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Company & Insolvency LawSupreme Court of India

B. Prashanth Hegde v. State Bank of India & Anr.

Civil Appeal · 2026 INSC 155Decided 12 Feb 2026
C.A. No.-000477 - 2022
Justice P.S. Narasimha · Justice Manoj Misra · Justice Manmohan

Background

State Bank of India, as financial creditor for a consortium of banks (SBI, PNB, Corporation Bank and UCO Bank), filed an application under Section 7 of the IBC against M/s. Metal Closure Pvt. Ltd. (the corporate debtor) alleging default of dues exceeding Rs. 280 crores. The NCLT, Bangalore Bench admitted the insolvency petition in 2018, and the corporate debtor's suspended Managing Director's appeal against that admission was dismissed by the NCLAT in 2019. The appellant then challenged the NCLAT's dismissal before the Supreme Court, arguing the application lacked material particulars, was time-barred, and was filed for an oblique/mala fide purpose.

Decision Breakdown

The Supreme Court framed three issues: whether the Section 7 application lacked required particulars under Form I, whether it was filed within limitation, and whether it was filed for an oblique purpose. The Court held the application sufficiently disclosed the debt and default particulars, and that acknowledgments of debt in balance sheets (signed 30.09.2015) extended the limitation period so that the application, filed within that extended window, was not time-barred. It further held that pendency of other proceedings (including a counterclaim and criminal complaints) between the parties does not bar a financial creditor from invoking Section 7 of the IBC, since once default above the threshold is established, the Adjudicating Authority has little discretion to refuse admission.

Lesson Learnt

A corporate debtor's acknowledgment of debt in its own signed balance sheets can extend the limitation period for a creditor's insolvency application, and merely having other litigation (civil recovery suits, counterclaims, or criminal complaints) pending against the creditor does not by itself block or delay an IBC insolvency application once default is established.

B. Prashanth Hegde v. State Bank of India & Anr. – Legal Case Shots | LegalAware