NCLAT dismisses 'non-substantive' appeal

NCLAT dismisses 'non-substantive' appeal

The Appellate Tribunal said that if there was a deficiency in the pleading, same could be corrected by giving opportunity before NCLAT to amend pleadings

The National Company Law Appellate Tribunal (NCLAT) dismissed an appeal filed against the order passed by the National Company Law Tribunal (NCLT) at New Delhi Bench on the ground that the Application u/S 7 of the Insolvency and Bankruptcy Code, 2016 (IBC) filed by the Respondent – Financial Creditor is not time-barred as claimed by the Appellant – Suspended Director who sought to amend the pleadings accordingly.

The Principal Bench of the National Company Law Appellate Tribunal at New Delhi, comprising of Justice A.I.S. Cheema and Dr Alok Srivastava dealt with this matter titled Vivek Malik, Suspended Director of Amzen Machines Pvt Ltd v Punjab National Bank And Anr.

The facts of this case were that the NCLT admitted the Application u/S 7 of the Insolvency and Bankruptcy Code, 2016 (IBC) filed by the Respondent – Punjab National Bank on 11 September 2019 who is the Financial Creditor. The Respondent – Bank claimed that it had advanced a term loan of Rs 200 crore on 17 March 2011 to the Corporate Debtor which was acknowledged by the Corporate Debtor on 10 July 2018.

The appeal was filed by the Appellant – Suspended Director of the Corporate Debtor – Amzen Machines Pvt Ltd claiming that the Application u/S 7 of the IBC was clearly beyond three years period of limitation in accordance with Section 3 read with Article 137 of the Limitation Act, 1963.

The bench, however, after referring to judgments of the Supreme Court observed that Section 18 of the Limitation Act, 1963 applied to the Code. It further observed that the Appellant being aware of the fact that the Supreme Court had made the law clear, at the time of arguments, did not try to submit applicability of Section 18 of the Limitation Act, 1963 which was the basis on which the present appeal had been filed.

Therefore, the Appellant argued that the present appeal deserved to be remanded to the NCLT giving an opportunity to the parties to amend their pleadings so as to incorporate pleadings with regard to acknowledgement and then the matter should be decided. It submitted the judgments of the Supreme Court to support its arguments. On the other hand, the Respondent – Bank submitted that there was no question of remanding the matter since the necessary pleadings had been made and the issue of limitation was also discussed and decided by the NCLT.

The Bench after referring to the judgments of the Supreme Court, observed:

"What is clear from the above is that if there was deficiency in pleading, the same could be corrected by giving opportunity before this Appellate Tribunal to amend the pleadings."

Keeping in view the principles with regard to pleadings, the bench observed and proceeded to see whether the application or reply filed, the issue with regard to limitation was raised and if the same was considered and discussed along with the documents so as to arrive at a decision. It was found that the reply filed by the Corporate Debtor before the NCLT clearly showed that the Corporate Debtor had specifically raised the issue with regard to limitation.

The bench observed that the pleadings were already there and the issues were dealt with and accordingly had been decided. Therefore, there was no substance in the arguments raised that the matter should be remanded to the NCLT and there should be an amendment of pleadings.

It was also stated by the bench that the application filed in 2019 could not be said to be time-barred since the Corporate Debtor acknowledged liability on 10 July 2018.

The appeal was, therefore, dismissed for having no substance.