NCLAT Chennai Rules, Amendment In Application U/S 7 Of IBC Cannot Be Permitted If It Amounts To Withdrawal Of An Admission
Pranav B Prem
The Chennai Bench of the National Company Law Appellate Tribunal (NCLAT), comprising Justice Sharad Kumar Sharma (Judicial Member) and Mr. Jatindranath Swain (Technical Member), has held that an amendment sought in a Section 7 application under the Insolvency and Bankruptcy Code, 2016, cannot be allowed if it effectively results in the withdrawal of an admission or undermines the judicial determination of an already pending issue. The ruling came in an appeal filed by Vasavai Power Services Pvt. Ltd. against the order of the National Company Law Tribunal (NCLT), Amravati Bench.
The Financial Creditor, Canara Bank, had filed a Section 7 petition before the NCLT, Amravati, which was registered as CP (IB) / 3 / 7 / AMR / 2024. In the original petition, the date of default was stated as 17.08.2023. During the pendency of the proceedings, the Corporate Debtor (appellant) filed Interlocutory Application (IA) No. 418 of 2024, raising objections regarding the correctness of the mentioned date of default. The objection was crucial because the date of default directly affects the issue of limitation, which in turn affects the maintainability of the Section 7 application. The said IA remains pending before the Adjudicating Authority.
While that application was still under consideration, the Financial Creditor filed another application—IA (IBC) No. 98 of 2025—seeking an amendment to the date of default in the original Section 7 application. Despite the pending objections, and without determining the issues raised in the earlier IA, the NCLT allowed the amendment sought by the Financial Creditor. Aggrieved by this, the Corporate Debtor preferred the appeal before the Appellate Tribunal.
The NCLAT, after hearing both parties, set aside the order passed by the NCLT. The Tribunal observed that the amendment allowed by the Adjudicating Authority had the effect of nullifying the Corporate Debtor's pending objection in IA No. 418 of 2024. It held that such an amendment, which seeks to change the date of default already pleaded, amounts to withdrawing a critical element of the pleadings. Since this issue was already the subject of a judicial application awaiting adjudication, permitting the amendment was both procedurally improper and legally unsustainable.
The Tribunal further emphasized that it is a settled principle of law that an amendment cannot be permitted if it withdraws an existing pleading, especially where that pleading has significant legal consequences. The Tribunal noted: “The amendment cannot be permitted to be carried in the shape which withdraws a pleading already raised before the Ld. Tribunal or which has a substantial bearing on the very genesis of the proceedings... or which amounts to withdrawal of an admission.”
The NCLAT also disapproved of the practice of the Adjudicating Authority advising or allowing parties to amend their case while substantive objections were pending adjudication. It held that permitting such an amendment undermines the adversarial process and the rule of judicial propriety. The Tribunal observed that if the amendment had been allowed to stand, the issue of limitation—central to the pending IA—would have been preempted without due adjudication.
Accordingly, the NCLAT quashed the order passed in IA (IBC) No. 98 of 2025 and remitted the matter back to the NCLT with a direction to hear and decide IA No. 418 of 2024 on its merits. The Tribunal clarified that the parties may exchange pleadings in the pending IA, and the issue of the date of default, particularly its bearing on limitation, must be determined strictly in accordance with law. With these directions, the appeal was allowed and disposed of, and all pending applications were closed.
Appearance
For Appellant: Mr. Satish Parasaran, Senior Advocate For Ms. Deepika Murali, Advocate
For Respondent: Mr. R. Manav Gecil Thomas, Advocate
Cause Title: Vasavai Power Services Pvt. Ltd. v. Canara Bank Ltd.
Case No: Company Appeal (AT) (CH) (Ins) No. 228/2025 (IA No. 649,650 & 651/2025)
Coram: Justice Sharad Kumar Sharma [Member (Judicial)], Jatindranath Swain [Member (Technical)]
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