Two unpaid invoices and operational debt default dates: Section 10A bar rejected, Section 9 insolvency claim restored for rehearing

The dominant issue was whether the operational debt claimed under two invoices fell within the Section 10A bar, thereby affecting maintainability of the Section 9 application. The Appellate Tribunal held that the dates of default under the two invoices arose beyond the Section 10A prohibited period; hence Section 10A could not be invoked to dismiss the Section 9 application. It further held that the amount due under these invoices exceeded the Section 4 threshold of Rs 1 crore, requiring adjudication on these invoices, especially as the operational creditor confined its claim to them. Consequently, the appeal was allowed, the impugned dismissal was set aside, and the Section 9 application was restored and remanded to the Adjudicating Authority for fresh consideration in accordance with law.

---

---

1. ISSUES PRESENTED AND CONSIDERED

(i) Whether a Section 9 application could be dismissed as barred by Section 10A when the operational creditor's Part-IV particulars included two invoices whose dates of default fell outside the Section 10A excluded period and, on those invoices alone, the claimed default exceeded the statutory threshold.

(ii) What consequential relief ought to follow where the adjudicating authority rejected the Section 9 application by considering only invoices falling within the Section 10A excluded period and omitted consideration of invoices falling outside that period.

2. ISSUE-WISE DETAILED ANALYSIS

Issue (i): Applicability of Section 10A to the invoices forming the basis of the Section 9 claim

Legal framework (as applied by the Tribunal): The Tribunal proceeded on the basis that Section 10A bars filing of CIRP applications for defaults occurring within the excluded period (as referred to in the impugned order), and examined whether the defaults pleaded in the Section 9 application fell within or outside that excluded period. The Tribunal also took note that maintainability depended on whether the pleaded default crossed the monetary threshold under Section 4.

Interpretation and reasoning: The Tribunal examined the Part-IV particulars in the Section 9 application and found that the operational creditor had raised a claim based on six invoices across three projects. Two invoices relating to one project were specifically shown with invoice dates of 29.03.2022 and 13.07.2022 and corresponding dates of default of 14.04.2022 and 29.07.2022. The Tribunal held that these two dates of default undisputedly fell outside the Section 10A excluded period. The adjudicating authority, however, treated the application as barred by Section 10A by recording and relying only upon invoices whose defaults fell within the excluded period, thereby omitting consideration of the two invoices that were outside Section 10A.

Conclusions: Since defaults arising from the two invoices fell beyond the Section 10A period, the Section 9 application could not have been dismissed on the ground of Section 10A. Further, the amount arising from those two invoices exceeded the threshold under Section 4; hence, dismissal without examining those invoices was held to be unsustainable.

Issue (ii): Appropriate appellate relief for omission to consider invoices outside Section 10A

Legal framework (as applied by the Tribunal): The Tribunal exercised appellate jurisdiction to set aside an order found unsustainable for non-consideration of material pleaded defaults and remitted the matter for fresh consideration in accordance with law.

Interpretation and reasoning: The Tribunal found a clear error in the impugned order: the adjudicating authority decided maintainability solely on invoices within Section 10A and failed to take note of the two invoices outside Section 10A that were part of the pleaded claim. During oral submissions, the operational creditor confined its claim to only those two invoices. The Tribunal also explicitly refrained from deciding any contention on "pre-existing dispute" regarding the said project, leaving that question open for determination by the adjudicating authority on remand.

Conclusions: The impugned order was set aside; the Section 9 application was restored and remanded for reconsideration in accordance with law, with the caveat that the operational debt claim shall remain confined to the two specified invoices (dated 29.03.2022 and 13.07.2022). No opinion was expressed on the merits of alleged pre-existing disputes, and no costs were awarded.

---