NCLAT Protects ARCIL's Rs. 3,482 Crore JCT Claim Before CoC Vote

Decision in brief

NCLAT granted temporary protection to ARCIL while its appeal against rejection of a large financial claim remains pending. The tribunal did not finally accept the claim. It also did not finally hold that the claim was within limitation.

The tribunal focused on the stage of JCT Limited's corporate insolvency resolution process. A resolution plan was approaching the voting stage. If voting proceeded after removing ARCIL from the CoC, and ARCIL later succeeded in the appeal, the earlier position might not be capable of being restored.

For that reason, the NCLT order dated 10 July 2026 was kept in abeyance until 7 September 2026. The respondents were given two weeks to file replies, followed by two weeks for a rejoinder.

How the dispute began

JCT Limited had executed continuing corporate guarantees in favour of IFCI Limited for credit facilities given to its subsidiary, JCT Electronics Limited. The guarantees dated back to 1993 and 1998. After default by the borrower, IFCI invoked the guarantees in January 2002 and started recovery proceedings before the Debts Recovery Tribunal.

In May 2015, IFCI assigned the debt and the benefit of the guarantees to ARCIL. The borrower had also gone through rehabilitation proceedings before the Board for Industrial and Financial Reconstruction. That rehabilitation later failed and winding-up proceedings followed.

JCT Limited entered CIRP on 25 October 2024. ARCIL submitted its financial creditor claim on 21 January 2025 for Rs. 3,482,31,36,084. The age of the guarantees, the recovery proceedings, the failed rehabilitation scheme and later balance sheet disclosures became central to the limitation dispute.

Provisional admission and CoC participation

On 7 July 2025, the interim resolution professional provisionally admitted about Rs. 56.68 crore of ARCIL's claim. The remaining amount, largely the interest component, was kept under verification.

ARCIL was then included in the Committee of Creditors with a voting share of approximately 20.09 percent. It participated in six CoC meetings, exercised voting rights and contributed to CIRP costs. The process had reached the stage of the request for resolution plan and the evaluation matrix.

This history was important at the interim stage. NCLAT had to consider not only whether the claim was disputed, but also what would happen if a creditor that had participated for months was excluded just before voting on a resolution plan.

Why the Resolution Professional rejected the claim

ARCIL said that verification remained pending for a long period. It obtained an NCLT order on 18 November 2025 under which the Resolution Professional undertook to complete the exercise within two weeks.

On 7 January 2026, the Resolution Professional rejected the entire claim, including the amount that had earlier been provisionally admitted. The stated grounds included missing foundational documents, difficulty in verifying the borrower's accounts and limitation.

ARCIL challenged that communication before NCLT through IA No. 83 of 2026. It argued that the Resolution Professional had an administrative verification role and could not act as an adjudicating authority or retrospectively reverse a claim that had already been admitted and used to constitute the CoC.

What NCLT decided on 10 July 2026

NCLT dismissed ARCIL's challenge. It treated the earlier admission as a temporary best estimate under Regulation 14(1) of the CIRP Regulations. In its view, Regulation 14(2) permitted revision when further information, or the continued absence of necessary information, justified it.

NCLT also accepted the limitation objection. It considered the guarantee invocation, the default under the rehabilitation scheme and the later demand to be too old for the 2025 claim. It held that pending DRT and SARFAESI proceedings did not bridge the limitation gap for IBC purposes.

The tribunal further found that balance sheet notes were accompanied by an express dispute about legal liability. It therefore did not treat those entries as valid acknowledgments capable of extending limitation under Section 18 of the Limitation Act.

ARCIL's arguments before NCLAT

ARCIL argued that the pending DRT proceeding was relevant and that its claim had been filed within the time invited by the Resolution Professional after CIRP commenced. It also relied on the effect of the rehabilitation scheme and the continuing nature of the corporate guarantees.

It challenged the rejection of the already admitted principal component and said the Resolution Professional had delayed verification for about a year. ARCIL maintained that the Resolution Professional could verify a claim but could not finally adjudicate complicated legal issues in the manner of a court.

ARCIL also referred to JCT Limited's financial statements for several years. It argued that the disclosures about the guarantees and the demand required a fuller examination before any final conclusion on acknowledgment and limitation could be reached.

Why NCLAT granted interim protection

NCLAT observed that limitation is a mixed question of law and fact. It noted that the DRT proceeding against JCT Limited was pending when ARCIL filed its claim in the CIRP. At the interim stage, the tribunal was not prepared to conclude that the claim had been filed out of time.

The bench also noted that the effect of the balance sheet disclosures and ARCIL's argument concerning refusal to pay required elaborate hearing. These observations are not final findings in ARCIL's favour. They explain why the appeal could not safely be made ineffective by allowing the CoC process to move past a decisive stage.

The balance of convenience was therefore found in ARCIL's favour. NCLAT said that once the CoC proceeded with voting, the position existing on 30 July 2026 might never be restored. Keeping the NCLT order in abeyance preserved the subject matter of the appeal.

Exact effect of the order

• The appeal remains pending and has not been finally allowed.
• The NCLT order dated 10 July 2026 remains in abeyance until the next listed date, 7 September 2026.
• NCLAT has not directed final admission of the full Rs. 3,482.31 crore claim.
• The tribunal has not finally decided whether DRT proceedings, the rehabilitation history or balance sheet entries save limitation.
• The respondents may file replies within two weeks and ARCIL may file a rejoinder within two weeks thereafter.
• The practical purpose is to prevent a CoC vote from creating an irreversible position before the claim dispute is heard.

Why the ruling matters for CoC voting

A creditor's admitted amount determines its voting share in the CoC. Here, even the provisionally admitted amount gave ARCIL about 20.09 percent voting power. Excluding that share could materially affect the approval or rejection of a resolution plan.

A later appellate victory may become commercially meaningless if the plan has already been voted upon and further statutory steps have followed. Interim orders can therefore be necessary to preserve a fair and workable remedy, especially when the dispute concerns a significant voting share.

This does not mean every disputed claim must stop a CIRP. A creditor seeking protection should show a serious arguable case, a real risk of irreversible prejudice and a connection between the challenged decision and an imminent process event.

Lessons for Resolution Professionals

• Begin verification promptly and record every request for documents with a clear deadline.
• State expressly whether an admission is final or provisional and identify the part kept under verification.
• Apply Regulations 13 and 14 consistently and keep an audit trail of changes in the amount admitted.
• Give the creditor a clear opportunity to answer documentary and limitation concerns before rejection.
• When a large CoC voting share may change, inform the tribunal and stakeholders about the process impact.
• Separate factual verification from legal questions that may require adjudication by NCLT.
• Avoid unnecessary delay because a late reversal close to plan voting increases the risk of interim litigation.

Lessons for financial creditors and ARCs

• File guarantee deeds, invocation notices, assignment documents and a complete statement of account with the claim.
• Explain every period relevant to limitation instead of relying only on the continuing nature of a guarantee.
• Provide copies and status details of DRT, SARFAESI, BIFR, winding-up and other recovery proceedings.
• Identify acknowledgments before expiry of limitation and explain any qualification or denial appearing in the same document.
• Monitor whether the admitted amount is provisional and answer verification requests without delay.
• Challenge a rejection quickly when plan voting is near and explain the irreversible effect on CoC rights.
• Ask for narrowly framed interim relief while the merits remain for final hearing.

Limits of this precedent

The order is procedural and interim. It preserves the appeal until the next hearing. It should not be cited as a final ruling that ARCIL's entire claim is valid, that pending DRT proceedings always save limitation or that every balance sheet reference is an acknowledgment of debt.

The NCLT findings have been placed in abeyance, not finally reversed. The respondents still have the opportunity to answer ARCIL's case. NCLAT may affirm, modify or set aside the NCLT order after a complete hearing.

Readers should also check for later orders after 7 September 2026 before relying on the present procedural position in advice, pleadings or a transaction.

Key takeaways

• NCLAT passed the interim order on 30 July 2026 in Company Appeal (AT) (Insolvency) No. 1246 of 2026.
• ARCIL claimed about Rs. 3,482.31 crore in JCT Limited's CIRP.
• About Rs. 56.68 crore had been provisionally admitted and ARCIL had about 20.09 percent CoC voting share.
• The entire claim was later rejected and NCLT upheld that rejection on 10 July 2026.
• NCLAT found that limitation required fuller examination and that CoC voting could create an irreversible position.
• The NCLT order is in abeyance until 7 September 2026.
• There is no final decision yet on admission, limitation or the amount of ARCIL's claim.

Conclusion

ARCIL v. Umesh Garg shows why the timing of claim verification matters in a corporate insolvency process. A decision made close to plan voting can change CoC control and make a successful appeal difficult to implement later.

NCLAT protected the appeal without deciding its merits. The careful reading is that ARCIL has received temporary procedural protection, not final recognition of a Rs. 3,482 crore debt. Resolution professionals, creditors and resolution applicants should track the next hearing and avoid treating this interim order as the last word on the claim.