Balance sheet entries acknowledging corporate guarantee liability, despite 'no validity' note, constitute Section 18 acknowledgment extending limitation for Section 7, combined with COVID extension; post-admission settlement requires Section 12A withdrawal application.

JUDGMENT

(25^th February, 2026)

Ashok Bhushan, J.

This Appeal by a Suspended Director of the Corporate Debtor- M/s. HIL (India) Limited has been filed challenging the order dated 30.07.2025 passed by the Adjudicating Authority (National Company Law Tribunal) Principal Bench, New Delhi admitting Section 7 application filed by the IDBI Bank Limited, the Respondent No.1 herein.

2. Brief facts of the case necessary to be noticed for deciding the Appeal are:-

2.1. M/s. HIL (India) Limited (Hindustan Insecticides Limited) is a Government of India enterprises having 100% shareholding with the President of India under the Department of Chemicals & Petrochemicals, Ministry of Chemicals & Fertilizers, Government of India. The Corporate Debtor was incorporate in March 1954. Southern Pesticides Corporation Limited (SPCL) is a subsidiary Company of the Corporate Debtor. IDBI has approved a term loan amounting to Rs.280 Lakhs for SPCL in the year 1983. SPCL availed a foreign currency loan facility of Rs.40 Lakh and entered into second loan agreement. There were third loan agreement entered with IDBI and SPCL to secure the repayment of loan amount of IDBI. M/s. HIL (India) Limited executed a Deed of Guarantee dated 21.11.1988 undertaking the repayment of loan taken by SPCL. On account of default by SPCL, the loan account was classified as NPA. The IDBI invoked the guarantee vide letter dated 01.07.1994. Pursuant to default committed by principal borrower and the M/s. HIL (India) Limited, IDBI Bank filed an OA No.253 of 2002 before the Debt Recovery Tribunal for recovery of amount of Rs.19,32,20,414/-. The DRT allowed the OA and passed a decree and issued a Recovery Certificate dated 26.07.2018. The High Court of Andhra Pradesh passed an order of winding up with regard to principal borrower- SPCL on 01.04.2002. In the balance sheet of Corporate Debtor for F.Y. 2020-2021 the corporate guarantee in respect of SPCL in favour of IDBI Bank was mentioned. The IDBI Bank issued a letter dated 30.12.2020 to the Managing Director of HIL offering for settlement to guarantor under the Saral Karj Bhugtan Yojana-II (SKBY-II): 2020-2021. The letter dated 30.12.2020 was not replied by the Corporate Debtor, however, Corporate Debtor wrote subsequent letters on 18.04.2022 and 02.06.2022 to the IDBI Bank informing that as per settlement offer an amount of Rs.30,90,143/- can be paid up to 31.03.2021. The Financial Creditor filed an application under Section 7 on 13.06.2024 before the NCLT claiming total amount of default as Rs.8,56,51,126/- with interest from 25.12.2003 till date of recovery. Part IV also mentioned that as per the Recovery Certificate by DRT dated 26.07.2018 dues as on 07.06.2024 are Rs.29,60,00,905/-. The notice was issued by the Adjudicating Authority to the Corporate Debtor. Corporate Debtor appeared and filed its reply objecting to Section 7 application. Corporate Debtor pleaded that the application is barred by time. Adjudicating Authority heard both the parties and by impugned order dated 30.07.2025 admitted Section 7 application. Adjudicating Authority held that the Financial Creditor shall have fresh period of limitation from date of the decree by the DRT dated 26.07.2018 and there was acknowledgment in the balance she