Swaminarayan Diamonds Private Ltd vs Canara Bank

IN THE MATTER OF: Swaminarayan Diamonds Pvt. Ltd. ...Appellant

Versus

Canara Bank ...Respondent

Present: For Appellant : Mr. Varun Singh, Mr. Vera Gaur and Mr. Bhairavi S., Advocates

For Respondent : Mr. Yash Dhruva and Ms. Ruchita Jain, Advocates for Financial Creditor.

ORDER

(Hybrid Mode)

23.06.2025: Heard Mr. Varun Singh Learned Counsel for the Appellant

as well as Mr. Yash Dhruva Learned Counsel for the Respondent and perused

the record.

The instant appeal has been preferred by the Appellant against the

impugned judgment / order of the Adjudicating Authority i.e. National

Company Law Tribunal, Mumbai Bench, Court-VI dated 28.05.2025 whereby

liberty has been granted to the applicant to amend the Form No.1 in order to

change the date of default with a further liberty to the Respondent (Appellant

herein) to file a Reply vis-à-vis the amended Form-1, within a period of seven

days from the date of receipt of the amended Form-1.

Learned Counsel for the Appellant while drawing the attention of this

Court towards the impugned order as well as the other pleadings, copy of

which has been placed on record, submits that by passing the impugned order the Adjudicating Authority has taken away a valuable defence of the Appellant

and has permitted the Applicant to amend the date of default and the manner

in which the impugned order has been passed would itself show that no

opportunity of being heard has been provided to the Appellant to put forth his

objections vis-à-vis the intended amendment.

It is further submitted that without moving any formal amendment

application, the Appellant has been granted liberty to submit an amended

Form -1 with a new date of default. It is also submitted that the impugned

order is devoid of any reason and therefor is not sustainable and be set aside.

Learned Counsel for the Appellant in support of his submissions has

relied on the following judgments passed by co-ordinates Benches of this

Tribunal:

i) Inakshi Sobti & Ors. Vs. Starlight Systems (I) Pvt. Ltd. & Anr. in Company Appeal (AT) (Ins.) No. 359 of 2024

ii) Vasavai Power Services Pvt. Ltd. Vs. Canara Bank Ltd.

in Company Appeal (AT) (CH) (Ins.) No. 228 of 2025

Learned Counsel representing the Respondent however submits that by

providing a liberty to the Applicant (Respondent herein) to submit amended

Form No. 1 the Adjudicating Authority has only permitted the Applicant to

clarify its earlier stand, with regard to the date of default.

It is further submitted that the bank account of the Corporate Debtor

was declared NPA on 06.07.2024 and it was in this perception keeping in view

the date of default as 90 days prior to this, the same was mentioned as

05.04.2024, however, later on it was discovered that the first date of default

is 10.04.2024, however, both these dates are falling within the period of

Company Appeal (AT) (Insolvency) No. 885 of 2025 2 of 10 limitation and thus the judgments relied on by Learned Counsel for the

Appellant is not applicable to the facts of the present case.

Learned Counsel for the Respondent has also relied on judgment of this

Bench passed in Company Appeal (AT) (Insolvency) No. 1278 of 2024 -

Sanjeev Ranjeet Das Vs. M/s Punjab National Bank and Anr. decided on

16.07.2024.

We have considered the submissions made by Learned Counsel for the

parties and have also perused the record including the impugned order

passed by the Adjudicating Authority.

In Dena Bank v. C. Shivakumar Reddy and Another [ (2021) 10 SCC 330].

In this case, Dena Bank has filed an application under Section 7 of the IBC with the

NCLT/ Adjudicating Authority. The bank' s petition was based on the default date

related to a Non-Performing Asset (NPA). Dena Bank later proposed to rely on new

default date and has sought amendment. Hon'ble Supreme Court while discussing

the nature of proceedings under IBC opined that amendments to the application

moved under Section 7 of the IBC or submission of additional documents could be

made any time before the final order admitting or rejecting the petition is passed

under Section 7, however such amendments should not manipulate the limitation

period subject to any acknowledgement of debt by the Corporate Debtor. It is also

opined that in the proceedings under the CIRP before the NCLT, there is no scope for

filing elaborate pleadings and an application is filed under Section 7 of the IBC in

the prescribed form, which cannot be compared with the plaint in a suit and also

cannot be judged by the same standards, as a plaint in a suit, or any other pleadings

in a Court of law. It was clarified that under the provisions of Section 7 of the Code,

NCLT can allow amendments to pleadings anytime before the final order is passed. Company Appeal (AT) (Insolvency) No. 885 of 2025 3 of 10 Relevant paragraphs No. 26, 73, 74, 75, 76, 77, 91, 93 and 144 of Dena Bank v. C.

Shivakumar Reddy and Another (Supra) for convenience are extracted as under:

"26. A third issue which arises for adjudication of this Court is, whether there is any bar in law to the amendment of pleadings, in a Petition under Section 7 of the IBC, or to the filing of additional documents, apart from those filed initially, along with the Petition under Section 7 of the IBC in Form-1.

73. Since a Financial Creditor is required to apply under Section 7 of the IBC, in statutory Form 1, the Financial Creditor can only fill in particulars as specified in the various columns of the Form. There is no scope for elaborate pleadings. An application to the Adjudicating Authority (NCLT) under Section 7 of the IBC in the prescribed form, cannot therefore, be compared with the plaint in a suit. Such application cannot be judged by the same standards, as a plaint in a suit, or any other pleadings in a Court of law.

74. Section 7(3) requires a financial creditor making an application under Section 7(1) to furnish records of the default recorded with the information utility or such other record or evidence of default as may be specified; the name of the resolution professional proposed to act as an Interim Resolution Professional and any other information as may be specified by the Insolvency and Bankruptcy Board of India.

75. Section 7(4) of the IBC casts an obligation on the Adjudicating Authority to ascertain the existence of a default from the records of an information utility or on the basis of other evidence furnished by the financial creditor within fourteen days of the receipt of the application under Section 7. As per the proviso to Section 7(4) of the IBC, inserted by amendment, by Act 26 of 2019, if the Adjudicating Authority has not ascertained the existence of default and passed an order within the stipulated period of time of fourteen days, it shall record its reasons for the same in writing. The application does not lapse for non-compliance of the time schedule. Nor is the Adjudicating Authority obliged to dismiss the application. On the other hand, the application cannot be dismissed, without compliance with the requisites of the Proviso to Section 7(5) of the IBC.

76. Section 7(5)(a) provides that when the Adjudicating Authority is satisfied that a default has occurred, and the application under sub- section (2) of Section 7 is complete and there is no disciplinary proceeding pending against the proposed resolution professional, it may by order admit such application. As per Section 7(5)(b), if the Adjudicating Authority is satisfied that default has not occurred or the application under sub-Section (2) of Section 7 is incomplete or any disciplinary proceeding is pending against the proposed resolution professional, it may, by order, reject such application, provided that

Company Appeal (AT) (Insolvency) No. 885 of 2025 4 of 10 the Adjudicating Authority shall, before rejecting the application under sub- section (b) of Section 5, give notice to the applicant, to rectify the defects in his application, within 7 days of receipt of such notice from the Adjudicating Authority.

77. The Corporate Insolvency Resolution Process commences on the date of admission of the application under sub-section (5) of Section 7 of the IBC. Section 7(7) casts an obligation on the Adjudicating Authority to communicate an order under clause (a) of sub-section (5) of Section 7 to the financial creditor and the corporate debtor and to communicate an order under clause (b) of sub-section (5) of Section 7 to the financial creditor within seven days of admission or rejection of such application, as the case may be.

Sections 8 and 9 of IBC pertain to Insolvency Resolution by an operational creditor and are not attracted in the facts and circumstances of this case. Section 10 pertains to initiation of Corporate Insolvency Resolution Process by the Corporate Debtor itself, and is also not attracted in the facts and circumstances of the case.

91. On a careful reading of the provisions of the IBC and in particular the provisions of Section 7(2) to (5) of the IBC read with the 2016 Adjudicating Authority Rules there is no bar to the filing of documents at any time until a final order either admitting or dismissing the application has been passed.

93. Furthermore, the proviso to Section 7(5)(b) of the IBC obliges the Adjudicating Authority to give notice to an applicant, to rectify the defect in its application within seven days of receipt of such notice from the Adjudicating Authority, before rejecting its application under Clause (b) of sub-section (5) of Section 7 of the IBC. When the Adjudicating Authority calls upon the applicant to cure some defects that defect has to be rectified within seven days. There is no penalty prescribed for inability to cure the defects in an application within seven days from the date of receipt of notice, and in an appropriate case, the Adjudicating Authority may accept the cured application, even after expiry of seven days, for the ends of justice.

144. There is no bar in law to the amendment of pleadings in an application under Section 7 of the IBC, or to the filing of additional documents, apart from those initially filed along with application under Section 7 of the IBC in Form-1. In the absence of any express provision which either prohibits or sets a time limit for filing of additional documents, it cannot be said that the Adjudicating Authority committed any illegality or error in permitting the Appellant Bank to file additional documents. Needless however, to mention that depending on the facts and circumstances of the case, when there is inordinate delay, the Adjudicating Authority might, at its discretion, decline the request of an applicant to file additional pleadings and/or documents, and proceed to pass a final order. In our considered view, Company Appeal (AT) (Insolvency) No. 885 of 2025 5 of 10 the decision of the Adjudicating Authority to entertain and/or to allow the request of the Appellant Bank for the filing of additional documents with supporting pleadings, and to consider such documents and pleadings did not call for interference in appeal." Thus it is evident from the above placed law that the nature of proceedings

under IBC is different than ordinary civil adverbial litigation and thus a distinct

approach is required, while dealing with cases under the IBC. Significantly proviso

to Section 7(5)(b) of the IBC empowers the Adjudicating Authority to give notice to an

applicant, to rectify the defect if any, in its application within seven days of receipt

of such notice from the Adjudicating Authority, before rejecting its application under

Clause (b) of sub-section (5) of Section 7 of the IBC. Thus there is an obligation on

the Adjudicating Authority to ascertain the existence of a default from the records of

an information utility or on the basis of other evidence furnished by the financial

creditor in order to take a decision with regard to admission or dismissal of such

application. However, the discretion required to be exercised by the Adjudicating

Authority in disposal of any request to amend the application or Form No. 1 must be

exercised on sound settled principles.

In this regard the law laid down by the Hon'ble Supreme Court in Life

Insurance Corporation of India Vs. Sanjeev Builders Private Limited and Ors.,

MANU/SC/1093/2022, may also be recalled and paragraph 70 of the report, where

in the principles for dealing with amendment applications have been summarised, is

reproduced as under:

"70. Our final conclusions may be summed up thus:

(i) Order II Rule 2 Code of Civil Procedure operates as a bar against a subsequent suit if the requisite conditions for application thereof are satisfied and the field of amendment of pleadings falls far beyond its purview. The plea of amendment being barred Under Order II Rule 2 Code of Civil Procedure is, thus, misconceived and hence negatived.

Company Appeal (AT) (Insolvency) No. 885 of 2025 6 of 10

(ii) All amendments are to be allowed which are necessary for determining the real question in controversy provided it does not cause injustice or prejudice to the other side. This is mandatory, as is apparent from the use of the word "shall", in the latter part of Order VI Rule the Code of Civil Procedure.

(iii) The prayer for amendment is to be allowed

(i) if the amendment is required for effective and proper adjudication of the controversy between the parties, and

(ii) to avoid multiplicity of proceedings, provided

(a) the amendment does not result in injustice to the other side,

(b) by the amendment, the parties seeking amendment does not seek to withdraw any clear admission made by the party which confers a right on the other side and

(c) the amendment does not raise a time barred claim, resulting in divesting of the other side of a valuable accrued right (in certain situations).

(iv) A prayer for amendment is generally required to be allowed unless

(i) by the amendment, a time barred claim is sought to be introduced, in which case the fact that the claim would be time barred becomes a relevant factor for consideration,

(ii) the amendment changes the nature of the suit,

(iii) the prayer for amendment is malafide, or

(iv) by the amendment, the other side loses a valid defence. (V) In dealing with a prayer for amendment of pleadings, the court should avoid a hyper-technical approach, and is ordinarily required to be liberal especially where the opposite party can be compensated by costs.

(vi) Where the amendment would enable the court to pin-pointedly consider the dispute and would aid in rendering a more satisfactory decision, the prayer for amendment should be allowed.

(vii) Where the amendment merely sought to introduce an additional or a new approach without introducing a time barred cause of action, the amendment is liable to be allowed even after expiry of limitation.

(viii) Amendment may be justifiably allowed where it is intended to rectify the absence of material particulars in the plaint.

(ix) Delay in applying for amendment alone is not a ground to disallow the prayer. Where the aspect of delay is arguable, the prayer for amendment could be allowed and the issue of limitation framed separately for decision.

(X) Where the amendment changes the nature of the suit or the cause of action, so as to set up an entirely new case, foreign to the case set up in the plaint, the amendment must be disallowed. Where, Company Appeal (AT) (Insolvency) No. 885 of 2025 7 of 10 however, the amendment sought is only with respect to the relief in the plaint, and is predicated on facts which are already pleaded in the plaint, ordinarily the amendment is required to be allowed.

(xi) Where the amendment is sought before commencement of trial, the court is required to be liberal in its approach. The court is required to bear in mind the fact that the opposite party would have a chance to meet the case set up in amendment. As such, where the amendment does not result in irreparable prejudice to the opposite party, or divest the opposite party of an advantage which it had secured as a result of an admission by the party seeking amendment, the amendment is required to be allowed. Equally, where the amendment is necessary for the court to effectively adjudicate on the main issues in controversy between the parties, the amendment should be allowed. (See Vijay Gupta v. Gagninder Kr. Gandhi and Ors., MANU/DE/2236/2022)"

Coming to the facts of the present case the Adjudicating Authority by passing

the impugned order has only given liberty to rectify the date of default and an

opportunity has also be given to Appellant to file reply with regard to such

amendment and a decision under Section 7 of the IBC pertaining to the admission

or rejection of the application is yet to be taken by the Adjudicating Authority, after

considering all the material/ documents available on record. In our considered

opinion no valuable right of the appellant is being defeated by the permitted

amendment, as the appellant has been provided an opportunity to file all the

evidence to contradict the claim of the applicant with regard to the date of default

and a decision pertaining to application moved under Section 7 of the IBC is yet to

be taken by the Adjudicating Authority. We are of the considered view that the

amendment permitted by the Adjudicating Authority is integral for deciding the

Petition and no prejudice has been caused to the Appellant in any manner,

whatsoever. On the contrary, such amendment appears to be conducive to the

pursuit of justice.

The judgments which have been relied on by Learned Counsel for the

Appellants appears to be pertaining to the different set of facts as in these

Company Appeal (AT) (Insolvency) No. 885 of 2025 8 of 10 cases the question of maintainability of the petition was before this Tribunal

keeping in view, the provisions contained under Section 10A of the IBC or the

issue of limitation and by the proposed amendment a valuable right which

has occurred in favour of the Respondent was being taken away by the

intended amendment.

In our considered view the factual matrix is quite different so far as the

instant case is concerned. By the proposed amendment pertaining to which

the Applicant has been given liberty by the Adjudicating Authority appears to

be of consequential and clarificatory nature. The original date of default which

was mentioned in Form No.1 was 05.04.2024 and the date which has been

mentioned in the amended Form-1 i.e. first date of default is 10.04.2024 and

both these dates falls within limitation. More so, the Appellant before us

(Respondent before the Adjudicating Authority) has also been given

opportunity to file a Reply vis-à-vis the amended Form No.1.

It is to be recalled that under the Scheme of the IBC, a duty has been

cast on the Adjudicating Authority, taking into account all the pleadings

submitted by the party and the documents filed with the same to assess the

ingredients of Section 7, in order to arrive as to whether there was any debt

and whether default has occurred and if both the ingredients are satisfied

then the duty of the Adjudicating Authority is to take a decision under Section

7 of the Code.

Keeping in view all the facts and circumstances of the case we are of

the considered view that no illegality appears to have been committed by the

Adjudicating Authority in giving liberty to the Applicant to submit an amended

Company Appeal (AT) (Insolvency) No. 885 of 2025 9 of 10 Form No.1. More so, when a consequential opportunity has been given to the

Appellant to file his reply / response with regard to such amended Form No.1.

Thus, for the reasons mentioned above the Appeal in our considered

view lacks merit and is hereby dismissed. The Adjudicating Authority is

requested to move further in order to take a decision under Section 7 of the

IBC.

[Justice Mohammad Faiz Alam Khan] Member (Judicial)

[Arun Baroka] Member (Technical) pks/rr

Company Appeal (AT) (Insolvency) No. 885 of 2025 10 of 10