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TMI Blog2024 (7) TMI 318X X X X Extracts X X X X X X X X Extracts X X X X ..... lanation is sought to be offered for date of default 05.09.2020 mentioned in Section 7 application. The date of default in itself is sought to be changed as 01.04.2021 without there being any reason or cause. Section 10A is a beneficial provision to extend certain protection to the corporate debtor during the COVID period. The said benefit cannot be allowed to be taken away indirectly, in event the appellant is permitted to amend the date of default which amendment is not supported by any justifiable cause or reason. Adjudicating Authority did not commit any error in rejecting the application of the appellant for change in date of default. After rejection of application of amendment, the Adjudicating Authority did not commit any error in rejecting Section 7 application as barred by Section 10A - Section 10A clearly mandated that no application can ever be filed with regard to default which has committed during 10A period. Counsel for the Appellant further sought to contend that default is a continuous default and hence, application under Section 7 could not have been said to be barred by Section 10A. The Adjudicating Authority has after considering all the aspects of the matter has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0/-. Date of default mentioned in Part IV was 05.09.2020. An application IA No.5054 of 2023 was filed by the Appellant seeking amendment of Section 7 application. Amendment application as well as Company Petition came for consideration before the Adjudicating Authority. After hearing counsel for the Appellant as well as Counsel for the Corporate Debtor, Adjudicating Authority vide impugned order rejected amendment application and dismissed Section 7 application as barred by Section 10A. By amendment application, appellant sought to amend the date of default 05.09.2020 to 01.04.2021. Adjudicating Authority took the view that financial creditor has already been stated in Part-IV the date of default as 05.09.2020. Amendment application is attempt to change the date of default. Challenging the order of the Adjudicating Authority, this appeal has been filed. 3. We have heard Shri Krishnendu Datta, Learned Senior Counsel appearing for the Appellants and Shri Arun Kathpalia, Learned Senior Counsel appearing for the Respondent. 4. Counsel for the Appellant challenging the order of the Adjudicating Authority submits that the Appellant had every right to amend the Section 7 application. It i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ult: 5 September 2020 8. Under Part V of the application, the Appellant had given particulars of financial debt (documents, records and evidence of default). It is useful to notice pleadings and para 8, 9, 10 of Part-V:- PART-V Particulars of the Financial Debt (Documents, Records and Evidence of Default) 8. On 4 September 2020, the said Society was registered before the Dy. Registrar, Co-operative Societies H-East Ward vide Serial No. Serial No. MUM/WHE/HSG(TC) 16162/2020-21/ Year 2020. 9. On 5 January 2021, the said Society through its Advocates sent a legal notice to the Corporate Debtor and called upon the Corporate Debtor to take requisite steps to assign and convey the remainder of the lease to the said Society. However, the Corporate Debtor failed to take any steps. 10. The Corporate Debtor has till date defaulted in transferring the amount as per Clause 8 which was collected towards corpus fund to the said Society and is therefore liable to return the same to the Financial Creditors. The amount so collected was far in excess of the required sum and upon formation of the Society on 4 September 2020, the said amount as per Clause 8 became due which was not repaid by the Corpo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d to wait till end of March 2021 being the end of financial year in which a Society was formed. 13. The above pleadings indicate that Appellant s case is that they entered into informal settlement between the corporate debtor and the petitioner had agreed to wait till end of March 2021 being the end of financial year in which society was formed. The pleadings of the appellant themselves is that settlement discussion did not fructify. When settlement discussion did not fructify, there is no occasion to change of date of default. Date of default could have been changed only when any settlement took place between the parties. The mere fact that appellants themselves stated that they will wait till March 2021 shall not stop the consequence of default which took place on 05.09.2020 as pleaded by the appellants themselves in Section 7 application. The default as pleaded by the appellant in Section 7 application is return of the excess amount from the amount which was deposited by the appellants with the corporate debtor towards maintenance/ corpus fund. The pleading further indicate that Civil Suit (L) No.196 of 2020 has already been filed by the Appellants before the Bombay High Court s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion 7 of the IBC to change the date of default. We need to be cautious if the change of date of default cuts the very root of maintainability of the Main Application. 4.5 Amendment of date of default in an application under Section 7 is not to be allowed for mere asking. The Hon'ble Supreme Court in Dena Bank Vs. Shivakumar Reddy (supra) also observed that amendment of pleading should be allowed depending on the facts and circumstances of each case. Mentioning date of default as 05.09.2020 in Part IV of the Main Application cannot be construed as mere error but a conscious admission. Allowing the amendment as prayed for in this IA would defeat the very purpose of Section 10A of the IBC and would render it redundant, amounting to abuse and misuse of the process of law. We hold that no amendment to an application under Secon 7 of the IBC nullifying a statutory mandate can be allowed by the Adjudicating Authority. Accordingly, we are of the considered view that the above IA is only to be dismissed. 14. The submission of the Counsel for the Appellant is that the appellant is entitled to make amendment in Section 7 application as per the law laid down by the Hon ble Supreme Court in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s sought to be allowed, in place of 02.06.2018 now amended date of default is 29.09.2018 which is in accord with the date of NPA as was mentioned in the original Form- 1 i.e. 31.12.2018. Learned Counsel for the Appellant submits that even date of default is not acceptable and is not according to the RBI Circular. 5. We have considered the submissions of the Learned Counsel for the parties and perused the record. 6. The amendment which has been allowed is amendment as per the date of NPA claimed in the application under Section 7. It is true that there is no reason given in the order of the Adjudicating Authority but we have looked into the amendment proposed and amendment allowed and we are of the view that it is not a fit case for the Appellate Court to exercise its jurisdiction to interfere with the impugned order. Adjudicating Authority has already given liberty to the Corporate Debtor to raise all issues, including the issue of limitation. It shall be open for the Appellant to raise the question of date of NPA and the date of default as well 16. This Tribunal has noted that in the original form itself the date of NPA was mentioned as 31.12.2018, hence, as per the RBI Circular, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... am Niranjan Kajaria and Ors. vs. Sheo Prakash Kajaria and Ors.- (2015) 10 SCC 203 in which judgment in paragraphs 24 and 25, following was laid down by the Hon ble Supreme Court:- 24. We agree with the position in Nagindas Ramdas (supra) and as endorsed in Gautam Sarup (supra) that a categorical admission made in the pleadings cannot be permitted to be withdrawn by way of an amendment. To that extent, the proposition of law that even an admission can be withdrawn, as held in Panchdeo Narain Srivastava (supra), does not reflect the correct legal position and it is overruled. 25. However, the admission can be clarified or explained by way of amendment and the basis of admission can be attacked in a substantive proceedings. In this context, we are also mindful of the averment in the application for amendment that : 11. Mahabir Prasad Kajaria died at age of 24 years on 7th May, 1949 when the Defendant No. 5 was only 2 years and the Defendant No. 12 was only 21 years. Till the death of Mahabir and even thereafter, the Petitioners had been getting benefits from income of the joint properties. The Defendant No. 5 and his two sisters, namely, Kusum and Bina were brought up and were maintai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... did not commit any error in rejecting Section 7 application as barred by Section 10A. In Section 7 application, date of default was mentioned as 05.09.2020 which fell within the prohibited period under Section 10A. Section 10A clearly mandated that no application can ever be filed with regard to default which has committed during 10A period. Counsel for the Appellant further sought to contend that default is a continuous default and hence, application under Section 7 could not have been said to be barred by Section 10A. 20. When we look into Part-IV of Section 7 application as extracted above, Part-IV of the application did not plead that there is no date of default and it is continuous default on the part of the corporate debtor even in the amendment application Part IV date of default is sought to be amended as 01.04.2021. There is no pleading of continuous date of default in Part-IV, hence, arguments advanced by Counsel for the Appellant that there was continuous default under Part-IV is only to save the petition as barred by Section 10A which cannot be accepted. 21. In view of the foregoing discussions, we are satisfied that the Adjudicating Authority has after considering all ..... X X X X Extracts X X X X X X X X Extracts X X X X
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