Vasavai Power Services Pvt. Ltd. Vs Canara Bank Ltd. (NCLAT Channai)
National Company Law Appellate Tribunal (NCLAT), Chennai bench, has set aside an order of the National Company Law Tribunal (NCLT), Amaravati, that permitted a financial creditor to amend the specified ‘date of default’ in its application seeking to initiate the corporate insolvency resolution process (CIRP) against a corporate debtor under Section 7 of the Insolvency and Bankruptcy Code, 2016 (IBC).
The case arose after a financial creditor filed a Section 7 application, stating August 17, 2023, as the date of default. The corporate debtor subsequently filed an interlocutory application before the NCLT challenging the methodology used to determine this date, raising concerns about its implications for the limitation period for filing the insolvency plea. This application challenging the original date of default was pending before the NCLT.
While the corporate debtor’s challenge was still under consideration, the financial creditor filed a separate application requesting the NCLT’s permission to rectify, or amend, the date of default previously stated in their original Section 7 application. The NCLT allowed this amendment application through an impugned order.
The corporate debtor appealed this order allowing the amendment to the NCLAT.
The NCLAT observed that permitting the financial creditor to change the date of default at that stage effectively nullified the corporate debtor’s pending application, which specifically disputed the original date and its bearing on the limitation period – a crucial factor for the maintainability of a Section 7 petition.
