NCLAT Holds Debt Not Time Barred In Rajeshwari Cotspin CIRP, Says Threshold Cannot Be Confined to Last Invoice

Holding that the claim was not time barred and that all the invoices had to be considered for determining the statutory threshold, the National Company Law Appellate Tribunal dismissed an appeal against the admission of insolvency proceedings against Rajeshwari Cotspin Ltd.

A bench of Chairperson Justice Ashok Bhushan and Technical Member Barun Mitra observed, “Thus, threshold has to be determined on basis of the invoices taking all the invoices and cannot confine to only last invoice of Rs. 19 lakhs.”

The tribunal first rejected the limitation objection. It held that the operational creditor was entitled to the benefit of the Supreme Court's order in 'Re: Cognizance for extension of Limitation' and that “the period from 15.03.2020 till 28.02.2022 deserves to be excluded, hence the application was not barred by time.”

The appeal was filed by Maheshkumar Bachubhai Patel, suspended director of Rajeshwari Cotspin Ltd., challenging the September 17, 2025 order of the Ahmedabad bench of the National Company Law Tribunal.

The NCLT had admitted a Section 9 application filed by operational creditor Shubh Cotton after recording debt and default of Rs. 4,27,89,552.64. The date of default mentioned in Part IV of the application was January 7, 2020. The application was filed in August 2023.

Before the NCLAT, the appellant argued that the application was barred by limitation as it was filed more than three years after the date of default. It was also contended that the threshold was not met because there was no running account and the last invoice was only for about Rs. 19 lakh. The appellant further submitted that there was inconsistency between the demand notice and the particulars set out in Part IV of the application.

On the threshold issue, the tribunal observed, “The mere fact that last invoice was of only Rs.19 lakhs and odd, hence the threshold is not complete does not commend us.” It noted that Part IV clearly referred to various invoices from May 7, 2019 to December 31, 2019, which were placed on record. The bench concluded that the application “fully fulfils the threshold” of Rs 1 Crore.

It also found no inconsistency between the demand notice and Part IV of the application. Finding no error in the admission order, the tribunal dismissed the appeal.