Failure to honour an OTS does not create a fresh default; the original default date governs Section 10A.

Sharon Solutions Limited had borrowed from UCO Bank, and its account was classified as an NPA on 31 December 2014.

The DRT issued a recovery certificate on 6 March 2018.

After an approved one-time settlement (OTS) failed, UCO Bank filed a Section 7 application on 2 April 2021.

The application stated 1 November 2020 as the date of default; the Bank later relied on 6 March 2018, the date of the recovery certificate.

The NCLT admitted the Corporate Debtor into CIRP on 18 April 2023.

A suspended director appealed, principally arguing that the stated default date fell within Section 10A’s prohibited period and could not be changed.

1. Whether the date of default stated in the Section 7 application could be corrected from 1 November 2020 to 6 March 2018, and whether Section 10A barred the application.

2. Whether the failure to perform the OTS constituted a fresh default, or whether the relevant date of default was the NPA or recovery-certificate date.

3. Whether the Corporate Debtor’s asserted viability, the alleged defects in the Section 7 application, or the NCLT’s treatment of those defects warranted setting aside the admission order.

Section 10A of the Insolvency and Bankruptcy Code, 2016 bars applications under Sections 7, 9 and 10 in respect of defaults arising during the specified suspension period; it does not bar a proceeding founded on an established pre-existing default.

Relying on Kotak Mahindra Bank Ltd. v. A. Balakrishnan, the Tribunal treated the date of the recovery certificate as a permissible date of default in the circumstances of this case.

It distinguished Ramesh Kymal v. Siemens Gamesa Renewable Power Pvt. Ltd., where a party sought to shift the default date to avoid Section 10A, and held that correcting an erroneous date in the present Section 7 application was permissible.

Curable procedural defects should not defeat substantive rights, applying Uday Shankar Triyar v. Ram Kalewar Prasad Singh.

The Tribunal also applied Innoventive Industries Ltd. v. ICICI Bank on the Adjudicating Authority’s inquiry into debt and default, and distinguished Vidarbha Industries Power Ltd. v. Axis Bank on the facts.

The Tribunal found that the default pre-dated the Section 10A period: the account became an NPA in 2014 and the recovery certificate was issued in 2018.

It treated 1 November 2020 as the date an OTS instalment was missed, not the date of a fresh underlying default; failure of the OTS restored the position existing before settlement.

The Tribunal therefore accepted 6 March 2018 as the relevant default date and held that the Section 7 application was within limitation, also noting acknowledgments of debt between February 2020 and March 2021.

It considered correction of the date a curable error, unlike the attempted date-shifting in Ramesh Kymal.

The viability argument was unsupported by credible evidence, and the Tribunal found the circumstances materially different from Vidarbha Industries.

It also rejected the challenge to the NCLT’s handling of curable defects and its reasoning.

It found no basis to interfere with the NCLT’s admission order and dismissed the appeal; pending interlocutory applications were closed.