NCLT Mumbai Rejects JM Financial ARC Insolvency Plea, Holds DRT Review Order Does Not Extend Limitation

The National Company Law Tribunal (NCLT), Mumbai on 23 June 2026 dismissed JM Financial Asset Reconstruction Company Ltd's Section 7 insolvency petition against Shubh Hospitality Pvt Ltd, holding that a Debt Recovery Tribunal (DRT) review order correcting errors in an earlier judgment does not extend the limitation period under the Insolvency and Bankruptcy Code, 2016.

A Bench comprising Judicial Member K.R. Saji Kumar and Technical Member Sanjiv Dutt observed:

“In other words, the Ld. DRT has allowed corrections to the DRT Judgment by deleting, adding and correcting certain portions of the text. Further, pursuant to the corrections/modifications, the corrected/modified portions have become part of the original DRT Judgment. When we construe the Review Order as an instrument to make corrections/modifications, the same cannot be considered as a document that extends limitation, which is determinable otherwise than the Review Order.”

The dispute arose from a Rs. 43 crore term loan that Bank of India sanctioned on 10 October 2006 and disbursed on 21 December 2006. The account turned into a Non-Performing Asset on 30 June 2008. After JM Financial ARC acquired the debt in August 2009, the DRT on 7 June 2013 directed the corporate debtor to pay Rs. 57.49 crore with interest. The financial creditor filed the Section 7 petition in September 2019.

The Tribunal held that the DRT's review order dated 12 May 2021 only corrected clerical mistakes and omissions in the original judgment. It ruled that the doctrine of merger did not shift the date of default from 7 June 2013 to 12 May 2021, and it held that the review order could not extend limitation.

It further held that a review before the same DRT could not be treated as a separate civil proceeding in another court so as to invoke Section 14 of the Limitation Act. The Bench held:

“A Revision Application to review the judgment filed in the same DRT to correct certain mistakes/modifications cannot be regarded as a separate civil proceeding in another court without jurisdiction.”

The Members also rejected JM Financial ARC's reliance on the Supreme Court's ruling in Dena Bank v. C. Shivakumar Reddy, observing that the One Time Settlement proposal dated 18 July 2025 was made on a “without prejudice” basis, expressly denied acknowledgment of liability, and the financial creditor did not accept it. They noted:

“The FC cited the judgment of the Hon'ble Supreme Court in Dena Bank (Supra), wherein the Apex Court held that there is no reason why an offer of one-time settlement of a live claim, made within the period of limitation, should also not be construed as an acknowledgment to attract Section 18 of the Limitation Act, if the requirements of Section 18 are satisfied. According to the FC, this OTS gives rise to a fresh period of limitation and thus the Application is maintainable.”

Accordingly, the NCLT dismissed the Section 7 application as barred by limitation and clarified that the rejection would not prevent the financial creditor from pursuing recovery before any other appropriate forum.