NCLAT Upholds Admission of SBI’s Rs.116 Crore Claim, Dismisses Appeals by Suspended Director [Read Order]

The National Company Law Appellate Tribunal (NCLAT), Principal Bench at New Delhi, has held that a suspended director who himself initiated the corporate insolvency resolution process (CIRP) cannot later dispute the financial creditor’s claim on the ground of limitation, thereby dismissing a batch of insolvency appeals.

The appeals were filed by Rakeshkumar Hariram Agarwal, who is the suspended director of the corporate debtor. He challenged orders passed by the Adjudicating Authority wherein the State Bank of India’s application for replacement of the resolution professional was allowed. The corporate debtor itself admitted a default exceeding Rs. 116 crore payable to SBI during the CIRP.

Before the NCLAT, the appellant relied upon the demand notice under the SARFAESI Act and contended that the claim admitted in favour of SBI was barred by limitation. It was argued that the Adjudicating Authority wrongly rejected the application for rejection.

Opposing the appeals, SBI submitted that the insolvency proceedings were initiated by the suspended director acknowledging the debt, and therefore he could not deny its existence or enforceability.

The NCLAT Bench, comprising Justice Ashok Bhushan, Chairperson and Barun Mitra (Technical Member), carefully considered the submissions put forth. And held that once the corporate debtor had voluntarily invoked Section 10 of the Code in 2025 on the basis of the admitted dues of SBI, the suspended director could not subsequently contend that the bank’s claim was barred by time. The Tribunal observed that the existence of a DRT decree passed in 2023 reinforced the conclusion that the claim could not be treated as time-barred.

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