IBC default threshold notification is prospective, so pre-notification defaults remain governed by the earlier limit.

The minimum default threshold under the Insolvency and Bankruptcy Code, 2016 was held to be triggered by the occurrence of default. The 24.03.2020 notification enhancing the threshold from one lakh rupees to one crore rupees was treated as prospective because it did not express retrospective operation. Where default had already occurred before the notification, the right to initiate insolvency proceedings had accrued earlier and could not be displaced by the later enhancement, even if the demand notice had not yet been issued. The enhanced threshold therefore did not apply to pre-notification defaults.

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Issues: Whether the notification enhancing the minimum default threshold under the Insolvency and Bankruptcy Code, 2016 from one lakh rupees to one crore rupees applied where the default and the demand notice both occurred before the notification date.

Analysis: The threshold under Section 4 of the Insolvency and Bankruptcy Code, 2016 is triggered by the occurrence of default. The notification of 24.03.2020 did not specify retrospective operation and was therefore treated as prospective. Since the default had already occurred and the demand notice had already been delivered before the notification, the right to initiate proceedings had accrued earlier and could not be taken away by a later notification. The same principle was applied to cases where default occurred before the notification even if the demand notice was not yet issued.

Conclusion: The enhanced threshold of one crore rupees did not apply to defaults that had occurred before 24.03.2020, including the present matter.

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