120-Day Timeline For Personal Insolvency Resolution Process Is Directory, Not Mandatory: NCLAT Delhi

On 26 February, the National Company Law Appellate Tribunal (NCLAT), New Delhi, held that the 120-day timeline for completing the Personal Insolvency Resolution Process (PIRP) under the Insolvency and Bankruptcy Code (IBC) is directory and not mandatory.

A Bench comprising Chairperson Justice Ashok Bhushan and Technical Member Indevar Pandey set aside the order of the National Company Law Tribunal (NCLT) Mumbai, which had refused to extend the process beyond the prescribed period. The Tribunal clarified that the Adjudicating Authority does not lose jurisdiction merely because the timeline under the IBBI Regulations has expired.

The Tribunal observed:

“Regulation 19 of the 2019 Regulations as quoted above is thus only procedural provisions and has to be held to be directory.”

The appeal was filed by Purusottam Behera, the Resolution Professional (RP) for several personal guarantors who had guaranteed loans for MSM Steels Private Limited. The creditors, led by the State Bank of India (SBI), had given 100% approval to their repayment plans by 6 December 2025.

The NCLT Mumbai Bench dismissed the RP's application for an extension of the PIRP on 28 January 2026, holding that once the 180-day statutory moratorium expired, it lacked jurisdiction to continue proceedings. It treated the 120-day timeline under Regulation 19 as mandatory, leading to the present appeal.

Behera contended that neither the IBC nor the IBBI (Insolvency Resolution Process for Personal Guarantors to Corporate Debtors) Regulations, 2019 prescribe a rigid outer limit for completing the process. The 120-day period for submission of the repayment plan is procedural and cannot extinguish substantive rights or foreclose adjudication.

Examining the statutory framework, the NCLAT distinguished between the “moratorium period” and the “PIRP period.” While Section 101 of the IBC strictly caps the moratorium at 180 days, the Code does not impose a specific deadline for completing the PIRP.

The Bench observed:

“When we look into the statutory scheme, it is clear that although the moratorium period is limited till 180 days maximum, the statutory provisions do not limit the PIRP period to any particular period.”

Emphasising that timelines under delegated legislation cannot override the parent statute, the Tribunal held that Regulation 19, which requires submission of the repayment plan within 120 days, is procedural and cannot be construed as mandatory so as to defeat the process itself.

Accordingly, the NCLAT set aside the NCLT Mumbai order, holding that the Adjudicating Authority is competent to grant extensions and proceed with the PIRP notwithstanding the expiry of the 120-day period. It extended the PIRP in the present case, clarifying that this does not affect the 180-day moratorium.

For Appellant: Senior Advocate Abhijeet Sinha with Advocates Aditya Gauri, Amar Vivek, Damini Sreshtha, Anant Jain, and Aryan Chhabra

For Respondents: Advocate Akash Chatterjee for CoC