The National Company Law Appellate Tribunal (NCLAT), Chennai Bench held that amendments to an application under section 7 of the Insolvency Bankruptcy Code( IBC), 2016 cannot be permitted if they amount to withdrawal of admission or undermine pending judicial objections.
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In order to start the CIRP, the Financial Creditor filed a Section 7 application against the Corporate Debtor. The date of default in the petition that was filed was August 17, 2023. The Corporate Debtor submitted the Interlocutory Application (IA) while the application was pending, arguing that the date of default was incorrect, particularly with regard to the statute of limitations. In addition to objecting to the Corporate Debtor’s plea, the Financial Creditor submitted a reply and a counter-affidavit.
The Adjudicating Authority is presently considering the aforementioned Interlocutory Application (IA). Nevertheless, the Financial Creditor submitted a request for a change to the date of default specified in the Section 7 application. Without taking into account the concerns expressed in the previous application, the adjudicating authority approved this change. The corporate debtor, who is upset about the change, has filed an appeal with the NCLAT in Chennai.
The appellant, Vasavai Power Services Pvt. Ltd., argued that the Adjudicating Authority could not change the default date because the matter was already being considered in another application. The appellant also emphasized that the contested matter was not properly considered by the court when the contested order was issued. In order to guarantee that the date of default is decided only following appropriate judicial adjudication, the appellant pleaded for the reversal of the contested order. Nonetheless, the respondent used a number of court rulings to support the change.
The NCLAT comprising Justice Sharad Kumar Sharma (Member-Judicial) and Jatindranath Swain (Member-Technical), rejected the Adjudicating Authority’s order allowing the change and granted the appeal. The tribunal noted that the argument put out by the appellant in the initial application would be deemed invalid if the contested order were granted.
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The tribunal noted that it is a well-established legal principle that an amendment cannot be approved if it withdraws an admission, a pleading that has already been made before the tribunal, or if it significantly alters the original intent of the proceedings that have already taken place before the courts or tribunals.
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