New Delhi, The NCLT has dismissed an insolvency plea of Morgan Securities and Credits Pvt Ltd (MSCPL) against BPL, saying that the claim for default of Rs 1,323.70 crore was barred by the limitation period and amounted to misuse of Insolvency and Bankruptcy Code as a debt-recovery tool.
The Kochi bench of the tribunal held the petition to be an attempt to use IBC as a recovery mechanism after already pursuing arbitration, appellate remedies, and execution.
“Considering the facts and circumstances of the present case, this Adjudicating Authority (NCLT) is of the view that the present proceedings are essentially an attempt to recover the balance amount claimed under the Award after having pursued arbitration, appellate proceedings and execution remedies for several years. Such use of the insolvency process is not in consonance with the object and scheme of the Code,” said NCLT in a July 7 order.
The NCLT’s decision came over a Section 7 application filed by MSCPL.
It had sought initiation of Corporate Insolvency Resolution Process (CIRP) against consumer electronics and healthcare equipment maker BPL over an alleged financial debt of Rs 1,323.70 crore arising from bill discounting transactions dating back to 2002-03.
Morgan Securities had contended that BPL defaulted on repayment obligations under bill discounting facilities extended in 2002 and 2003 and that the liability stood crystallised through an arbitral award passed in December 2016, which was subsequently upheld by the Supreme Court in December 2025.
The creditor claimed that despite recoveries and court-directed payments, dues amounting to over Rs 1,323 crore remained outstanding.
However, BPL opposed the petition, contending that the original default dated back to June 2007 and that the insolvency application, filed in March 2026, was time-barred. The company also submitted that substantial payments had already been made and that the claim largely related to interest rather than principal dues.
The Limitation Act provides a specified time limit to file a lawsuit. Section 3 of the Act mandates application made after the prescribed period shall be dismissed.
The NCLT held that though bill discounting arrangement qualified as a “financial debt” under the IBC and that Morgan Securities could be treated as a financial creditor, it ruled that the insolvency plea could not survive the limitation test.
The bench observed that the creditor itself had declared June 14, 2007 as the date of default and had approached the tribunal nearly 19 years later.
The NCLT also noted that MSCPL had already pursued arbitration proceedings, defended the arbitral award before the Delhi High Court and the Supreme Court, and initiated execution proceedings for recovery of the adjudicated amount.
It said the petitioner could not simultaneously rely on the arbitral award as a fresh cause of action while also seeking exclusion of time spent in arbitration and related proceedings under Section 14 of the Limitation Act.
“So, in a nutshell, this Adjudicating Authority is inclined to hold that the Section 7 petition filed by the Applicant is barred by limitation,” said the bench comprising Judicial Member Vinay Goel and Technical Member Ravichandran Ramasamy.
The tribunal noted that MSCPL had taken “contradictory stands” by simultaneously claiming that the arbitral award furnished a fresh cause of action while also seeking exclusion of the arbitration period under Section 14 of the Limitation Act — a position it termed “antithetical”.
It further observed that MSCPL had already pursued execution proceedings before a civil court in Bengaluru and recovered about Rs 168 crore, including Rs 72 crore paid directly by BPL and Rs 96 crore released from a Supreme Court deposit, against an original arbitration claim of Rs 25.79 crore.
“The cumulative effect of the facts noticed above leads this Adjudicating Authority to the conclusion that the present proceedings bear the characteristics of an attempt to enforce and recover amounts under an adjudicated Award rather than a genuine invocation of the insolvency resolution process contemplated under the Code,” said NCLT.
