Section 7 Of The Insolvency And Bankruptcy Code Does Not Bar The Amendment Of Pleadings: The Supreme Court

BACKGROUND OF THE CASE

• In the present case, the applicant bank was allowed by the adjudicating authority ,to file additional documents as well to amend the application.
• Later, it submitted the petition under Section 7 of the IBC, and arranged an Interim Resolution Professional, which rejected the objection of the Corporate Debtor on the issue of limitation.
• In the appeal made by NCLAT, it held that the application was prohibited by limitation.

RELATED PROVISIONS

Section 7 of Insolvency and Bankruptcy Code

• It defines the initiation of corporate insolvency resolution process by the financial creditor.
• It states that an application for initiation of corporate insolvency resolution against any corporate debtor can be filed by a financial creditor individually, jointly or on anyone’s behalf, before the Adjudicating Authority, on the occurrence of any default.
• Under the Sub-section (1), the financial creditor can make an application in the manner that has been given in the said Section.

ISSUES BEFORE THE COURT

• Issues were raised against the NCLAT judgement dismissing the application, considering the appeal filed by the Bank under Section 7 IBC.
• The question was whether there is any bar in law under Section 7 of the IBC, for the amendment of pleadings in the petition, or in the filing of additional documents, apart from the petition filed under Section 7 of the IBC in Form-1.

OBSERVATIONS OF THE COURT

• The Division Bench, consisting of Justices Indira Banerjee and V. Ramasubramanian, observed that there is no bar permitting the amendment of pleadings or in the filing of additional document in an application, under Section 7 of the Insolvency and Bankruptcy Code.
• The Court declined the request depending on the facts and circumstances of the case, when there is inordinate delay, with the Adjudicating Authority.
• The Bench observed that there was absence of any illegality or error by the Adjudicating Authority in permitting the Bank to file additional documents.
• Further,the Bench added that keeping in view the facts and circumstance of the case, the decision of the Adjudicating Authority to entertain and allow the request of the Appellant Bank for the filing of additional documents in support with the pleadings, and to consider such documents and pleadings did not call for interference in appeal.

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