Amendment in pleadings under Sec 7 can be done at any stage, rules NCLT, Read Order

The NCLT, New Delhi Bench held that the amendment of pleadings in an Application filed under Section 7 of the Insolvency and Bankruptcy Code, 2016 (hereinafter referred to as “IBC”), can be done at any stage of the matter.

Brief Facts:

The Applicant/Financial Creditor filed an application under Section 7 of IBC seeking initiation of the Corporate Insolvency Resolution Process the Respondent/Corporate Debtor.

Brief Background:

It was asserted by the Financial Creditor that the Corporate Debtor failed to pay as per the terms set out in a facility agreement. Further, clause of the Corporate Guarantee was also breached by the Corporate Debtor.

During the pendency, the Respondent asserted that the petition was barred under Section 10A of the IBC.

The Applicant even sought a rectification in the petition.

Contentions of the Applicant:

It was argued that the defaults were continuing in nature. Further, the defaults committed by the Corporate Debtor occurred even after the period prescribed under Section 10A IBC expired.

Contentions of the Respondent:

It was argued that the date of initiation of CIRP could not be the date of default for initiation of Section 7 Application.

Further, it was alleged that the Applicant sought pleading of other new grounds and if rectification was allowed at this stage when notice was issued to the Respondent, it would tantamount to seeking review of the order by the Tribunal.

Observations of the Tribunal:

It was noted that the defaults were continuing in nature. Further, it was held that the amendment of pleadings in an Application filed under Section – 7 IBC, can be done at any stage of the matter.

The Tribunal even rejected the case of the Corporate Debtor that application was barred under Section 10A of the IBC.

The decision of the Tribunal:

Based on the aforementioned reasons, the interim application was accordingly allowed.

Case Title: PHL Fininvest Private Limited v. Kay Jay Leasing Limited and other matter

Case No.: IA-1547/2023

Coram: Shri Bachu Venkat Balaram Das (Hon’ble Judicial Member), Shri Atul Chaturvedi

(Hon’ble Technical Member)

Advocate for Applicant: Adv. Mr. Krishnendu Datta

Advocate for Respondent: Adv. Mr. Vikas Dutta