Archive · 26 Aug 2026
NCLT Rejects Canara Bank’s ₹742 Crore Insolvency Plea Over Limitation
Canara Bank asked a tribunal to begin insolvency proceedings against N.S.D. Nirman.
The bank said the company owed ₹742.06 crore as a corporate guarantor.
The tribunal looked at when the bank first demanded payment.
It found that the guarantee was already invoked in a notice dated September 1, 2018.
The company had five days to pay, so the legal time limit began on September 6, 2018.
The law generally gave the bank three years to file this type of case.
The bank later sent another demand notice in January 2025.
The tribunal said that later notice could not restart the expired time limit, so it rejected the case.
The NCLT Mumbai bench rejected Canara Bank’s ₹742.06-crore insolvency petition against N.S.D. Nirman Private Limited.
The bank sought proceedings under Section 7 of the Insolvency and Bankruptcy Code against a corporate guarantor for Frost International Limited.
The tribunal ruled that the guarantee was invoked through a September 1, 2018 notice, not the January 20, 2025 notice.
Because the guarantee allowed five days for payment, limitation began on September 6, 2018, under the tribunal’s reasoning.
The tribunal said the three-year limitation period had expired and a later demand could not revive the claim.
- Who
- Canara Bank and N.S.D. Nirman Private Limited were the main parties; Frost International Limited was the principal borrower.
- What
- The National Company Law Tribunal rejected Canara Bank’s Section 7 insolvency petition seeking recovery of ₹742.06 crore from N.S.D. Nirman.
- When
- The Mumbai bench issued its ruling on August 26, 2026; the relevant notices were dated September 1, 2018, and January 20, 2025.
- Where
- The case was decided by the Mumbai bench of the National Company Law Tribunal.
- Why
- The tribunal held that the claim was filed after the three-year limitation period had expired and that the 2025 notice could not revive it.
Canara Bank’s Position
Tribunal’s Finding
Date of guarantee invocation
Canara Bank’s Position
Canara Bank relied on the January 20, 2025 notice and contended that the guarantee was invoked through that notice.
Tribunal’s Finding
The tribunal found that the guarantee had already been invoked by the September 1, 2018 notice, which gave five days for payment.
Effect of the 2025 notice
Canara Bank’s Position
The bank sought to proceed against N.S.D. Nirman based on its later demand and claimed amount.
Tribunal’s Finding
The tribunal held that a fresh demand could not create a new cause of action or revive a time-barred claim.
Independent proceedings against guarantor
Canara Bank’s Position
The bank pursued insolvency proceedings against the corporate guarantor separately from the principal borrower.
Tribunal’s Finding
The tribunal clarified that such proceedings can be independent but must still be filed within the applicable limitation period.
- Claim amount
- ₹742.06 crore as of March 31, 2025, excluding future interest, costs and charges
- Applicant
- Canara Bank
- Respondent
- N.S.D. Nirman Private Limited
- Principal borrower
- Frost International Limited
- First guarantee notice
- September 1, 2018
- Later demand notice
- January 20, 2025
- Limitation period
- Three years under Article 137 of the Limitation Act, 1963