Financial Creditor Can Amend Date Of Default Even If Pleadings Are Closed: NCLT Mumbai
The Nationwide Firm Legislation Tribunal, Mumbai, comprising Nilesh Sharma (Member-Judicial) and Sameer Kakar (Member-Technical), has allowed an utility filed by the monetary creditor, looking for modification within the pleadings to right the date of default. The difficulty earlier than the tribunal was whether or not a monetary creditor can amend its pleading to vary the date of default in a Part 7 utility if the pleadings have been declared full.
Background
Axis Financial institution Restricted filed an utility underneath Part 7 of the IBC looking for initiation of the CIRP towards Yashwant Dugdh Prakriya Restricted. Might 1, 2020, was talked about because the date of default within the authentic petition, which was additionally the date on which the account was categorized as NPA. For the reason that date falls throughout the protected interval underneath Part 10A. Therefore, the petitioner claimed that the date of default is in February 2020.
Rivalry of the Events
The applicant argued that the modification is just not meant to introduce a brand new reason for motion however merely to right the date of default. They relied on the Hon’ble Supreme Court docket’s ruling within the case of Dena Financial institution (now Financial institution of Baroda) v. C. Shivkumar Reddy and Anr., whereby it was held that there is no such thing as a bar in legislation to the modification of the pleadings in an utility u/s 7. In the talked about judgment, it was additionally laid down that the adjudicating authority has the discretion to permit such amendments whether it is essential for the willpower of the dispute.
Per contra, the respondent submitted that the pleadings had been closed by the earlier order of the tribunal and the applicant had filed the applying to bypass the bar imposed by Part 10A by altering the date of default. It relied on the choice of NCLT Hyderabad within the case of M/S Sanghi Textiles Pvt. Ltd., whereby the tribunal did not enable the modification to the pleadings, which claimed to be underneath related circumstances.
Observations of the Adjudicating Authority
The tribunal noticed that the modification sought by the Axis Financial institution is important for the adjudication of the petition, because it clarified that the NPA date is definitely 90 days after the precise default. The bench famous that February 1, 2020, was the precise date of default, and the identical was supported by the paperwork on document.
The bench additionally noticed that the choice of Sanghi Textiles is not going to apply to the current case, because the modification sought in that case launched a new reason for motion.
Relying on the choice of the Dena Financial institution, the bench noticed that within the absence of any categorical bar or timeline underneath the code, it has the discretion to enable the amendments to guard the curiosity of justice. It was famous that the modification sought within the current case is just not for introducing a separate reason for motion, however it’s only for the target of bringing the proper date of default on document in order that the primary petition might be determined clearly.
Lastly, by exercising its inherent energy given underneath Part 60(5)(a) of the Code learn with Rule 11 of the NCLT, the tribunal allowed the modification with sure circumstances.
Case Title: Axis Financial institution Restricted vs. Yashwant Dugdh Prakriya Restricted
Case Quantity: IA(I.B.C.)/ 1382 (MB) 2023 in CP(IB)/707 (MB)/2022
For Monetary Creditor: Adv. Mr. Nausher Kohli a/w Apurva Sanglikar i/b Nidhi Companions
For Company Debtor: Adv. Mr. Viraj Parikh i/b Adv. Mr. Agam H Maloo.
Bench: Nilesh Sharma (Member-Judicial) and Sameer Kakar (Member-Technical)
Judgment Date: 05/06/2025
