Surendra Trading Company Vs. Juggilal Kamlapat Jute Mills Company Ltd & Ors (Civil Appeal No. 8400 of 2017) - Synopsis
Team SoOLEGAL 29 Oct 2020

In this particular case, Surendra Trading Company Vs. Juggilal Kamlapat Jute Mills Company Ltd & Ors (Civil Appeal No. 8400 of 2017) the brief fact is that the appellant company filed a petition under Section 8 of Insolvency Bankruptcy Code, against the respondent company. A certain amount was claimed by the appellant company but the particular application was filed without following Rule 6 of Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016. According to that rule few benefits are being given which must be followed while filing an application under IBC. The appellant company was given a seven-day additional time to rectify their mistakes, but the appellant company had failed to follow the direction within the stipulated time and they argued that under Section 9(5) of the Code, the time period is not mandatory. The NCLAT held that the 7-day time limit for the correction of the defects in the application is mandatory in nature and that the 14-day time limit for the determination of the presence of the default is discretionary. The appeal was further filed to the Supreme Court.
The Supreme Court held that no legitimate reasoning could be found in the conclusion of NCLAT that a delay of 7 days is mandatory. It also noted that the 180-day period laid down in IBC for the completion of the resolution process can not be a legal ground justifying the conclusion of NCLAT, since the 180-day period begins from the date of admission of the application. The Court held that seven days time period for removing the mistakes is not mandatory in nature rather it is a directory. According to the Court, there should be a balanced approach. The appellant must provide sufficient notice as to why they are unable to remove the objections within the stipulated time period that is within seven days. If the NCLT is satisfied with the cause then only the tribunal can entertain the particular matter, otherwise, NCLT has the full right to reject the applications.


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