NCLT Mumbai Rejects SBI's ₹1,759 Crore Insolvency Plea Against Patanjali Foods Guarantor
The National Company Law Tribunal (NCLT), Mumbai, has rejected State Bank of India's insolvency plea against Dinesh Shahra, personal guarantor for Patanjali Foods Ltd., formerly known as Ruchi Soya Industries Ltd.
The tribunal held that SBI's petition over a debt of ₹1,759 crore was filed after the limitation period had expired.
A coram of Judicial Member Sushil Mahadeorao Kochey and Technical Member Prabhat Kumar held that SBI's March 21, 2023 insolvency petition was not maintainable, as the limitation period had expired on February 26, 2023.
Holding that the provision permitting condonation of delay did not apply where the limitation period was governed by the Schedule to the Limitation Act, the Tribunal said:
"However, the said provisions apply to applications filed under any statute where the time limit is prescribed to do so and it does not apply to the filing of the application where the period for filing of such application is governed by the time limit specified in schedule appended to the Limitation Act. Accordingly, the present petition filed on 21.03.2023 having been filed after the expiry of limitation on 26.02.2023 is not maintainable."
State Bank of India had sanctioned credit facilities to Ruchi Soya from 2013 onwards with Shahra executing various deeds of guarantee. The guarantees were invoked on March 7, 2018 after which default occurred on March 12, 2018. Following approval of Patanjali Group's resolution plan on July 24, 2019, SBI received Rs.854.04 crore under the plan.
SBI issued a demand notice to Shahra on May 26, 2022 and later filed the insolvency petition. Before the Tribunal, Shahra opposed it, arguing that the resolution plan had discharged the underlying debt and that the petition was time barred.
SBI argued that the petition was within limitation and sought condonation of the delay, which was allowed by the Tribunal on October 18, 2023. The Respondent challenged the order before the NCLAT but withdrew the appeal on August 17, 2026, with liberty to raise the limitation issue before the NCLT.
On the issue of limitation, the Tribunal said that the earlier condonation was based on a mistaken application of the Supreme Court's COVID-19 relaxation, as 362 days remained available from March 1, 2022 and the additional 90 day benefit was therefore unavailable.
"On a careful reading of the order passed in Suo Motu Writ Petition, it is noted that the said period of 90 days was allowed in case the remaining period starting from 01.03.2022 remains less than 90 days. In the present case, a period of 362 days was available from 01.03.2022, accordingly, the said condonation is based on mistaken belief that they remain the period of 90 days was beyond the relaxation granted by hon'ble supreme court in the said petition."
The Tribunal held that the Rs.854.04 crore received under the resolution plan had to be accounted for while determining the subsisting guarantee liability but the receipt did not by itself extinguish Shahra's liability.
It also noted that the pendency of SBI's proceedings before the Debts Recovery Tribunal did not establish discharge of the guarantee in the absence of a final adjudication.
The personal guarantor argued that SBI had sought condonation of delay, which was allowed by the Tribunal on October 18, 2023, and that his challenge before the National Company Law Appellate Tribunal was later withdrawn with liberty to raise the limitation issue before the NCLT.
The Tribunal noted that the NCLAT's August 17, 2026 order had left the issue open.
Since the limitation expired on February 26, 2023, the petition filed on March 21, 2023 was not maintainable.
The Tribunal accordingly rejected and disposed of the petition.
For the Applicant: Advocate Samuel Abraham
For Resolution Professional: Advocate Nausher Kohli
For Personal Guarantor: Advocate Jay Zaveri