M/s. Morgan Securities and Credits Pvt Ltd vs BPL Limited

Per Coram

This petition has been filed under Section 7 of the Insolvency and Bankruptcy Code, 2016 (hereinafter referred to as the ‘Code’ or ‘IBC’) by M/s. Morgan Securities & Credits Private Limited (hereinafter referred to as the ‘Financial Creditor’ or ‘MSCPL’) on 16.03.2026 through its authorised representative, Mr. Sriniwas Chandan, who has been duly authorised vide Board Resolution dated 10.12.2025, against BPL Limited (hereinafter referred to as the ‘Corporate Debtor’) seeking initiation of the Corporate Insolvency Resolution Process (hereinafter referred to as the ‘CIRP’), appointment of an Interim Resolution Professional (hereinafter referred to as the ‘IRP’), and declaration of moratorium on account of default in repayment of a financial debt amounting to Rs. 13,23,70,00,924/- (Rupees Thirteen Hundred Twenty-Three Crores Seventy Lakhs Nine Hundred Twenty-Four Only).

Part I of the petition sets out the particulars of the Financial Creditor. It is stated that the Financial Creditor is a company incorporated under the provisions of the Companies Act, 1956, bearing Corporate Identification Number Page 2 of 40 U46909DL1996PTC077623. The Financial Creditor was recognised as a Non-Banking Financial Company by the Department of Non-Banking Supervision, Reserve Bank of India, New Delhi, vide Certificate No. B14.02441 dated 23.08.2001, authorising it to carry on the business of a non-banking financial institution without accepting public deposits. Subsequently, vide order dated 02.11.2018, the Reserve Bank of India cancelled the said Certificate of Registration.

As per Part II of the petition, the Respondent/Corporate Debtor is a Public Limited Company with Corporate Identification Number: L28997KL1963PLC002015. The date of incorporation is 16.04.1963. The registered office of the Respondent/Corporate Debtor is situated at BPL Works Palakkad, Palakkad, Kerala, India, 678 007. Therefore, this Bench has jurisdiction to deal with this petition.

Perusal of Part III of the Petition reveals that the Petitioner/Financial Creditor has proposed AAA Insolvency Professionals LLP, having its office at First Floor, 64, Okhla Estate, Phase-III, New Delhi – 110020, bearing Registration No. IBBI/IPE/002/IPA-1/200-23/50001, to act as the Interim Resolution Professional (IRP). The proposed IRP has filed its written communication in Form-2, annexed to the Petition, in compliance with Rule 9(1) of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016.

Part IV of the petition signifies the amount of debt to the tune of Rs. 13,23,70,00,924/- (Rupees Thirteen Hundred Twenty-Three Crores Seventy Lakhs Nine Hundred Twenty-Four Only). The date of default is 14.06.2007.

Part V of the petition describes the particulars of Financial Debt; documents, records and evidence of default as described below:

Bill Discounting Facility Agreement dated 27.12.2002 and 11.06.2003 for Rs 6 Crores and 6.5 Crores.

Tabulation of all bills of exchange issued pursuant to the bill discounting dated 27.12.2002 & 11.06.2003 as on 10.08.2007 for Rs 27,89,34,259/-

Acknowledgement letter dated 02.02.20227 sent and signed by the Corporate Debtor to the Financial Creditor.

Demand Notice dated 06.06.2007 for Rs.25,79,91 ,096/-

Copy of Notice by MSCPL to BPL dated 28.06.2007 for invocation of Arbitration proceedings for Rs.25,79, 91,096/-

Copy of the statutory Winding-Up Notice dated 07.06.2007 and the order passed in the winding-up proceedings.

A copy of the Order passed by the Hon’ble High Court of Delhi dated 04.12.2012.

Copy of the Orders dated 08.02.2013, 12.09.2025 and 04.12.2025 passed by the Hon’ble Supreme Court.

Copy of the Arbitral Award dated 14.12.2016.

Copies of the SEBI disclosures dated 24.12.2024 and 05.12.2025.

The detailed computation of the default amount, reflecting the award sums and interest accrued and the bank statement of the Financial Creditor for the period 06.07.2002 to 13.01.2026.

Copy of the Financial Statement of BPL Limited, the Corporate Debtor for the FY 2022-23, 2023-24 and 2024-25.

A copy of the entries and account details in the Banker’s Book.

Brief Facts of the Case, as stated in the Petition:

Submissions on behalf of the Respondent/Corporate Debtor: -

Submissions on behalf of the petitioner/Financial Creditor in the rejoinder state as follows:

The Respondent/Corporate Debtor filed IA(IBC)/185/KOB/2026 seeking leave of this Adjudicating Authority to place on record an Additional Statement of Objections in the present Section 7 Petition. According to the Respondent, additional grounds and documents are required for the proper adjudication of the present Section 7 Petition.

The Respondent submits that the proposed Additional Statement of Objections raises several legal issues, including that the Petitioner, being an award-holder/decree-holder, cannot automatically invoke the provisions of the Insolvency and Bankruptcy Code, 2016; that the underlying bill discounting transactions do not constitute a financial debt under Section 5(8) of the Code; that the Petition is barred by limitation; that there was no direct lending relationship between the parties; that assignment does not alter the nature of the debt; that the Code cannot be used as a substitute for execution proceedings or as a debt recovery mechanism; and that payments made by the Corporate Debtor had been adjusted towards the principal amounts.

The Respondent has further sought to place on record additional documents in support of the above contentions, including copies of proceedings before the Hon'ble Supreme Court, the adjustment chart filed by the Petitioner in the arbitral proceedings, and the cross-examination of the Petitioner's witness before the learned Sole Arbitrator, which, according to the Respondent, are relevant for determining the nature of the debt, limitation and the extent of recoveries already effected by the Petitioner.

The Respondent, along with the additional reply, filed certain documents to substantiate its pleadings. The Petitioner has not denied the existence or admissibility of those documents but has contended that they have no bearing on the proceedings under Section 7 of the Code. Further, the Petitioner has pleaded that whatever objection the Respondent intends to raise by way of additional defence, as an extension of the earlier defence, cannot be entertained. It is also contended that some of the objections sought to be raised have already been decided by the Arbitral Tribunal, the Hon'ble High Court, or the Hon'ble Supreme Court, and therefore, those issues cannot be reagitated before this Adjudicating Authority in the present Section 7 application.

We have heard the Learned Counsel for both parties and perused the documents available on record. Before proceeding further, it is pertinent to note that the Respondent had filed additional objections along with supporting documents through IA(IBC)/185/KOB/2026. In view of the judgment dated 11.06.2026 passed by the Hon'ble High Court of Kerala in W.P.(C) No. 1914348 of 2026 concerning the said pleadings and documents, the additional objections, the documents produced therewith filed by the Respondent to the additional objections, reply, and rejoinder to the additional objections, were taken on record vide order dated 12.06.2026.

The Respondent, through IA(IBC)/185/KOB/2026, has raised additional objections contending, inter alia, that the Petitioner, being an Award Holder/Decree Holder, does not automatically become a Financial Creditor under the Code, that the underlying bill discounting transaction does not constitute a Financial Debt under Section 5(8) of the Code and that the Petitioner has already pursued arbitration and execution proceedings, obtained substantial recoveries and is attempting to invoke the Code as a recovery mechanism, that the Corporate Debtor is a going concern and a listed company, that substantial amounts have already been paid pursuant to various judicial orders, and that documents relied upon from the arbitral proceedings indicate that the principal amounts stood discharged and that the surviving dispute substantially relates to interest calculations.

Subsequently, the Hon'ble High Court of Kerala, in W.P.(C) No. 19348 of 2026 dated 11.06.2026, passed orders concerning the said pleadings and documents. In view of the judgment of the Hon'ble High Court, the additional objections, the documents produced therewith, and the counter objections filed by the Respondent are taken on record. The reply filed by the Petitioner to the additional objections is already on record. The rejoinder filed by the Petitioner is also taken on record. Accordingly, all pleadings and documents placed by the parties have been considered for adjudication of the present Petition. This Adjudicating Authority is conscious that any point raised by the Respondent and parties before Arbitration about the alleged transaction cannot be reagitated in this section 7 petition, which refers to the nature of the loan, contractual obligation, and rights and liabilities of the parties under the said contract.

Before examining the issues for determination, this Adjudicating Authority considers it appropriate to set out the chronology of material events giving rise to the present proceedings. The sequence of events, as borne out from the records placed before this Tribunal, is summarised hereunder:

This Adjudicating Authority has heard the learned counsels for both parties and has gone through the pleadings, documents on record, written submissions, and oral arguments made at the Bar, and the case laws cited on behalf of the rival parties. Accordingly, these points attract attention by this Adjudicating Authority for judicious adjudication of the present case are:

 what is the effect of the underlying transaction on the Arbitral Award.

 what is the nature of the transaction between the parties and whether it constitutes a financial debt under the Code  whether the present application is within limitation  whether this Adjudicating Authority is bound to admit an application under Section 7 of the Code upon existence of debt and default, ignoring all other facts and circumstances  whether the provisions of the Code can be used as an arm twisting mechanism for recovery  whether the benefit of Section 14 of the Limitation Act, 1963 is available to a litigant who, at the time of filing the application for insolvency under the Code, is enjoying the fruits of the litigation and pursuing execution proceedings and  whether the Petitioner by filing execution proceedings to enforce the Arbitral Award, discontinued the continuous chain of cause of action arising from the original transaction for the purpose of claiming limitation on account of continuing cause of action or a fresh cause of action under the principles laid down in Dena Bank v. C. Shivakumar Reddy. Whether the courts adopted to pursue remedies available at different stages would have any bearing on the section 7 petition or not  whether the amounts deposited pursuant to the orders of the Court constitute a valid acknowledgment of debt under Section 18 or Section 19 of the Limitation Act, 1963, in the facts and circumstances of the present case  whether the present Petition is barred by the principle of res judicata on account of the earlier winding-up proceedings initiated against the Respondent under the provisions of the Companies Act, 1956  whether the pendency of the Review Petition before the Hon'ble Supreme Court affects the maintainability of the present Section 7 application

The Corporate Debtor has raised a preliminary objection regarding the maintainability of the present Petition on the ground that the Petitioner is not a Financial Creditor and that the claim does not constitute a Financial Debt within the meaning of Sections 5(7) and 5(8) of the Code. The case of the Respondent is that the underlying transaction was merely a commercial bill discounting arrangement and not a loan transaction and, therefore, the Petitioner cannot invoke Section 7 of the Code. The Respondent has placed reliance upon the judgment dated 04.12.2025 passed by the Hon'ble Supreme Court in Civil Appeal Nos. 14565-14566 of 2025. On the other hand, the Petitioner has contended that the transaction squarely falls within Section 5(8)(e) and 5(8)(f) of the Code, which specifically includes receivables sold or discounted other than on a non-recourse basis. It is submitted that amounts were disbursed by the Petitioner against Bills of Exchange accepted by the Corporate Debtor and that the Corporate Debtor had undertaken liability to repay the discounted amounts together with interest.

This Adjudicating Authority notes that the Bill Discounting Facility Agreements dated 27.12.2002 and 11.06.2003 were admittedly executed between the parties. Section 5(8)(e)^{11.5(8) “financial debt” means a debt along with interest, if any, which is disbursed against the consideration for the time value of money and includes— (e) receivables sold or discounted other than any receivables sold on a non-recourse basis;} and 5(8)(f)^{22.5(8) “financial debt” means a debt along with interest, if any, which is disbursed against the consideration for the time value of money and includes— (f) any amount raised under any other transaction, including any forward sale or purchase agreement, having the commercial effect of a borrowing;} of the Code specifically includes within the ambit of financial debt, "receivables sold or discounted other than any receivables sold on a non-recourse basis" and therefore, the legislature itself has recognised certain forms of receivable financing and discounting transactions as constituting financial debt. The transaction involved in the present case arises out of a bill discounting arrangement under which funds were advanced by the Petitioner against receivables represented through Bills of Exchange accepted by the Corporate Debtor and having commercial effect of borrowing. Thus, the transaction cannot be excluded from consideration merely because it is not a conventional loan. Further, Section 5(8)(f) of the Code includes within the definition of financial debt any amount raised under a transaction having the commercial effect of a borrowing. In the present case, funds were made available by the Petitioner under the bill discounting arrangement and the Corporate Debtor was under an obligation to repay the amounts due. Therefore, the transaction also has the commercial effect of borrowing and would fall within the ambit of Section 5(8)(f) of the Code.

This Adjudicating Authority also finds that the reliance placed by the Respondent on the observations of the Hon'ble Supreme Court in Civil Appeal Nos. 14565-14566 of 2025 is misplaced. Paragraphs 47 to 50 in Civil Appeal Nos. 14565-14566 of 2025 of Hon'ble Supreme Court reads as under:

A reading of paragraphs 47 to 50 of the judgment shows that the Hon'ble Supreme Court has pleased to examine the distinction between a loan transaction and a bill discounting facility for the purpose of considering the applicability of the Usurious Loans Act, 1918. The Hon'ble Supreme Court has pleased to observe that bill discounting is a commercial financing arrangement through which immediate liquidity is made available by a financial institution against receivables and that such transactions carry a different commercial character from conventional loans. The observations of the Hon'ble Supreme Court were made in the context of examining the nature of a bill discounting transaction vis-à-vis a loan transaction while considering the applicability of the Usurious Loans Act, 1918. Since the said judgment does not contain any determination regarding the classification of a bill discounting transaction as a financial debt under Section 5(8) of the Code, the observations contained therein cannot be construed as conclusively deciding whether the present transaction falls within the ambit of financial debt under the Code.

The Arbitral Award merely quantified and crystallised the liability arising from the underlying transaction. The character of the debt does not stand altered merely because the liability has been adjudicated through arbitral proceedings. The source of the claim continues to remain the bill discounting transactions entered into between the parties.

In the present case, the liability of the Corporate Debtor under the Bill Discounting Facility Agreements is no longer res integra. The same has been adjudicated through arbitral proceedings. The existence of liability arising from the underlying transaction, therefore, cannot be disputed. This Adjudicating Authority is satisfied that the claim of the Petitioner arises from transactions covered under Section 5(8) of the Code and that the Petitioner answers the description of a Financial Creditor under Section 5(7) of the Code. Prima facie, the transaction falls within the ambit of Section 5(8) of the Code, and the Petitioner can be treated as a Financial Creditor for the purpose of maintaining the present proceedings.

It is further contended on behalf of the respondent that the Section 7 Petition against the Respondent is not maintainable as no money was directly disbursed to the Respondent. This Adjudicating Authority has gone through the documents on record. The Respondent, under the commercial transaction documents, had admitted its joint and several liability along with BPL Display Devices Limited. Accordingly, arbitration proceedings were initiated against both the companies, and the Respondent was also a beneficiary of the said transaction. As such, the defence taken by the Respondent is not tenable.

The defence taken by the Respondent is that the Corporate Debtor is a listed company and, therefore, insolvency proceedings cannot be initiated against it. This Adjudicating Authority finds no merit in the said contention. The status of the debtor as a corporate entity is sufficient to attract the provisions of Sections 7, 9 and 10 of the Insolvency and Bankruptcy Code, 2016. Whether the company is listed or unlisted has no bearing on the right of a Financial Creditor to initiate insolvency proceedings, provided the statutory requirements relating to debt, default, threshold amount and limitation are satisfied.

The pendency of the Review Petition filed by the Respondent before the Hon'ble Supreme Court has no bearing on the merits of the present case, as the said Review Petition was lying under defects on the date of filing of the present Section 7 Petition. Moreover, even after the filing of the Review Petition, no interim order has been passed by the Hon'ble Supreme Court. Therefore, the pendency of the Review Petition does not affect the maintainability of the present application filed under Section 7 of the Insolvency and Bankruptcy Code, 2016.

Having held that the Petitioner is a Financial Creditor and that the claim arises from a Financial Debt, the next question that arises for consideration is whether the present application has been filed within the period of limitation prescribed under law.

The date of default stated by the Petitioner in Part IV in the petition is 14.06.2007. The present application has been filed only on 16.03.2026. Therefore, on the face of the record, the application has been filed nearly nineteen years after the date of default. A Financial Creditor can file a Section 7 within 3 years from the date of default or within further extended period of limitation is extendable due to acknowledgement of debt or by other measures as recognised by law.

The Petitioner contends that the application is saved by various circumstances, namely, acknowledgments allegedly made by the Corporate Debtor, part-payments made towards the debt, exclusion of time under Section 14 of the Limitation Act, 1963, and, most importantly, the Arbitral Award dated 14.12.2016, which was ultimately affirmed in Civil Appeal no. 14565 - 14566 of 2025 by the Hon'ble Supreme Court on 04.12.2025. According to the Petitioner, the Award furnished a fresh cause of action in terms of the judgment of the Hon'ble Supreme Court in Dena Bank v. C. Shivakumar Reddy, (2021) ibclaw.in 69 SC and therefore limitation must be reckoned from the date on which the Award attained finality.

At the outset, it is necessary to note that the Petitioner itself has unequivocally stated the date of default as 14.06.2007 in Form-1. It is settled law that limitation for an application under Section 7 of the Code is governed by Article 137 of the Limitation Act, 1963. Therefore, unless the Petitioner is able to demonstrate a legally sustainable ground for extension, exclusion or fresh commencement of limitation, the present application would prima facie be barred by time.

The Petitioner has placed reliance upon the acknowledgment letter dated 02.02.2007, certain subsequent SEBI disclosures made by the Corporate Debtor and the arbitral proceedings with Award dated 14.12.2016.

This Adjudicating Authority is of the considered view that the Award dated 14.12.2016, which has subsequently been affirmed in appellate proceedings, constitutes a relevant factor that cannot be completely ignored while examining the question of limitation. The judgment of the Hon’ble Supreme Court in Dena Bank recognises that a judgment, decree or recovery certificate may furnish a fresh cause of action for initiation of proceedings under the Code.

The Petitioner seeks to rely upon the Arbitral Award and simultaneously invokes Section 14 of the Limitation Act, 1963. The pleadings in Part V, page 44 in the petition are reproduced below:

Section 14 of the Limitation Act, 1963 is founded on the principle that a litigant who has prosecuted a proceeding with due diligence before a forum which ultimately could not entertain the matter on account of a defect of jurisdiction or other cause of a like nature should not suffer on account of the time spent in such proceedings. The benefit of Section 14 of the Limitation Act, 1963 is therefore available where a party has approached an inappropriate forum in good faith and the proceeding fails for reasons relating to maintainability or jurisdiction.

When this Adjudicating Authority noticed an apparent inconsistency in the stand taken by the Petitioner, namely, that on the one hand it was relying upon the Arbitral Award and its subsequent affirmation as furnishing a fresh cause of action, while on the other hand seeking exclusion of the period spent in the arbitral proceedings under Section 14 of the Limitation Act, 1963, clarification was sought regarding the submissions made in the pleadings and about the date of default. It is also noted that the proceedings of the hearing held on 27.04.2026, as recorded in the daily order, are as follows: -

It is pertinent to note that, when the apparent contradiction in the Petitioner's pleadings was specifically brought to its notice by this Adjudicating Authority, including the inconsistency between the reliance placed on the Arbitral Award as furnishing a fresh cause of action and the date of default disclosed in the Petition as 14.06.2007, the Petitioner expressly stated during the hearing held on 27.04.2026 that the Petitioner intended to continue with the pleadings as filed. It is further noticed that, during the course of oral hearing, specific queries were raised by this Adjudicating Authority regarding the maintainability of the plea under Section 14 of the Limitation Act, 1963 and its apparent inconsistency with the Petitioner's reliance on the Arbitral Award and the date of default stated in the Petition. Despite such queries, the Petitioner neither sought to amend its pleadings nor chose to abandon or modify any of the stands taken therein. Rather, the Petitioner consciously elected to proceed on the basis of the Petition as originally presented. The Petitioner thus maintained its stand that limitation should be computed with reference to the date of default of 14.06.2007, while simultaneously seeking exclusion of the period spent in the arbitral proceedings under Section 14 of the Limitation Act, 1963 and also relying upon the Arbitral Award and its subsequent affirmation up to the Hon'ble Supreme Court as furnishing a fresh cause of action. In these circumstances, the contradictory stands taken by the Petitioner cannot be ignored and are liable to be examined on their own merits. The pleadings must be clear and without any ambiguity. A person cannot be allowed to take inconsistent pleas. Individual separate pleas under section 14 of the Limitation Act and individual exclusive reliance upon finalisation of the cause of action on account of Arbitral proceedings are permissible but simultaneously reliance upon both aspects are not permissible.

It is alleged on behalf of the Respondent that the present Petition is barred by the principle of res judicata, as the Petitioner had filed winding-up proceedings under Section 433(e) of the Companies Act, 1956. Having considered the submissions, this Adjudicating Authority is of the considered opinion that those proceedings would not constitute res judicata because the decision therein was not on the merits, and liberty was granted to the Petitioner under the said provision to approach the Court again after the arbitration proceedings was over.

In the present case, the Petitioner itself admits that after the alleged default, it consciously invoked the arbitration clause contained in the Bill Discounting Facility Agreements. The arbitral proceedings so initiated were the appropriate proceedings to the case and remedy attributable to the petitioner. On the contrary, they resulted in an Award substantially in favour of the Petitioner. The said Award was defended by the Petitioner before the Hon’ble High Court and ultimately before the Hon'ble Supreme Court. The Petitioner has consistently relied upon the Award as a valid adjudication of its rights and has also sought to be a fresh cause of action from the Award by placing reliance upon the judgment of the Hon’ble Supreme Court in Dena Bank. In this regard, the Hon'ble Kerala High Court in P.T. Babu v. Vijaya Bank and Ors. (2025) ibclaw.in 3490 HC, observed that

Therefore, Section 14 does not extend to cases where the earlier proceedings were entertained by a competent forum and culminated in adjudication. In the present case date of default as disclosed is 14.06.2007, and the Applicant has consciously opted for such date of default to make its case in synchronisation with its pleadings about the exemption claimed under Section 14 of the Limitation Act. If Applicant had intentions to avail the benefit of finalization of Arbitral proceedings after the decision of the Hon'ble Supreme Court, Applicant would have mentioned the date of default after December 2025, i.e., after the date of the order of the Hon’ble Supreme Court. A party can file an application under Section 7 within three years from the date of default, and this period can be enlarged if there exists any acknowledgement of debt.

Once such a stand is taken, it becomes difficult to simultaneously contend that the period spent in arbitration proceedings and the subsequent challenges thereto should be excluded under Section 14 of the Limitation Act, 1963. The arbitration proceedings were not proceedings before a forum lacking jurisdiction. On the contrary, the proceedings resulted in a binding adjudication, which the Petitioner now seeks to rely upon as the very foundation of the present application. The simultaneous invocation of Section 14 of the Limitation Act and reliance upon the Arbitral Award as furnishing a fresh cause of action are, in the facts of the present case, antithetical to each other.

This Adjudicating Authority also notices that, upon the occurrence of the alleged default in 2007, the Petitioner had multiple remedies available under law, including:

The Petitioner consciously selected to invoke arbitration by issuing a Notice of Arbitration on 28.06.2007. Simultaneously, the Petitioner also initiated winding-up proceedings by filing Company Petition No. 28 of 2008 before the Hon'ble High Court of Kerala. By order dated 06.01.2011, the Hon'ble High Court of Kerala noticed that the very debt forming the subject matter of the winding-up petition was already pending adjudication before the Arbitrator. Taking note of the pendency of the arbitral proceedings, the Hon'ble High Court declined to proceed with the winding-up petition at that stage and closed the same, while expressly reserving liberty to the Petitioner to approach the Court again after the arbitration proceedings are over, if the debt was quantified and remained unpaid.

Thereafter, the arbitral proceedings culminated in an Award dated 14.12.2016, substantially in favour of the Petitioner. The Award was subsequently challenged before the Hon'ble High Court of Delhi under Sections 34 and 37 of the Arbitration and Conciliation Act, 1996, and was ultimately affirmed by the Hon'ble Supreme Court. Significantly, even during the pendency of the appellate proceedings, the Petitioner selected to enforce the Award by initiating Execution Petition No. 4621 of 2018 before the City Civil Court, Bengaluru, on 13.12.2018, thereby treating the Award as an executable adjudication of its rights.

The payment made pursuant to the Court's directions cannot be considered as an acknowledgment of debt under Section 18 of the Limitation Act, as the said deposits lack voluntariness, and the Applicant has failed to place on record any accompanying admission in writing allegedly made along with such deposit so as to satisfy the requirements of Section 19 of the Limitation Act. Therefore, the defence so taken is liable to be ignored.

Accordingly, the application is barred by limitation from the date of default, as by filing the execution application before the Civil Court, the Applicant broke the chain of continuity. Subsequently, the deposits made before the Court would not come within the ambit of Sections 18 or 19 of the Limitation Act. The benefit of the law laid down by the Hon'ble Supreme Court in the Dena Bank case would not be available to the Applicant to claim limitation on the basis of a continuous cause of action from the initiation till the finalisation of the arbitral proceedings. By its own acts and conduct, the Applicant diverted the course by filing the execution application. To claim such benefit, the Applicant would have pursued the arbitral proceedings in one course and was required to mention the date of default after the finalisation of the arbitral proceedings. So, in a nutshell, this Adjudicating Authority is inclined to hold that the Section 7 Petition filed by the Applicant is barred by limitation.

The significance of these facts is that the Petitioner was never prevented from pursuing its remedies. On the contrary, the Petitioner consciously chose arbitration as its primary remedy, pursued the arbitral proceedings to their conclusion, successfully defended the Award before the appellate forums, and thereafter invoked the execution jurisdiction for recovery of the awarded amounts. The time consumed in arbitration, appellate proceedings, and execution proceedings was therefore the consequence of the remedies consciously elected and pursued by the Petitioner and not because it was bona fide prosecuting proceedings before a forum lacking jurisdiction. Consequently, the requirements for the invocation of Section 14 of the Limitation Act, 1963, do not appear to be satisfied.

There can be no dispute with the proposition in Dena Bank v. C. Shivakumar Reddy that an adjudicated liability may furnish a fresh cause of action. Thus, the conduct of the Petitioner shows that the Award has been treated as an executable decree and that the Petitioner has been actively pursuing recovery thereunder. The present proceedings under Section 7 have been initiated only after prolonged execution proceedings and after the award has been affirmed by the Hon'ble Supreme Court. The question that therefore arises is whether the insolvency process can now be invoked as an additional mechanism for recovery of the same adjudicated claim.

It is also significant that, upon obtaining the Arbitral Award, the Petitioner had two remedies available in law, namely,

The Petitioner consciously elected to pursue execution proceedings and continued with the same for several years. Having chosen the execution route and having obtained attachment orders and substantial recoveries thereunder, the Petitioner treated the Award as an executable decree and pursued enforcement of the adjudicated claim through the machinery of the Civil Court. Even though there is no material on record that the petitioner has withdrawn those arbitration proceedings before taking the defence of Section 14 of the Limitation Act, in the considered view of this Adjudicating Authority, once the Petitioner consciously chose to enforce the Award through execution proceedings, the continuous cause of action arising from the original debt stood broken and merged into the adjudicated Award, which thereafter became the basis of its recovery efforts. The conduct of the Petitioner unmistakably demonstrates that the primary objective was the enforcement and recovery of the adjudicated claim. Having selected to pursue execution and having actively availed the recovery machinery of the Civil Court, the Petitioner cannot now seek to invoke the insolvency jurisdiction as an additional or parallel mechanism for recovery of the balance amount claimed under the Award. Such a course would be contrary to the settled principle that the Code is not intended to serve as a substitute for execution proceedings or as a debt recovery forum.

It is also relevant to note that Annexure A1 produced along with IA(IBC)/185/KOB/2026 in CP(IBC)/10/KOB/2026, contains the evidence adduced before the learned Sole Arbitrator wherein an admission has been made that the principal amount due under the bill discounting transactions has already been paid, which reads as follows:

This Adjudicating Authority, by reproducing the above portion of the cross-examination, is not giving any finding on the quantum of the principal amount. The same has been referred to only for the limited purpose of bringing the relevant facts on record. The Respondent has produced the said document along with its additional reply, and the Petitioner has failed to dispute its genuineness or authenticity. Though the Petitioner, being the award-holder, may be entitled to recover the amount in terms of the Arbitral Award, it is a matter of record that the amount originally claimed in the Arbitration Notice dated 28.06.2007 was Rs.25,79,91,096/- (Rupees Twenty-Five Crores Seventy-Nine Lakhs Ninety-One Thousand and Ninety-Six only), where, in the present Section 7 Petition, the Petitioner claims a total amount of Rs.13,23,70,00,924/-(Rupees One Thousand Three Hundred Twenty-Three Crores Seventy Lakhs Nine Hundred and Twenty-Four only) on the basis of the said Arbitral Award.

The Respondent has specifically relied upon the above evidence to contend that the principal amounts covered under the bill discounting transactions had already been discharged and that the surviving claim substantially relates to interest and consequential amounts. A perusal of the testimony extracted above shows that the witness examined on behalf of the Petitioner admitted that, in respect of the hundies referred to therein, the original principal amounts had been fully paid and that the dispute persisted only on account of the interest component. While this Adjudicating Authority is not called upon to adjudicate the correctness of the quantum claimed under the Award, the aforesaid admission assumes relevance while examining the nature of the present proceedings and the contention of the Respondent that substantial recoveries have already been effected and that the present petition is essentially directed towards recovery of the balance amounts claimed under the Award.

The materials on record further disclose that, during the course of the proceedings arising from the Arbitral Award dated 14.12.2016, including the proceedings before the Hon'ble High Court of Delhi and the proceedings before the Hon'ble Supreme Court in SLP (C) Diary No. 56596 of 2024, subsequently registered as SLP (C) Nos. 32849-32850 of 2025 and culminating in Civil Appeal Nos. 14565-14566 of 2025, substantial amounts were realised by the Financial Creditor. These included a payment of Rs.72 Crores made directly by the Corporate Debtor and the subsequent release of Rs.96 Crores, along with interest, from the amounts deposited before the Hon'ble Supreme Court pursuant to its orders. Thus, a total sum of Rs. 168 Crores has already been recovered against the amount for Rs. 25,79,91,096/-, for which the arbitration proceedings were originally initiated.

The above facts assume considerable significance. There is no other transaction between the parties. As far as the amount due and recoverable is concerned, that has already been crystallised in the Award. The materials placed on record indicate that the principal amounts under several of the bill discounting transactions stood discharged. It is also a matter of record that the aggregate Bill Discounting Facilities originally sanctioned in favour of the Corporate Debtor were Rs.6 Crores on 27.12.2002 and Rs.6.5 Crores on 11.06.2003, aggregating to Rs.12.5 Crores. The materials placed on record, particularly those relied upon by the Respondent in IA(IBC)/185/KOB/2026, indicate that the principal amounts under several of the bill discounting transactions had already been discharged. It is also not in dispute that the Petitioner has received Rs.72 Crores from the Corporate Debtor and a further sum of Rs.96 Crores, together with accrued interest, pursuant to the orders of the Hon'ble Supreme Court. The execution proceedings instituted by the Petitioner continue to remain pending and attachment orders have also been obtained. These circumstances lend support to the contention of the Respondent that the Petitioner has already realised amounts far in excess of the original financial accommodation extended under the Bill Discounting Facility Agreements and that the surviving dispute substantially relates to the balance amounts claimed under the Award, including interest and consequential accruals.

This aspect assumes significance because the jurisdiction under Section 7 of the Code is not intended to function as an alternative forum for enforcement of decrees, awards or recovery certificates. The object of the Code is resolution of insolvency and revival of a corporate person in financial distress. The Code is not intended to be invoked merely because a creditor has been unable to realise the entire amount claimed under an adjudicated award. The argument advanced by the Learned Counsel for the Petitioner regarding the diversion of funds by the Respondent Corporate Debtor to other sister concerns does not constitute a valid ground for initiating the insolvency resolution process in the facts and circumstances of the present case

The Hon'ble Supreme Court has repeatedly emphasised that the provisions of the Code cannot be permitted to be used as a substitute for recovery proceedings. The Hon'ble Supreme in Anjani Technoplast Ltd. v. Shubh Gautam (2026) ibclaw.in 209 SC, the Hon'ble Supreme Court held that,

In the present case, the conduct of the Petitioner assumes relevance. After obtaining the Award, the Petitioner choose to pursue execution proceedings and has continued with the same. The Award has thus been treated by the Petitioner as an executable adjudication capable of enforcement through the ordinary process of law. Having chosen to pursue execution and having already recovered substantial amounts pursuant to orders passed in the arbitral and appellate proceedings, the Petitioner now seeks initiation of CIRP against the Corporate Debtor for recovery of the balance amount claimed under the Award.

This Adjudicating Authority is of the considered view that once the Petitioner has elected to treat the Arbitral Award as the basis of its recovery and has invoked the execution jurisdiction for enforcement thereof, the insolvency process cannot ordinarily be resorted to as an additional mechanism for recovery of the amounts claimed under the Award.

The effect of the facts noticed above leads this Adjudicating Authority to the conclusion that the present proceedings bear the characteristics of an attempt to enforce and recover amounts under an adjudicated Award rather than a genuine invocation of the insolvency resolution process contemplated under the Code. The existence of a debt and an adjudicated liability cannot by themselves justify admission of a petition under Section 7 when the overall facts demonstrate that the insolvency jurisdiction is being invoked primarily as a recovery mechanism after pursuing arbitration, appellate remedies and execution proceedings over an extended period of time.

The cumulative effect of the facts noticed above leads this Adjudicating Authority to the conclusion that the present proceedings bear the characteristics of an attempt to enforce and recover amounts under an adjudicated Award rather than a genuine invocation of the insolvency resolution process contemplated under the Code.

This Adjudicating Authority notes that upon the occurrence of the alleged default in the year 2007, the Petitioner consciously invoked arbitration under the Bill Discounting Facility Agreements and pursued the arbitral proceedings to their conclusion, resulting in an Award in its favour. The Petitioner thereafter successfully defended the Award before the appellate forums and ultimately before the Hon'ble Supreme Court. Following the Award, the Petitioner initiated execution proceedings, which continue to remain pending, and has also recovered substantial amounts during the course of the proceedings. The materials placed on record further indicate that, in respect of several transactions, the principal amounts had already been discharged and that the surviving dispute substantially relates to the claim for contractual interest and consequential amounts.

In these circumstances, the Petitioner cannot simultaneously rely upon the Award as a valid and binding adjudication giving rise to a fresh cause of action while also seeking exclusion of the period spent in the arbitral proceedings under Section 14 of the Limitation Act. Having elected to pursue arbitration, defended the Award up to the Hon'ble Supreme Court and invoked execution proceedings for its enforcement, the Petitioner has consistently treated the Award as the basis of its recovery. The scope of the Insolvency and Bankruptcy Code, 2016 is confined to the resolution of insolvency of a corporate person and not to provide an additional forum for enforcement of awards, decrees or recovery of money claims. The Code is intended to address genuine cases of insolvency and facilitate revival of the Corporate Debtor as a going concern in a time-bound manner. It is not within the scope of the Code to function as a substitute for execution proceedings or as a parallel recovery mechanism after a creditor has already pursued adjudicatory and execution remedies under ordinary law. Permitting such a course would amount to expanding the scope of the Code beyond its legislative intent and converting the insolvency process into a recovery forum, which is impermissible in law.

Considering the facts and circumstances of the present case, this Adjudicating Authority is of the view that the present proceedings are essentially an attempt to recover the balance amount claimed under the Award after having pursued arbitration, appellate proceedings and execution remedies for several years. Such use of the insolvency process is not in consonance with the object and scheme of the Code.

Accordingly, this Adjudicating Authority is of the considered opinion that the present Company Petition does not warrant admission under Section 7 of the Code and is liable to be dismissed.

No observation in this order will have any bearing on the respective rights and liabilities of the parties under the arbitration award. The above discussions has been made with reference to the adjudication of this Section 7 petition.

In view of the above, CP(IBC)/10/KOB/2026 is, therefore, dismissed and disposed of accordingly, with no order as to costs.

The Registry is further directed to send a copy of this order to the Insolvency and Bankruptcy Board of India for their record.

The Registry is directed to send e-mail copies of the order forthwith to all the parties and their Ld. Counsel for information and for taking necessary steps.

Let the Certified Copy of this order be issued, if applied for, upon compliance with all requisite formalities.