SC sets aside NCLAT order on Section 7 Insolvency Process
The Supreme Court has set aside an NCLAT order relating to insolvency pleas by financial creditors. The NCLAT decision has held that an application by Dena Bank under section 7 of Insolvency and Bankruptcy Code (IBC) for the initiation of insolvency process was time barred. The SC held that such an application would not be time barred if there had been an acknowledgement of the debt by the Corporate Debtor before the expiry of the three year limitation period, in which case the period of limitation would get extended by an additional three year period.
The bench stated that in the absence of express provisions in the IBC relating 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 the provision of the IBC in Form-1, the adjudicating authority would not be in the wrong to allow the applicant to filed additional documents. Requests for filing such additional documents can be denied on a case to case basis, depending on the facts and circumstances of the case, when there is inordinate delay