Time Spent In Voluntary Pre-Institution Mediation Cannot Be Excluded For Computing Limitation U/S 14 Of Limitation Act: NCLT New Delhi

The operational creditor, Shiva Asphaltic Products Private Limited, supplied bitumen emulsion to the corporate debtor, Atlas Constructions Private Limited, for which the amount was due and payable. The demand notice was served, but still the payment was not made; however, the corporate debtor acknowledged the debt and expressed the willingness to reconcile accounts.

Before filing the CIRP application, the operational creditor initiated the pre-institution mediation before the District Legal Service Authority, but the corporate debtor didn't participate in that. Therefore, the present application was preferred.

Contention of the Parties

The operational creditor asserted that the corporate debtor duly acknowledged the goods supplied and invoices. It argued that the period for which the pre-institution mediation was pending should be excluded under section 14 of the Limitation Act.

Per contra, the corporate debtor denied the acknowledgement of liability and argued that the petition is barred by limitation.

Observations of the NCLT

The NCLT observed that the corporate debtor's willingness to reconcile the accounts doesn't constitute the unequivocal acknowledgement of debt as per section 18.

The tribunal further ruled that the pre-institution mediation proceedings could not be excluded under section 14, as it was not voluntary and was outside the frameworks of the IBC. Section 14 only applies to the proceedings pursued outside the jurisdiction or under a bona fide mistake, and its protection doesn't extend to the voluntary mediation.

The bench also referred to the IBBI Expert Committee Report, namely the “Report on Framework for Use of Mediation under the Insolvency and Bankruptcy Code, 2016,” where it was provided that the mediation prior to the filing of an insolvency application falls outside the framework of the Code and cannot be treated as a proceeding “in relation to insolvency.”

Accordingly, the bench ruled that the time spent in voluntary pre-institution mediation proceedings cannot be excluded for computation of limitation under Section 14 of the Limitation Act.

Case Name: Shiva Asphaltic Products Private Limited v. Atlas Constructions Private Limited

Case No: CP (IB) 339 (ND)/2025

Coram: Shri Manni Sankariah Shanmuga Sundaram (Member-Judicial) and Shri Atul Chaturvedi (Member-Technical)

For Applicant: Mr. Nipun Gupta, Advocate

For Respondent: Mr. Shrey Patnaik, Ms. Saira Khan, and Mr. Ritwik Batra, Advocates

Order Date: 14.10.2025