06.05.2021, it was clearly beyond the three-year limitation prescribed under Article 137 of the Limitation Act, 1963. The NCLT had erroneously relied on a later invoice dated 29.11.2018 raised by the corporate debtor itself, treating it as an acknowledgement of debt.

The appellate tribunal agreed with the appellant, holding that proceedings under Section 9 are governed by Article 137 and not Article 1 of the Limitation Act. Article 137 provides a three-year limitation period from the date when the right to apply accrues. In this case, the right accrued on 07.11.2016, the date of the last invoice raised by the operational creditor.

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The tribunal clarified that subsequent transactions or invoices raised by the corporate debtor could not extend the limitation for the creditor’s claim. It relied on its earlier decision in Laxmi Trading Corporation v. Hindustan Construction Company Ltd. (2024), which had settled that Article 137 applies to IBC applications, not Article 1 dealing with mutual accounts.

On the issue of threshold, the tribunal examined whether the claim crossed the minimum default requirement of ₹1 crore under Section 4 of the IBC. The principal amount claimed was only ₹84.88 lakh, below the statutory threshold. The operational creditor attempted to add interest to inflate the claim beyond ₹1 crore, citing rates of 18% in the demand notice and 36% in invoices.

However, the three-member bench comprising Rakesh Kumar Jain (Judicial Member), Mohd. Faiz Alam Khan (Judicial Member) and Naresh Salecha(Technical Member) held that interest cannot be added unless there is a contractual agreement between the parties. Merely mentioning interest in invoices is a unilateral act and cannot bind the debtor. The tribunal noted the inconsistency in the claimed rates and found no evidence of any interest agreement.

In reaching this conclusion, the tribunal relied on its decision in Jai Narain Fabtech Pvt. Ltd. v. Cheema Spintex Ltd. (2025), which held that unilateral interest claims cannot be considered for threshold calculation. It distinguished the case relied upon by NCLT, Prashant Kumar Agarwal v. Vikash Parasrampuria (2022), as inapplicable.

Ultimately, the appellate tribunal held that the Section 9 application was both time-barred and below the threshold, rendering it not maintainable. The impugned order admitting the petition was set aside, and the appeal was allowed.