NCLT Amravati: Correction of Incorrect Default Date Allowed Before Final Hearing If No New Cause of Action Arises
Pranav B Prem
The National Company Law Tribunal (NCLT), Amravati Bench, comprising Shri Umesh Kumar Shukla (Technical Member) and Shri Kishore Vemulapalli (Judicial Member), has held that a change in the incorrect date of default mentioned in the original Section 7 petition can be allowed before final adjudication, provided it does not introduce a new cause of action and does not cause prejudice to the corporate debtor. The ruling came in an application filed by M/s. Vasavi Power Services Pvt. Ltd. (Corporate Debtor) under Section 60(5) of the Insolvency and Bankruptcy Code, 2016 (IBC), read with Rule 11 of the NCLT Rules, seeking dismissal of the company petition filed by Canara Bank for initiation of the Corporate Insolvency Resolution Process (CIRP).
The Corporate Debtor contended that the financial creditor had inconsistently stated the date of default as 17 August 2023, despite the account being classified as a Non-Performing Asset (NPA) on 30 November 2015 and the Information Utility (IU) records reflecting different dates. It was alleged that the inconsistent assertions were misleading, designed to circumvent the limitation period, and rendered the petition legally untenable. The applicant also argued that new documents were annexed to the rejoinder without leave of the Tribunal, despite being available at the time of filing the original petition.
The Financial Creditor countered that the date of default under Section 3(12) of the IBC need not be the NPA date and that the change sought was only to correct an inadvertent error. It was further argued that no new case was introduced through the rejoinder, additional documents could be filed before final order as per Supreme Court’s ruling in Dena Bank v. C Shivakumar Reddy, and acknowledgments through OTS proposals extended limitation.
The Tribunal noted that in the course of proceedings, the financial creditor had sought permission to rectify the incorrect date of default from 17 August 2023 to 30 November 2015 — the date of NPA classification. This request had been initially allowed, but the NCLAT later remitted the matter back for fresh consideration on procedural grounds, directing the NCLT to decide the application after hearing both sides on the date of default issue.
In its analysis, the Bench examined various precedents cited by both parties, including Puneet P. Bhatia v. ASREC (India) Ltd., Apple Sponge & Power Ltd. v. PNB, and Dena Bank v. C Shivakumar Reddy. The Tribunal observed that amendment to the date of default before final adjudication is legally permissible if it does not alter the cause of action, and the opposing party is given an opportunity to contest it. It distinguished other cases cited by the corporate debtor — such as Milind Kashiram Jadhav and Varanium Cloud Ltd. — noting that they involved materially different factual contexts like successive filings or changing from NPA date to an earlier alleged default date.
Applying these principles, the NCLT found that replacing the incorrect date with the correct NPA date did not create a new cause of action and caused no prejudice to the corporate debtor. It emphasised that procedural flexibility under the IBC is intended to ensure substantial justice, provided it does not frustrate the Code’s objectives. Accordingly, the Tribunal dismissed the application seeking dismissal of the main petition, holding that the amendment to the date of default was permissible, and clarified that the limitation issue from the corrected default date would be considered on merits during final hearing of the Section 7 petition.
Appearance
For the FC: Mr. Manav Gecil Thomas, Adv.
For the CD: Mr. Amir Bavani, Adv.
Cause Title: M/s. Canara Bank V. M/s. Vasavi Power Services Pvt Ltd
Case No: IA (IBC)/418/2024, IA (IBC)/98/2025 in CP (IB)/3/7/AMR/2024
Coram: Shri Umesh Kumar Shukla [Technical Member], Shri Kishore Vemulapalli [Judicial Member]
