NCLT Rejects Canara Bank's ₹742 Crore Insolvency Plea Against Globiz Exim, Says Claim Is Time-Barred

Mumbai, July 10: The National Company Law Tribunal (NCLT) has rejected an insolvency petition filed by Canara Bank against Globiz Exim Private Limited, a company belonging to the Kanpur-based Frost Group, holding that the application was barred by limitation.

The bank had sought initiation of the Corporate Insolvency Resolution Process (CIRP) against the company over an alleged default exceeding Rs 742 crore.

Dismissing the petition, the tribunal held that the bank's claim was “hopelessly barred by limitation” and observed that it could not revive a time-barred claim by issuing a fresh demand notice.

“We have clearly held that the notice dated 01.09.2018 was a notice of demand and, therefore, the record of limitation of the Corporate Guarantor had commenced with effect from 06.09.2018, i.e., on the expiry of the five-day period from the date of the demand notice. The applicant has not placed anything on record to show that the limitation was ever extended after it had begun to run from 06.09.2018, except relying upon authentication of the debt with NeSL dated 05.11.2023,” the tribunal observed.

Tribunal Finds Claim Time-Barred

The bench further noted that by the time the NeSL authentication took place, the principal borrower, Frost International Ltd., had already been admitted into the Corporate Insolvency Resolution Process (CIRP) and was under the control of the Interim Resolution Professional/Resolution Professional (IRP/RP).

Canara Bank had filed the petition under Section 7 of the Insolvency and Bankruptcy Code (IBC), seeking insolvency proceedings against Globiz Exim in its capacity as the corporate guarantor for credit facilities extended to Frost International Ltd. The bank contended that the guarantee had been invoked through a demand notice dated January 20, 2025, and claimed that the company had defaulted on dues of more than Rs 742 crore.

The bank argued that the limitation period stood extended because the debt was authenticated with the National E-Governance Services Ltd. (NeSL) in November 2023 and due to developments in the insolvency proceedings of the principal borrower.

Fresh Demand Notice Invalid

The tribunal, however, rejected this argument, holding that no valid acknowledgment of liability had been made by the corporate guarantor after the guarantee was first invoked in September 2018. It ruled that the NeSL authentication could not be treated as an acknowledgment capable of extending the limitation period.

Referring to the Supreme Court's judgment in Shankar Khandelwal, the tribunal observed that the admission of a creditor's claim by a Resolution Professional is only an administrative exercise and cannot amount to an acknowledgment of debt under the Limitation Act.

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The tribunal also held that the guarantee executed by Globiz Exim was an “on-demand guarantee”, under which the limitation period begins once a valid demand notice is issued.

Since the first demand notice had been served on September 1, 2018, and no legally valid acknowledgment extending limitation was produced thereafter, the subsequent demand notice issued in January 2025 could not create a fresh cause of action.

Accordingly, the NCLT dismissed Canara Bank's insolvency application, holding that the claim was filed beyond the prescribed limitation period.

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