NCLT Delhi Initiates CIRP Against TDT Copper Ltd; Holds OTS Proposal as Fresh Acknowledgment of Debt Under Section 7 IBC

NCLT Delhi Initiates CIRP Against TDT Copper Ltd; Holds OTS Proposal as Fresh Acknowledgment of Debt Under Section 7 IBC

Introduction

The National Company Law Tribunal (NCLT), Delhi Bench, has admitted TDT Copper Limited into Corporate Insolvency Resolution Process (CIRP) upon a petition filed by Bank of India under Section 7 of the Insolvency and Bankruptcy Code, 2016 (IBC). The petition sought recovery of dues amounting to ₹153.98 crore.

A Bench comprising Mr. Mahendra Khandelwal (Judicial Member) and Ms. Anu Jagmohan Singh (Technical Member) passed the order on October 16, 2025, appointing Mr. Shailesh Chandra Ojha as the Interim Resolution Professional (IRP) and declaring a moratorium under Section 14 of the IBC.

Factual Background

The dispute traces back to June 2010, when the Bank of India sanctioned working capital loans to TDT Copper Limited. Over time, the credit facility was enhanced to ₹81 crore, with an additional ₹10 crore as ad hoc credit. However, the corporate debtor defaulted on January 25, 2019, leading to the account being classified as a Non-Performing Asset (NPA) on April 30, 2019. In January 2024, the Bank recovered approximately ₹61 crore through a SARFAESI auction, yet a substantial outstanding of ₹153.98 crore, inclusive of interest, remained unpaid.

Meanwhile, the corporate debtor proposed a One-Time Settlement (OTS) in January 2024, which the lenders rejected.

Procedural Background

Aggrieved by the continued default, the Bank of India filed the present petition under Section 7 of the IBC, seeking initiation of CIRP against TDT Copper Limited. Upon admission of the petition, the NCLT appointed Mr. Shailesh Chandra Ojha as the Interim Resolution Professional (IRP) and directed the Financial Creditor to deposit ₹2 lakh towards initial CIRP expenses. The Tribunal also declared a moratorium on proceedings against the corporate debtor in accordance with Section 14 of the IBC, clarifying that it would not extend to personal guarantors.

Issues

1. Whether the Section 7 application filed by Bank of India was within the period of limitation.

2. Whether the acknowledgment of debt in financial statements and OTS proposal constituted a fresh acknowledgment under Section 18 of the Limitation Act, 1963.

3. Whether the established default justified admission of the petition under Section 7 of IBC.

Contentions of the Parties

Bank of India (Financial Creditor): The Bank contended that TDT Copper Ltd. had acknowledged its debt in the financial statements for FY 2019-20 and FY 2020-21, and again through the OTS proposal dated January 23, 2024, which effectively extended the limitation period. It argued that despite partial recoveries under SARFAESI, the default remained substantial, justifying the initiation of CIRP. Reliance was placed on judicial precedents affirming that acknowledgment of debt in balance sheets constitutes a valid acknowledgment under Section 18 of the Limitation Act.

TDT Copper Limited (Corporate Debtor): The Corporate Debtor did not successfully refute the existence of debt or the default. It relied on the pendency of the OTS proposal, suggesting willingness to settle, but provided no concrete evidence of repayment or dispute regarding the default.

Reasoning and Analysis

The Tribunal, after examining the material on record, held that:

• The default of ₹153.98 crore stood proved and undisputed.
• The OTS proposal dated January 23, 2024, and the acknowledgments in financial statements constituted valid acknowledgments of liability, thereby extending the limitation period under Section 18 of the Limitation Act, 1963.
• Relying on Innoventive Industries Ltd. v. ICICI Bank, the Bench reiterated that once a financial debt and default are established, the Adjudicating Authority has a limited scope to reject a Section 7 application.
• Accordingly, the Bench found the petition to be within limitation and fit for admission.

Implications

The order reinforces key principles governing Section 7 petitions under the IBC:

• Acknowledgment of debt in financial records or OTS proposals can validly extend the limitation period.
• Once default is established, the NCLT’s role is confined to admission, not adjudication of commercial disputes.
• The decision also reiterates that moratorium protection under Section 14 does not extend to guarantors, maintaining accountability across entities.
• This decision emphasizes the judiciary’s consistent approach toward ensuring swift insolvency resolution where defaults are evident and uncontested.

In this case the applicant was represented by Mr. Karan Gandhi, Mr. Sikhar Tiwari, Ms. Vidhika Kapoor and Ms. Riya Jain, Advocates.