No Bar In Permitting Amendment Of Pleadings Or Filing Of Additional Documents In CIRP Application U/s 7 IBC: Supreme Court

The Supreme Court observed that there is no bar in permitting amendment of pleadings or to the filing of additional document in an application under Section 7 of the Insolvency and Bankruptcy Code.

Depending on the facts and circumstances of the case, when there is inordinate delay, the Adjudicating Authority may, at its discretion, decline the request, the bench comprising Justices Indira Banerjee and V. Ramasubramanian observed.

One of the issues considered in the appeal filed by the Bank against NCLAT judgment dismissing its application under Section 7 IBC was whether there is any bar in law to the amendment of pleadings, in a Petition under Section 7 of the IBC, or to the filing of additional documents, apart from those filed initially, along with the Petition under Section 7 of the IBC in Form-1?In this case, the adjudicating authority had permitted the applicant bank to file additional documents and also to amend the application. Later, it admitted the Petition under Section 7 of the IBC, and appointed an Interim Resolution Professional rejecting the objection of the Corporate Debtor on the issue of limitation. NCLAT, in appeal held that the application was barred by limitation.

In appeal, relying on Babulal Vardharji Gurjar v. Veer Gurjar Aluminium Industries Private Limited, it was contended that the subsequent improvement in pleadings, at the fag-end of the NCLT proceedings, ought not to have been countenanced.

"111. Babulal Vardharji Gurjar (supra) is not an authority for the proposition that there can be no amendment of pleadings at the fag end of the NCLT proceeding. Moreover, in this case, the amendments were not made at the fag end of the proceedings but within 2/3 months of their initiation, before admission of the petition under Section 7 of the IBC.", the court said rejecting the submission.

The bench observed that the Adjudicating Authority has not committed any illegality or error in permitting the Bank to file additional documents.

144. There is no bar in law to the amendment of pleadings in an application under Section 7 of the IBC, or to the filing of additional documents, apart from those initially filed along with application under Section 7 of the IBC in Form-1. In the absence of any express provision which either prohibits or sets a time limit for filing of additional documents, it cannot be said that the Adjudicating Authority committed any illegality or error in permitting the Appellant Bank to file additional documents." , the court observed.

The bench added that depending on the facts and circumstances of the case, when there is inordinate delay, the Adjudicating Authority might, at its discretion, decline the request of an applicant to file additional pleadings and/or documents, and proceed to pass a final order. In our considered view, the decision of the Adjudicating Authority to entertain and/or to allow the request of the Appellant Bank for the filing of additional documents with supporting pleadings, and to consider such documents and pleadings did not call for interference in appeal, it said.

Also from the Judgment:

Money Decree/Certificate Of Recovery In Favour Of Financial Creditor Gives Fresh Cause Of Action To Initiate CIRP U/s 7 IBC: Supreme Court

Case: Dena Bank vs. C. Shivakumar Reddy ; CA 1650 OF 2020

Coram: Justices Indira Banerjee and V. Ramsubramanian

Counsel:  Sr. Adv Dhruv Mehta, Adv Goutham Shivshankar

Citation: LL 2021 SC 349

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