Tribunal rejects application due to default date falling under Section 10A suspension.

The Tribunal rejected the Operational Creditor's application under Section 60(5) of the Insolvency & Bankruptcy Code, 2016, as the default date of 28.07.2020 fell within the period covered by Section 10A, which suspends initiation of insolvency proceedings for defaults arising after 25th March 2020. The Tribunal found the attempt to amend the default date to 21.03.2020 as a misuse of IBC provisions, emphasizing the seriousness of insolvency consequences.

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Issues Involved:
1. Existence of Operational Debt
2. Privity of Contract
3. Quality and Quantity of Supplied Goods
4. Impact of COVID-19 and Lockdown
5. Applicability of Section 10A of IBC
6. Date of Default

Detailed Analysis:

1. Existence of Operational Debt:
The Operational Creditor, a registered partnership firm, supplied aqua products to the Corporate Debtor, who acknowledged the receipt of materials but made only partial payments. The total sales amounted to Rs. 1,43,53,247, with a remaining balance of Rs. 93,53,247. Including interest, the operational debt as of 30.11.2020 stood at Rs. 1,05,80,698. The Corporate Debtor's ledger account acknowledged the principal debt of Rs. 93,53,248 as of 27.07.2020.

2. Privity of Contract:
The Corporate Debtor argued that there was no direct privity of contract between them and the Operational Creditor, stating that all transactions were conducted through an agent. The Operational Creditor refuted this, asserting that the Corporate Debtor's defense was a sham to avoid payment.

3. Quality and Quantity of Supplied Goods:
The Corporate Debtor contended that due to the national lockdown, the supplied goods, which were stored in cold storage, were found to be of inferior quality and damaged, leading to their destruction. They claimed that the goods were not exported, and no revenue was earned from them, resulting in a settlement to pay Rs. 35,00,000 for the damaged goods.

4. Impact of COVID-19 and Lockdown:
The Corporate Debtor cited the COVID-19 pandemic as a reason for the damages and default in payment. They highlighted the unprecedented situation and national lockdown, which affected their ability to inspect and process the goods.

5. Applicability of Section 10A of IBC:
The Tribunal examined whether Section 10A, which suspends the initiation of CIRP for defaults arising on or after 25th March 2020, applied to this case. The application was filed on 16.09.2020, and the default date was initially set as 28.07.2020. The Tribunal referred to the Supreme Court's decision in Ramesh Kymal Versus M/s Siemens Gamesa Renewable Power Pvt Ltd, which clarified that Section 10A bars the initiation of CIRP for defaults occurring during the stipulated period.

6. Date of Default:
The Operational Creditor sought to amend the default date to 21.03.2020 to fall outside the purview of Section 10A. However, the Tribunal found that the true default date was 28.07.2020, as evidenced by the last payment made on that date. The Tribunal concluded that the amendment was an attempt to misuse the provisions of the IBC.

Conclusion:
The Tribunal determined that the default date was 28.07.2020, making the application fall within the period covered by Section 10A. Given the severity of consequences following insolvency proceedings and the intent to misuse the IBC provisions, the application by the Operational Creditor was rejected under Section 60(5) of the Insolvency & Bankruptcy Code, 2016.

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