NCLT Kochi Declines Insolvency Petition Against BPL
The National Company Law Tribunal (NCLT) in Kochi has dismissed the insolvency application filed by Morgan Securities and Credits Private Limited against BPL Limited, seeking ₹1,323 crore. The case titled Morgan Securities Vs BPL was adjudicated by a bench comprising Judicial Member Vinay Goel and Technical Member Ravichandran.
IBC Not a Parallel Recovery Tool
The tribunal highlighted that the Insolvency and Bankruptcy Code (IBC) is not intended as an alternative recovery mechanism, especially when arbitration and execution processes have already been pursued. This decision comes in light of Morgan Securities filing under Section 7 of the IBC, aiming to initiate a corporate insolvency resolution process against BPL, appoint an interim resolution professional, and declare a moratorium. The alleged default amount was ₹13,23,70,00,924, with the default date recorded as June 14, 2007.
Background of the Dispute
The dispute traces back to bill discounting facilities approved in 2002 and 2003, amounting to ₹6 crore and ₹6.5 crore, respectively. Morgan Securities claimed that funds were disbursed against bills of exchange accepted by BPL, making BPL jointly and severally liable for repayment with interest. An arbitration process was invoked by Morgan Securities, resulting in an arbitral award in their favor on December 14, 2016.
Legal Proceedings and Payments
BPL challenged the arbitral award in the Delhi High Court, with the legal battle eventually reaching the Supreme Court. On December 4, 2025, the Supreme Court dismissed BPL’s appeals, upholding the arbitral award. During these proceedings, BPL made payments of ₹72 crore to Morgan Securities and deposited ₹96 crore with the Supreme Court Registry.
Arguments and NCLT’s Findings
In the NCLT proceedings, BPL contended that the insolvency plea was barred by limitation, citing the alleged default from 2007. They argued that Morgan Securities intended to use the IBC as a recovery tool, contrary to its purpose. While the NCLT rejected BPL’s claim that the transaction was not a financial debt, citing that bill discounting falls within Section 5(8) of the IBC, it found the insolvency plea time-barred.
The tribunal noted that payments made under judicial orders lack voluntariness and cannot be treated as debt acknowledgment. Furthermore, it criticized Morgan Securities’ reliance on the arbitral award as a basis for a fresh cause of action while seeking exclusion of arbitration time.
Conclusion
Ultimately, the NCLT concluded that the IBC should not act as a substitute for execution proceedings or function as a parallel recovery mechanism. The petition was dismissed without any order as to costs. BPL was represented by Senior Advocate KG Raghavan, alongside advocates Cyriac Tom and Arjun K Perikal, while Morgan Securities was represented by Senior Advocate Santhosh Mathew, with advocates Niraj Chamyal and Akhil Suresh.
