NCLT Admits CIRP Petition Because Repeated Debt Acknowledgments Extended Limitation

Canara Bank Vs Mohan Rail Components Private Limited (NCLT Chandigarh)

The National Company Law Tribunal (NCLT), Chandigarh Bench, admitted a petition filed under Section 7 of the Insolvency and Bankruptcy Code, 2016 (IBC) by Canara Bank seeking initiation of the Corporate Insolvency Resolution Process (CIRP) against Mohan Rail Components Private Limited for a claimed default amount of ₹63,85,20,356.54 along with applicable interest. The date of default mentioned in the application was 31.03.2015.

The Financial Creditor stated that it had sanctioned various credit facilities to the Corporate Debtor, including cash credit and term loans, which were renewed and restructured on multiple occasions, the last sanction being on 24.03.2015. These facilities were governed by loan agreements, demand promissory notes, supplemental agreements, and secured through hypothecation deeds and collateral security documents. According to the Financial Creditor, the Corporate Debtor defaulted in repayment of its financial obligations, leading to the classification of the loan account as a Non-Performing Asset (NPA) on 31.03.2015. The Corporate Debtor did not deny the existence of the debt or the occurrence of default. The Financial Creditor also stated that the Corporate Debtor acknowledged its liability on multiple occasions through written communications, settlement proposals, and payments credited to the loan account. An One Time Settlement (OTS) proposal was accepted on 20.03.2021, but the Corporate Debtor failed to comply with its terms.