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NCLAT Holds 's Own OTS Proposals Cannot Extend Limitation for Section 94 IBC Petition
The , New Delhi, on , dismissed an appeal by Kanta Gupta, a , holding that she could not use her own to extend the for filing a petition under . The bench comprising Justice Mohammad Faiz Alam Khan and Technical Member Naresh Salecha upheld the Chandigarh order that rejected her as .
The Background: A Guarantor's Default
Kanta Gupta had executed personal guarantees in and for credit facilities availed by from a consortium led by . The loan account was classified as a non-performing asset (NPA) in . After the was admitted into on , and subsequently ordered into liquidation on , invoked Gupta's personal guarantee on , by issuing a notice under . A followed on .
Gupta submitted OTS proposals in and , offering amounts toward settlement. On , she filed a petition under Section 94 of the IBC before the , seeking initiation of personal insolvency proceedings. The Resolution Professional recommended admission, but objected on limitation grounds. On , the dismissed the petition as .
The Legal Question: Can a Debtor Extend Limitation by His Own Act?
The core issue before the NCLAT was whether a can rely on her own OTS proposals as acknowledgements of liability under , to extend the for filing a . Gupta argued that her OTS proposals constituted valid acknowledgements in writing, giving rise to a fresh . She also contended that the limitation should run from the issuance of a , which had not yet been issued.
The respondents, including and the liquidator, countered that limitation began from the invocation of the personal guarantee on , and expired on . They argued that an OTS proposal by the debtor herself cannot be used to extend limitation, and that the petition was filed with the of stalling the ongoing auction of assets.
The Court's Reasoning: Admissions Cannot Benefit the Maker
The NCLAT emphatically rejected the appellant's argument, emphasizing the well-settled principle that Section 18 of the Limitation Act operates only when the acknowledgement is made by the party against whom a right is claimed. A party cannot create evidence for her own benefit.
"The OTS, which has been moved by the Appellant as a
, could be used by the bank for invoking Section 18 of the Limitation Act, but the same could not be used by the Appellant/Guarantor himself in order to extend the limitation,"
the bench observed.
Citing its earlier decision in , the Tribunal held that the mere submission of an OTS proposal by the guarantor to the bank cannot give any benefit under Section 18. The limitation for a to file a commences from the date of , which in this case was . The under expired on , making the December 2025 petition clearly .
The Tribunal also noted that the appellant had earlier cited Zameer Pawan Kumar Agarwal to argue that limitation starts from the issuance of a , but clarified that the coordinate bench had categorically held that an OTS proposal does not extend limitation under Section 18.
Key Observations
"In simple words, if the acknowledgement has been made by the opposite party in writing against whom any right is being asserted, the same acknowledgement may enhance the period of limitation. However, a party, by making any document, himself, cannot extend the period of limitation by invoking section 18 of the
."
(Para 39)
"An OTS, which has been moved by the guarantor, is nothing but an
. Having regard to the general principles of admissions, a party making an admission cannot use the same for his own benefit. Rather, the admission made by a party can be proved against him by the other party."
(Para 42)
"Thus, if we exclude the period which has been included by the appellant in view of Section 18 of the
, it would emerge that the
provided under Section 137 of the
has expired much before the institution of the proceeding by the appellant, under Section 94 of the Code, on 18-12-2025. Thus, the petition filed by the appellant under Section 94 of the Code was clearly barred by limitation."
(Para 43)
Final Verdict
The NCLAT dismissed the appeal and also rejected IA No. 4477 of 2026, which sought to stay the auction notice for the sale of the 's assets. The Tribunal found no illegality in the 's order and noted that the petition was filed only to delay recovery proceedings. No costs were awarded.
The ruling reinforces that personal guarantors cannot unilaterally extend limitation periods by submitting settlement proposals, and that limitation for filing personal insolvency applications runs strictly from the date of .
