2026 (1) TMI 396 - AT - IBC

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 ... Maintainability of the Section 9 application - claimed refund of excess payment made to the Operational Creditor - default in respect of invoices of projects - Whether the invoices raised by the Appellant-Operational Creditor in respect of Vanijya Bhawan Project in the Section 9 application fell within the excluded period of Section 10A or not. Corporate Debtor had defaulted in clearing the outstanding operational debt which had arisen beyond the Section 10-A prohibited period and that this amount crossed the threshold limit of Rs 1 Cr. prescribed under Section 4. HELD THAT:- Since the date of default arising out of these two invoices fall beyond the Section 10-A period, the Section 9 application could not have been dismissed by the Adjudicating Authority on grounds of Section 10-A. We find that the amount arising out of the two invoices in respect of Vanijya Bhawan Project which is more than the amount of threshold provided under Section 4 of IBC of Rs 1 Cr., the Section 9 application could not have been dismissed by the Adjudicating Authority without looking into these two invoices. It is pertinent to add here that during the oral submissions made before this Tribunal, the Appellant has categorically stated that they would like to confine their claims in the Section 9 application only with respect to these two invoices pertaining to Vanijya Bhawan Project. In sum, we have no hesitation in concluding that the impugned order is unsustainable as it has failed to notice that the two invoices relating to Vanijya Bhawan Project are not covered by Section 10-A of IBC. We therefore find merit in the present Appeal. The appeal is hereby allowed and the impugned order is set aside. The application is hereby restored and the matter is remanded back to the Adjudicating Authority to be considered again in accordance with law with the caveat. 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.