Changing Incorrect Date Of Default Is Permitted Before Final Adjudication If No New Cause Of Action Is Raised By Such Amendment: NCLT Amravati

The National Company Law Tribunal (NCLT), Amravati Bench of Shri Umesh Kumar Shukla (Technical Member) and Shri Kishore Vemulapalli (Judicial Member) held that a change in the incorrect date of default mentioned in the original petition can be allowed before final adjudication, provided it does not introduce a new cause of action and no prejudice is caused to the corporate debtor by such an amendment. The present application has been filed under section 60(5) of the Insolvency and Bankruptcy Code, 2016 (IBC) seeking dismissal of the Company Petition (CP) filed by the Canara Bank. The Applicant submitted that the Financial Creditor has inconsistently claimed the date of default as 17.08.2023, which contradicts the Non-Performing Assets (NPA) classification date of 30.11.2015 and the dates recorded in the IU. Such misleading and inconsistent assertions render the CP incomplete and legally untenable. It was further argued that new documents were annexed to the Rejoinder without prior leave of this Adjudicating Authority. These documents, admittedly available at the time of filing the CP, are now sought to be introduced belatedly to cure defects, which is impermissible. Per contra, the Respondent submitted that the date of default under Section 3(12) of the IBC need not be strictly construed as the date of NPA. The Financial Creditor has consistently relied upon the same date in the CP and has not introduced any new case through the Rejoinder in the CP and it merely reiterates the factual and legal basis to establish that the CP is within limitation. It was further argued that there is no bar under Section 7(2)(5) of the IBC or the Adjudicating Authority Rules, 2016, against filing additional documents prior to the final order. The Tribunal noted that the NCLAT in Milind Kashiram Jadhav held that the NPA date cannot automatically be classified as the date of default without mentioning any specific instance of default. However, the facts of the present case is distinguishable from the above case as in the present case the applicant seeks to replace the incorrect default date with the NPA classification date which was claimed as the default date in the petition. Similarly, another judgment of the NCLT Mumbai in Varanium Cloud Ltd. vs. Rolta Pvt. Ltd cited by the Corporate Debtor is not applicable in the present case. In the above case, the NCLT dismissed the second petition of the Financial Creditor on the ground that since the first petition had been dismissed, the second petition based on the similar facts with a change in date of default cannot be entertained. However, in the present case, the applicant wants to change the incorrect date of default within the same petition before final adjudication, not successive filings and or a change in date of default. It further noted that the NCLAT in Apple Sponge & Power Ltd. v. PNB held that amendment in part IV including change in date of default of the application under section 7 of the IBC is permissible based on the facts of the case. In the above case, the date of default was allowed to be substituted with the NPA date which was a matter of public record and the corporate debtor was allowed to contest the same on merits including the issue of limitation. This case squarely supports the case of the Applicant. It concluded that in the present case the amendment was allowed before the final adjudication which is permissible as per the law laid down by the Appellate Tribunal. The amendment was later questioned by the Appellate Tribunal on procedural grounds, such as no proper hearing was afforded to the corporate debtor, which has been remedied by giving proper opportunity of hearing to the both sides. The change in date of default from the mentioned originally in the petition to the corrected date of default does not introduce any new cause of action. Acceptance of such amendment causes no prejudice to the corporate debtor. Accordingly, the present application was dismissed. Case Title: M/s. Canara Bank Versus M/s. Vasavi Power Services Pvt Ltd Case Number: IA (IBC)/418/2024, IA (IBC)/98/2025 in CP (IB)/3/7/AMR/2024 Judgment Date: 25/07/2025 Click Here To Read/Download The Order

Changing Incorrect Date Of Default Is Permitted Before Final Adjudication If No New Cause Of Action Is Raised By Such Amendment: NCLT Amravati

Mohd Malik Chauhan

This is a premium content
Available exclusively to
Our subscribers

INR 1099+GST

Tags

Changing Incorrect Date Of Default Is Permitted Before Final Adjudication If No New Cause Of Action Is Raised By Such Amendment: NCLT Amravati

Mohd Malik Chauhan

This is a premium content Available exclusively to Our subscribers

INR 1099+GST

Tags

This is a premium content
Available exclusively to
Our subscribers