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Dena Bank vs C. Shivakumar Reddy and Ors. - (Supreme Court) (04 Aug 2021)

No bar in permitting amendment of pleadings or filing of additional documents in CIRP application under Section 7 of IBC

MANU/SC/0502/2021

Insolvency

Present Appeal under Section 62 of the Insolvency and Bankruptcy Code, 2016 (IBC) is against a judgment passed by the National Company Law Appellate Tribunal (NCLAT), allowing Company Appeal filed by the Respondents and setting aside an order passed by the Adjudicating Authority/National Company Law Tribunal (NCLT), whereby the Adjudicating Authority had admitted the Petition filed by the Appellant Bank against the Respondent No.2 (Corporate Debtor) under Section 7 of the IBC. The NCLAT held that, said Petition of the Appellant Bank under Section 7 of the IBC, was barred by limitation. The Respondent No.1 is a Director of the Corporate Debtor.

Section 18 of the Limitation Act, 1963 cannot also be construed with pedantic rigidity in relation to proceedings under the IBC. The Balance Sheets and Financial Statements of the Corporate Debtor for 2016-2017, constitute acknowledgement of liability which extended the limitation by three years, apart from the fact that a Certificate of Recovery was issued in favour of the Appellant Bank in May, 2017. The NCLT rightly admitted the application by its order.

Moreover, a judgment and/or decree for money in favour of the Financial Creditor, passed by the DRT, or any other Tribunal or Court, or the issuance of a Certificate of Recovery in favour of the Financial Creditor, would give rise to a fresh cause of action for the Financial Creditor, to initiate proceedings under Section 7 of the IBC for initiation of the Corporate Insolvency Resolution Process, within three years from the date of the judgment or within three years from the date of issuance of the Certificate of Recovery, if the dues of the Corporate Debtor to the Financial Debtor, under the decree or in terms of the Certificate of Recovery, or any part thereof remained unpaid.

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.

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. 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. The impugned judgment and order is unsustainable in law and facts. The impugned judgment and order of the NCLAT is set aside. Appeal allowed.

Tags : ADDITIONAL DOCUMENTS   CIRP   BAR  

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