JM Financial Asset Reconstruction Company Limited Vs Shubh Hospitality Private Limited (NCLT Mumbai)
NCLT Rejects Section 7 IBC Plea as Time-Barred; DRT Review Order Does Not Extend Limitation
The Financial Creditor filed a petition under Section 7 of the Insolvency and Bankruptcy Code, 2016 seeking initiation of the Corporate Insolvency Resolution Process against the Corporate Debtor. The petition, filed on 26.09.2019, claimed a default of ₹121.48 crore arising from a term loan originally sanctioned by Bank of India. The dates of default pleaded were 30.06.2008, when the account became NPA, and 07.06.2013, when the Debt Recovery Tribunal (DRT) passed its judgment. During the proceedings, an intervention petition was also filed by a third party claiming possessory rights over the Corporate Debtor’s leasehold property.
The Financial Creditor submitted that after the DRT judgment dated 07.06.2013, it filed a review application to correct factual inaccuracies, which resulted in a DRT Review Order dated 12.05.2021. It contended that the DRT judgment attained finality only after the Review Order, giving rise to a fresh limitation period. It also relied on a One-Time Settlement (OTS) proposal dated 18.07.2025 as an acknowledgment of debt and invoked Section 14 of the Limitation Act for exclusion of time spent in DRT and SARFAESI proceedings.
