2022 (3) TMI 266 - SC - Insolvency and Bankruptcy

Maintainability of application - appropriate forum - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Creditors - existence of debt and dispute or not - application was barred by limitation or not - HELD THAT - The Appellant has relied upon certain material in the form of correspondences during the years 2014 to 2017 and balance sheets for the Financial Years ending 2015, 2016, 2017, 2018 and 2019 to show that the application filed under Section 7, IBC was within the period of limitation. Admittedly, the material relied upon by the Appellant was not before the Adjudicating Authority. In a similar situation, this Court in Asset Reconstruction 2021 (4) TMI 753 - SUPREME COURT , after noting that the appellant therein was completely remiss in not pleading acknowledgement of liability, provided another opportunity to the appellant to amend its pleadings before the NCLAT. In the said case, the appeal was remanded to the NCLAT subject to cost of ₹ 1,00,000/-, after taking into account the huge amount of money that was due from the corporate debtor therein. Permission granted to the Appellant to amend the application under Section 7, IBC, subject to payment of cost of ₹ 1,00,000/- by the Appellant to the Corporate Debtor. The appropriate forum to consider the amended application is the NCLT - matter remanded back to the NCLT to consider the amended application under Section 7, IBC afresh.

Summary

Issues:
1. Application under Section 7 of the Insolvency and Bankruptcy Code seeking initiation of Corporate Insolvency Resolution Process against Corporate Debtor.
2. Rejection of application by NCLAT on the ground of limitation.
3. Appeal for permission to amend the application under Section 7, IBC.
4. Grant of permission to amend the application and remand of the matter to NCLT.

Analysis:
The Supreme Court dealt with an appeal involving an application under Section 7 of the Insolvency and Bankruptcy Code seeking the initiation of Corporate Insolvency Resolution Process against a Corporate Debtor. The National Company Law Tribunal (NCLT) had admitted the application, but the National Company Law Appellate Tribunal (NCLAT) set aside the order on the basis of limitation due to the date of Non-Performing Asset (NPA) being earlier than the application date. The Appellant presented additional material before the Supreme Court, including correspondences and balance sheets, to establish that the application was within the limitation period. The Appellant relied on a previous judgment to request a remand to NCLAT for consideration of the additional material.

In response to the Appellant's request, the Supreme Court referred to a similar case where an appellant was allowed to amend pleadings before NCLAT. The Court granted permission to the Appellant to amend the application under Section 7, IBC, subject to the payment of a cost of ?1,00,000 to the Corporate Debtor. The matter was remanded back to NCLT for fresh consideration of the amended application. The Court clarified that it had not expressed any view on the merits of the case, leaving all questions open for further consideration by the appropriate forum.

Ultimately, the appeal was disposed of with the condition that the Appellant pays the specified cost to the Corporate Debtor. Any pending applications were deemed disposed of as well. The judgment highlighted the importance of allowing the Appellant to amend the application and have the matter reconsidered by the NCLT, emphasizing procedural fairness and the need for a comprehensive review of the case without expressing any opinion on the substantive aspects.