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2026 Supreme(Online)(NCLAT) 388

NATIONAL COMPANY LAW APPELLATE TRIBUNAL
Sharad Kumar Sharma, Judicial Member
Vemuri Chenchaiah – Appellant
Versus
Indian Renewable Energy Development Agency Ltd. – Respondent
Company Appeal (AT) (CH) (Ins) No. 226 / 2025 (IA No. 638 / 2025 & IA No. 129 / 2026)|CP (IB) No. 8/7/AMR/2022

Advocates:
For Appellant: E. Om Prakash, N. Kumaraswamy, B. Ravikiran Singh, R. Moneshaa
For Respondents: Vikram Pooserla, Sagar Arora, S. Praneetha

Balance sheet acknowledgments extend limitation under Section 18 for Section 7 applications without needing amendment to pleaded default date; reschedulement ineffective without precondition compliance; Tribunal may determine actual default from documents on record.

Headnote:(A) Insolvency and Bankruptcy Code, 2016 - Sections 7, 61, 238A - Limitation Act, 1969 - Section 18 - Application under Section 7 admitted despite pleaded default date of NPA classification; actual default determined from original loan amortization schedule as failure to pay instalment - Proposed loan reschedulement held ineffective due to non-fulfilment of preconditions like payment of dues, liquidated damages, post-dated cheques - Balance sheet entries acknowledging debt as long-term borrowings extended limitation period from each financial year end under Section 18, applying Supreme Court ratio that such acknowledgments reset limitation clock, application filed within extended period not barred - Date of default in Part IV not immutable if documents establish otherwise; no amendment needed for considering balance sheet acknowledgments on record for limitation. (Paras 14, 15, 16, 21-24, 36)

(B) Insolvency and Bankruptcy Code, 2016 - Section 7 - Date of default - Cannot be altered by Adjudicating Authority without formal amendment only if pleadings sought to be changed; Tribunal may determine actual default from documents like amortization schedule without altering application, especially where no prejudice and within limitation either way - Acknowledgment via balance sheets or books constitutes valid extension under Section 18 without requiring amendment. (Paras 21, 31-36)

Facts of the case:
Financial Creditor filed Section 7 application alleging default from NPA date, supported by loan agreement, amortization schedule showing missed instalment, failed reschedulement letter with unmet conditions, and Corporate Debtor's balance sheets acknowledging outstanding debt as secured long-term borrowings for financial years 2016-17 to 2019-20. Corporate Debtor contested limitation and reschedulement validity. NCLT admitted application holding default existed, reschedulement ineffective, limitation extended by acknowledgments. Suspended Director appealed.

Findings of Court:
Reschedulement not binding absent compliance with terms; default date per original schedule; balance sheet entries extend limitation; Section 7 application within time; no merit in appeal.

Issues: (1) Whether reschedulement letter revised repayment postponing default; (2) Actual date of default and whether NCLT could determine from documents differing from pleaded NPA date; (3) Whether limitation extended by balance sheet acknowledgments without amendment to Part IV default date.

Ratio Decidendi: Reschedulement requires full precondition compliance to bind; Tribunal can find actual default from records without application amendment; balance sheet debt acknowledgments extend limitation under Section 18 irrespective of pleaded default date, provided documents on record; precedents on amendment inapplicable where no pleading change sought and acknowledgment independently establishes timeliness.

Result: Appeal dismissed.

Table of Content
1. section 7 application filed alleging default from npa declaration. (Para 1 , 2 , 3)
2. dispute over default date and loan reschedulement preconditions. (Para 4 , 5 , 6 , 7 , 9)
3. reschedulement ineffective due to non-compliance with conditions. (Para 8 , 10 , 11 , 12)
4. npa classification valid despite reschedulement failure. (Para 13 , 14)
5. balance sheet acknowledgments extend limitation period. (Para 15 , 16)
6. cirp admission upheld as within limitation. (Para 17)
7. appellant challenges default date alteration and limitation. (Para 18 , 19 , 20)
8. date of default determinable from documents despite pleadings. (Para 21 , 22 , 23 , 24)
9. no binding reschedulement without full compliance and acceptance. (Para 25 , 26 , 27 , 28)
10. acknowledgment extends limitation without amending default date. (Para 29 , 30 , 31 , 32 , 33 , 34 , 35 , 36)
11. balance sheets constitute valid debt acknowledgment. (Para 37 , 38 , 39 , 40)
12. appeal dismissed; nclt order upheld. (Para 41 , 42)

JUDGMENT

(Hybrid Mode)

Per : Justice Sharad Kumar Sharma, Member (Judicial):

The Appellant, in his capacity as the Suspended Director of M/s. SLS Power Corporation Limited, the Corporate Debtor, has invoked the appellate jurisdiction under Section 61 of the Insolvency and Bankruptcy Code, 2016 to file the present Appeal challenging the Impugned Order dated 07.04.2025 passed in CP (IB) No. 8/7/AMR/2022 by the Ld. NCLT, Amaravati Bench, whereby the Corporate Debtor has been admitted into the Corporate Insolvency Resolution Process (CIRP) under Section 7 of the I&B Code, 2016.

2. In the proceedings CP(IB)/8/7/AMR/2022 before the Adjudicating Authority, the Financial Creditor had filed an application on 04.02.2022 under Section 7 of the I & B Code, read with Rule 4 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016, seeking commencement of the CIRP against the Corporate Debtor. The Financial Creditor in the said application alleged the amount in default to be Rs. 488,00,78,691/-, as on 31.12.2021 (inclusive of interest payable thereon) and that the date of default is 31.03.2015, the date on which the account of the Corporate Debtor was declared a ``Non-Performing Asset (NPA)’’.

3. The Financial Creditor had contended before Ld. NCLT that it had sanctioned Rs.151 Crore to the CD for setting up a 24 MW Mini-Hydel Project, that the CD was not able to pay the EMIs and therefore the account of the CD was declared as NPA on 31.03.2015 and hence the date of default would also fall on the same date. It was further stated that the Balance Sheets of the Corporate Debtor for the financial years 2016–17, 2017–18, 2018–19, and 2019–20 reflected the outstanding debt payable to the Financial Creditor which amounted to acknowledgement of debt in those years and hence, the application under Section 7 of the Code filed on 04.02.2022 is filed within limitation which should be admitted.

4. Upon being issued notice in the proceedings for initiation of the CIRP, the Corporate Debtor had contended that, the date of declaration of the account as NPA cannot be taken as the basis for determining the date of default, which under law is a necessary parameter required to be satisfied in proceedings under Section 7 of the I & B Code, 2016, that the mere declaration of the account as NPA on 31.03.2015, as reflected in Part IV of the Section 7 application, cannot be strictly construed as the actual date of default and that, the default had occurred much earlier, and therefore the proceedings initiated by the Financial Creditor would be barred by limitation.

5. In response, the Financial Creditor submitted before the Learned Adjudicating Authority that, as per the amortisation schedule placed before the Learned NCLT in terms of the Loan Agreement dated 06.01.2009, the original date of default could be considered as 31.12.2014, which corresponded to the failure of the Corporate Debtor to remit the 11^th instalment as per the agreed repayment terms, and t

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2026 Supreme(Online)(NCLAT) 388

NATIONAL COMPANY LAW APPELLATE TRIBUNALSharad Kumar Sharma, Judicial MemberVemuri Chenchaiah – AppellantVersusIndian Renewable Energy Development Agency Ltd. – RespondentCompany Appeal (AT) (CH) (Ins) No. 226 / 2025 (IA No. 638 / 2025 & IA No. 129 / 2026)|CP (IB) No. 8/7/AMR/2022

Balance sheet acknowledgments extend limitation under Section 18 for Section 7 applications without needing amendment to pleaded default date; reschedulement ineffective without precondition compliance; Tribunal may determine actual default from documents on record.

Cases Referred (3)

NATIONAL COMPANY LAW APPELLATE TRIBUNAL
Sharad Kumar Sharma, Judicial Member
Vemuri Chenchaiah – Appellant
Versus
Indian Renewable Energy Development Agency Ltd. – Respondent
Company Appeal (AT) (CH) (Ins) No. 226 / 2025 (IA No. 638 / 2025 & IA No. 129 / 2026)|CP (IB) No. 8/7/AMR/2022