Appellant's Insolvency Application Dismissed for Failing Threshold Limit

The tribunal concluded that the appellant's application under Section 9 of the Insolvency and Bankruptcy Code was not maintainable as it did not meet the threshold limit of Rupees One Crore. The tribunal emphasized that the relevant date for determining the threshold limit's applicability is the date of filing the application, not the date of default. The appeal was dismissed, affirming the Adjudicating Authority's decision to reject the application due to non-fulfillment of the threshold limit requirement.

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Issues Involved:

1. Maintainability of the application under Section 9 of the Insolvency and Bankruptcy Code (I&B Code) based on the threshold limit of Rupees One Crore.
2. Applicability of the threshold limit amendment introduced by the Notification dated 24.03.2020.
3. Interpretation of the date of default and its relevance to the threshold limit.
4. The impact of Section 10A on the application.

Detailed Analysis:

1. Maintainability of the Application under Section 9:

The appellant, an Operational Creditor, challenged the order dated 10.06.2021 by the National Company Law Tribunal (NCLT), Kolkata, which dismissed the application under Section 9 of the I&B Code for claiming an amount of Rs.41,10,166/-. The dismissal was based on the ground that the claimed amount was below the threshold limit of Rupees One Crore, as stipulated by the Notification dated 24.03.2020. The appellant argued that the default occurred before the notification date, and hence the application should be maintainable.

2. Applicability of the Threshold Limit Amendment:

The core issue was whether the amendment to Section 4 of the I&B Code, which raised the threshold limit from Rupees One Lakh to Rupees One Crore, applied to defaults that occurred before the notification date but where the application was filed after. The appellant contended that the default date should be the determining factor, not the application date. The respondent argued that any application filed after 24.03.2020 must meet the new threshold limit of Rupees One Crore.

3. Interpretation of the Date of Default and its Relevance:

The tribunal examined the scheme of the I&B Code, particularly Sections 4, 6, 7, 8, 9, and 10, which collectively govern the initiation of the Corporate Insolvency Resolution Process (CIRP). It was determined that the relevant date for applying the threshold limit is the date of filing the application, not the date of default. The tribunal emphasized that the legislative intent behind the amendment was to ensure that no application for CIRP could be initiated unless the default amount met the new threshold limit of Rupees One Crore, effective from 24.03.2020.

4. The Impact of Section 10A on the Application:

The appellant also argued that Section 10A, which provides protection to corporate debtors from CIRP initiation for defaults occurring after 25.03.2020 due to COVID-19, should be harmoniously construed with Section 4. However, the tribunal clarified that Section 10A was introduced for an entirely different purpose'to protect corporate debtors from the adverse effects of the pandemic'and does not affect the threshold limit amendment under Section 4.

Conclusion:

The tribunal concluded that the application filed by the appellant on 18.01.2021 was not maintainable as it did not meet the threshold limit of Rupees One Crore. The relevant date for determining the applicability of the threshold limit is the date of filing the application, not the date of default or the date of issuing the demand notice. The tribunal dismissed the appeal, affirming that no error was committed by the Adjudicating Authority in rejecting the application under Section 9 of the I&B Code due to non-fulfillment of the threshold limit.

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