NCLT Kochi dismisses Morgan Securities’ ₹1,323 crore insolvency plea against BPL

The National Company Law Tribunal (NCLT) at Kochi has dismissed Morgan Securities and Credits Private Limited’s ₹1,323 crore insolvency plea against BPL Limited [Morgan Securities Vs BPL].

A Bench of judicial member Vinay Goel and technical member Ravichandran held that the Insolvency and Bankruptcy Code (IBC) cannot be used as a parallel recovery tool. This is especially so when a creditor has already pursued arbitration and execution remedies.

Morgan Securities filed the plea under Section 7 of the IBC. It sought initiation of corporate insolvency resolution process against BPL. It also sought appointment of an interim resolution professional and declaration of moratorium.

The alleged default amount was ₹13,23,70,00,924. The date of default was stated to be June 14, 2007.

The dispute arose from bill discounting facilities sanctioned in 2002 and 2003. The facilities were for ₹6 crore and ₹6.5 crore.

Morgan Securities said that funds were disbursed against bills of exchange accepted by BPL. It claimed that BPL was jointly and severally liable to repay the amount with interest.

Morgan Securities later invoked arbitration. An arbitral award was passed in its favour on December 14, 2016.

BPL challenged the award before the Delhi High Court. The matter later reached the Supreme Court. On December 4, 2025, the Supreme Court dismissed BPL’s appeals and upheld the award.

During the Supreme Court proceedings, BPL paid ₹72 crore to Morgan Securities. It also deposited ₹96 crore before the Supreme Court Registry.

Before the NCLT, BPL argued that the insolvency plea was barred by limitation. It said the alleged default went back to 2007. It also argued that Morgan Securities was trying to use the IBC as a recovery tool.

The NCLT rejected BPL’s argument that the claim was not a financial debt. It held that bill discounting transactions can fall within Section 5(8) of the IBC.

“The transaction cannot be excluded from consideration merely because it is not a conventional loan,” the tribunal said.

However, the NCLT found that the plea was time-barred.

It held that payments made under court orders could not be treated as acknowledgments of debt. Such deposits lacked voluntariness, the tribunal said.

The NCLT also found fault with Morgan Securities’ limitation argument. It said the creditor could not rely on the arbitral award as a fresh cause of action while also seeking exclusion of time spent in arbitration.

“It is not within the scope of the Code to function as a substitute for execution proceedings or as a parallel recovery mechanism,” the tribunal said.

The petition was dismissed with no order as to costs.

BPL was represented by Senior Advocate KG Raghavan along with advocates Cyriac Tom and Arjun K Perikal.

Morgan Securities was represented by Senior Advocate Santhosh Mathew with advocates Niraj Chamyal and Akhil Suresh.

[Read Order]