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Issues: Whether an application under section 7 of the Insolvency and Bankruptcy Code, 2016 was barred by section 10A where the underlying default had occurred before 25 March 2020, notwithstanding later default in relation to a one-time settlement arrangement.
Analysis: Section 10A bars initiation of corporate insolvency resolution process only for defaults arising on or after 25 March 2020, and its explanation excludes defaults committed before that date. On the facts, the debt had been in default since 2016, the account had been classified as NPA, and the corporate debtor had acknowledged the liability in subsequent financial years. The later one-time settlement arrangement did not alter the position because the default relevant to the insolvency claim had already arisen before the statutory cut-off, and the alleged non-compliance with the settlement did not bring the matter within the protection of section 10A.
Conclusion: The application under section 7 was not barred by section 10A and admission of the insolvency petition was . The appeal failed and the order admitting the application was upheld.
Ratio Decidendi: Section 10A does not apply where the default relied upon for insolvency proceedings had occurred before 25 March 2020, even if there was a subsequent settlement arrangement that also remained unperformed.
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