NCLAT Stays NCLT Order Upholding Rejection Of ARCIL's ₹3,482 Crore Claim Against JCT

The National Company Law Appellate Tribunal (NCLAT) has recently kept in abeyance a National Company Law Tribunal (NCLT) order that upheld the Resolution Professional's rejection of Asset Reconstruction Company (India) Ltd.'s (ARCIL) financial claim against textile manufacturer JCT Ltd.

The appellate tribunal observed that the issue of limitation must be decided before the committee of creditors (CoC) votes on a resolution plan.

A bench of officiating Chairperson Justice Yogesh Khanna and Technical Member Barun Mitra observed,

"Admittedly, the Resolution Professional did not call for any documentation/relevant material for about a year, despite within 14 days he was to verify such claim and it was only at the asking of the appellant, he went into motion and rejected the claim alleging it being time barred. In view of the above facts and the law viz. limitation being a mixed question of law and facts, the issues needs to be decided prior to any plan is put to vote, as once the CoC goes ahead, the position as of today could never be restored."

The dispute stems from corporate guarantees executed by JCT in favour of IFCI Ltd. in 1993 to secure loans extended to its subsidiary, JCT Electronics Ltd. After the subsidiary defaulted, IFCI invoked the guarantees in 2002.

IFCI assigned the debt and the underlying guarantees to ARCIL in 2015.

After JCT entered the corporate insolvency resolution process (CIRP) in October 2024, ARCIL filed a claim of about ₹3,482 crore. The Interim Resolution Professional provisionally admitted ₹56.68 crore and inducted ARCIL into the CoC with a 20% voting share. The balance claim remained under verification.

In January 2026, the Resolution Professional rejected ARCIL's claim, citing documentary deficiencies, non-production of documents and limitation.

The Chandigarh bench of the NCLT upheld that decision in July. Before the appellate tribunal, ARCIL argued that a claim already admitted and acted upon could not later be reversed.

It also maintained that limitation bars only the remedy, not the debt, and relied on the pending DRT proceedings and the BIFR rehabilitation scheme.

The Resolution Professional and the CoC disputed this, saying the admission was only provisional. Finding that limitation raises mixed questions of law and fact, the appellate tribunal kept the NCLT's order in abeyance.