Back
NCLT Mumbai Rejects Claim After COVID Extension, Costs ₹1 Lakh on Shaanxi Baoguang
The has dismissed two filed by Chinese operational creditor in its insolvency proceedings against Indian company , holding that a repayment extension granted during the COVID-19 period cannot revive a default that falls within the protected window of . The bench, comprising Judicial Member Nilesh Sharma and Technical Member Sameer Kakar, also imposed a cost of ₹1 lakh on the applicant for wasting judicial time.
The Dispute and Attempted Amendment
Shaanxi Baoguang filed Company Petition (IB) No. 497/2026 under in , claiming unpaid dues from and citing as the date of default. The invoices in question all became due between and — the period covered by the Section 10A , which bars any insolvency application for defaults occurring during that time.
During the initial hearing on , the NCLT flagged the Section 10A issue and directed the applicant to file written submissions on , citing the 's judgment in The matter was heard on and reserved for orders on .
After the petition was reserved, Shaanxi Baoguang filed two . The first (IA 2690/2026) sought to amend the petition to shift the date of default to , relying on email exchanges from September 2021. According to the applicant, on it offered Stelmec two options for clearing dues — either gradual payment by March 2022 or converting the outstanding amount to accounts receivable within one year. Stelmec accepted the second option via email on , promising to start monthly payments from October 2021. Since no payment was made by , the applicant argued this constituted a .
The second application (IA 2899/2026) sought to the main petition, as it had already been reserved for orders.
Tribunal's Rejection: Procedure and Merits
The NCLT refused to entertain the amendment, observing that the applicant had not explained why the September 2021 email attachment was not placed on record earlier. The document was in the company's possession from the beginning, and it remained available even when the petition was reserved on . The tribunal relied on the judgment in , which holds that applications raising facts already in existence cannot be moved after final arguments are concluded and judgment is reserved.
On the merits, the bench rejected the argument that a arose from the failure to pay during the extended period. It emphasised that the to Section 10A categorically states that no application shall ever be filed for a default occurring during the COVID-19 period. Extending the repayment timeline does not erase the original default or create a new, actionable default for insolvency purposes.
"Even on merits the IA's deserve to be rejected since as per the ratio of the Judgment of Hon'ble in the matter of Ramesh Kymal VS. Simens Gamesa Renewable Power Pvt Ltd. the date of default if it is within the 10A period, no insolvency petition can ever be filed."
The tribunal further noted that granting the creditor the right to rely on a later failure during the extended period would contravene the of Section 10A, which was to shield companies from insolvency proceedings arising from pandemic-induced defaults.
Costs Imposed
The NCLT observed that the applicant had been given an opportunity to withdraw the applications but persisted, causing loss of judicial time — the main petition's pronouncement had to be deferred due to the filings. Accordingly, it levied a cost of ₹1,00,000 on Shaanxi Baoguang, payable to the within seven days. The applications were relisted for compliance on .
Implications
This ruling reinforces the strict interpretation of Section 10A's on insolvency petitions for COVID-period defaults. It clarifies that a creditor cannot circumvent the bar by alleging a arising from a repayment schedule voluntarily agreed to after the . The decision also underscores the principle that parties cannot introduce new material after a matter is reserved for judgment, even if the material was in their possession throughout the proceedings.
The respondent, , did not appear before the tribunal during the applications, with the bench recording "None present" for the respondent.
For Applicant in both IAs: Advocates and , instructed by .
