Amendment In Application U/S 7 Of IBC Cannot Be Permitted If It Amounts To Withdrawal Of An Admission: NCLAT Chennai

The National Company Law Appellate Tribunal (NCLAT), Chennai Bench, comprising Justice Sharad Kumar Sharma (Member-Judicial) and Jatindranath Swain (Member-Technical), allowed an appeal arising out of a decision of the NCLT, Amravati Bench. The main issue before the tribunal was whether an amendment in a Section 7 IBC application can be allowed if it withdraws a pleading already raised before NCLT, which is held before the courts or the tribunals, or if it amounts to withdrawal of an admission. The bench ruled that such amendments cannot be permitted if they amount to withdrawal of admission or undermine pending judicial objections. Background The Financial Creditor filed the Section 7 application against the Corporate Debtor, seeking initiation of the CIRP. In the filed petition, the date of default was 17.08.2023. During the pendency of the application, the Corporate Debtor filed the Interlocutory Application (IA), raising objections regarding the correctness of the date of default specifically in relation to the limitation period. The Financial Creditor filed a counter affidavit and objected to the Corporate Debtor's prayer, and a rejoinder was also filed by the Financial Creditor. The mentioned Interlocutory Application (IA) is currently pending consideration before the Adjudicating Authority. However, the Financial Creditor filed an application seeking an amendment in the rectification of the date of default mentioned in the Section 7 application. The learned Adjudicating Authority allowed this amendment without considering the objections raised in the earlier application. Aggrieved by the amendment, the Corporate Debtor has preferred the appeal before the NCLAT, Chennai. Contention of the Parties The appellant contended that the Adjudicating Authority cannot amend the date of default, as the same issue is already pending in a separate application before the authority. The appellant also highlighted that the impugned order was passed without proper judicial consideration of the contested issue. The appellant pleaded for the reversal of the impugned order to ensure that the date of default is determined only after proper judicial adjudication. However, the respondent justified the amendment by relying on several judicial precedents. NCLAT's Judgment The NCLAT allowed the appeal and quashed the Adjudicating Authority's order permitting the amendment. The tribunal observed that if the impugned order is allowed, it would nullify the contention raised by the appellant in the first application. The learned tribunal observed that it is a settled principle of the law that the amendment cannot be permitted if it withdraws a pleading already raised before the tribunal or if it has a substantial bearing on the very genesis of the proceedings that have been held before the courts or tribunals or if it withdraws the admission. The bench remitted back the matter to the NCLT and asked to decide the first application on merits. Case Title: Vasavai Power Services Pvt. Ltd. v. Canara Bank Ltd. Case Number: Company Appeal (AT) (CH) (Ins) No. 228/2025 (IA No. 649,650 & 651/2025) For Appellant: Mr. Satish Parasaran, Senior Advocate For Ms. Deepika Murali, Advocate For Respondent: Mr. R. Manav Gecil Thomas, Advocate Bench: Justice Sharad Kumar Sharma (Member-Judicial) and Jatindranath Swain (Member-Technical) Judgment Date: 30/04/2025 Click Here To Read/Download The Order

Amendment In Application U/S 7 Of IBC Cannot Be Permitted If It Amounts To Withdrawal Of An Admission: NCLAT Chennai

Mohd.Rehan Ali

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