The Bengaluru Bench of the National Company Law Tribunal (NCLT) has held that an amendment to the date of default in an insolvency petition may be permitted where the amendment is clarificatory, relevant to proper adjudication, and intended to align the pleading with the factual foundation already set out, provided it does not shift the cause of action, withdraw an admission, or cause irretrievable prejudice to the respondent.
The Tribunal further held that the mere fact that interest under a foreign judgment was awarded from a particular date does not by itself furnish a justifiable basis for treating that date as the date of default in the insolvency proceedings, and that questions concerning the substantive enforceability of the underlying Letter of Comfort, the foreign judgment, and authorization issues are not germane while deciding the amendment application and are to be addressed at the hearing of the main petition.
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The Division Bench comprising Sunil Kumar Aggarwal (Judicial Member) and Radhakrishna Sreepada (Technical Member) observed that the application may have been prompted by the objections raised by the respondent and could, in that sense, be regarded as belated, yet there was “absolutely no basis available” for treating Nov 27, 2020 as the date of default merely because the Vienna Commercial Court had awarded interest from that date.
The Tribunal further recorded the settled proposition of law on amendment of pleadings, namely that at the stage of considering an amendment application, the merits of the proposed amendment are not to be examined; rather, the inquiry is whether the amendment is relevant and aimed at placing facts necessary for real, effective and complete adjudication of the disputes, so long as it does not amount to withdrawal of admission or setting up an altogether new cause of action.
Applying that test, the Tribunal held that the proposed amendment appeared to align the date of default with the pleaded case and did not displace the respondent from its disclosed standpoint. The Tribunal expressly left issues regarding the efficacy of the Letter of Comfort, implementation of the foreign judgment, and authorization of the signatory to be considered at the stage of hearing of the main petition.
Briefly, an application was filed by Rechtsanwalt Dr. Christian Bachmann, as Insolvency Administrator of Coffee Day Gastronomie und Kaffeehandels GmbH, seeking amendment of the date of default. The applicant stated that, pursuant to the Letter of Comfort issued by the Corporate Debtor, payments were regularly made through AM Coffee Day International Ltd. till August 2019, the last payment having been made on Aug 28, 2019, and that no further payments were made thereafter. According to the applicant, the next payment had fallen due on or before Sep 30, 2019, and the mention of Nov 27, 2020 in the original Section 9 petition was only because the Vienna Commercial Court had awarded interest from that date.
The respondent opposed the amendment on grounds including that it was an afterthought intended to avoid the bar under Section 10A of the IBC, that the original petition and NeSL record mentioned Nov 27, 2020 as the date of default, that there was no documentary basis for a payment due on Sep 30, 2019, and that the Letter of Comfort itself was disputed in enforceability; however, the applicant contended in rejoinder that the amendment was only to correctly reflect the actual first default and did not introduce any new cause of action.
