Amendment of Form No.1 permitted where clarificatory and within limitation, with opportunity to reply to avoid prejudice.

Amendments to Form No.1 and filing of additional documents are permissible until a final order admitting or rejecting an application is passed; rectification of defects must be allowed where it does not introduce a time-barred claim, change the nature of the cause of action, arise from bad faith, or divest a valid defence. Where the amended date of default remains within the limitation period and the opposite party is given an opportunity to file a reply, allowing a consequential or clarificatory amendment does not cause prejudice and is legally permissible.

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Issues: Whether the Adjudicating Authority erred in granting liberty to the applicant to amend Form No.1 to alter the date of default and whether such amendment causes prejudice or takes away any valuable right of the opposite party.

Analysis: The proceedings under the Insolvency and Bankruptcy Code, 2016 require a different and pragmatic approach to pleadings in Form No.1; amendments and filing of additional documents are permissible until a final order admitting or rejecting an application under Section 7 is passed. The proviso to Section 7(5)(b) obliges the Adjudicating Authority to allow rectification of defects within seven days before rejecting an application. Principles governing amendment under civil procedure law require allowance of amendments that facilitate adjudication of the real controversy provided they do not introduce time-barred claims, change the nature of the case, are mala fide, or cause injustice by divesting a valid defence. The admitted and amended dates of default in the present case (05.04.2024 and 10.04.2024) both fall within the period of limitation and the Adjudicating Authority granted an opportunity to file a reply to the amended Form No.1, thereby preserving the appellant's ability to contest the claim.

Conclusion: The amendment permitted by the Adjudicating Authority to rectify the date of default was permissible and did not cause prejudice or divest any valuable right of the opposite party; the appeal challenging that liberty is dismissed.

Ratio Decidendi: Under Section 7 of the Insolvency and Bankruptcy Code, 2016, amendments to Form No.1 and filing of additional documents are permissible until the final order admitting or rejecting the application is passed, and the Adjudicating Authority may allow such amendments provided they do not introduce a time-barred claim, change the nature of the cause of action, or cause prejudice to the opposite party; where amendment is consequential or clarificatory and the opposite party is given an opportunity to reply, refusal to allow the amendment is not warranted.

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