Date of Default: Pre moratorium contractual maturities remain defaults; later cheque dishonour does not reset default date.

Section 10A moratorium does not apply to defaults that became due before 25 March 2020; invoices dated in 2019 with 30 day contractual maturity gave rise to defaults prior to the suspension period, so the Section 9 initiation remains sustainable. A running account allegation and subsequent dishonour of cheques intended to discharge pre existing liabilities do not reset the date of default or convert pre moratorium defaults into defaults during the suspension period. The operative rule applied is that the date of default is when the debt became due and payable under the contract, not when subsequent payments fail.

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Issues: (i) Whether the defaults relied upon in the Section 9 application fall within the suspension period under Section 10A of the Insolvency and Bankruptcy Code, 2016; (ii) Whether the existence of a running account or the subsequent dishonour of cheques alters the date of default to fall within the Section 10A suspension period.

Issue (i): Applicability of Section 10A suspension to the defaults relied upon in the Section 9 application.

Analysis: Section 10A of the Insolvency and Bankruptcy Code, 2016 imposes a moratorium on filing applications for defaults arising on or after 25 March 2020 for the specified suspension period. The invoices relied upon by the Operational Creditor are dated between 20.04.2019 and 19.09.2019, with contractual terms making each invoice payable 30 days after the invoice date. Consequently the amounts became due on or before 19.10.2019, which is prior to 25.03.2020. The Adjudicating Authority recorded that the insolvency application was filed on the basis of defaults that had accrued prior to 25.03.2020 and the Corporate Debtor did not dispute existence of the debt.

Conclusion: The Section 10A suspension does not apply because the defaults arose before 25.03.2020 (in favour of Respondent).

Issue (ii): Effect of running account status and dishonour of cheques on the date of default.

Analysis: The Appellant argued that a running account exists and that the date of default should be the date of last payment (dishonour of cheques on 29.01.2021), which would place default within the Section 10A suspension. The Tribunal examined the ledger, payment pattern, and absence of any accepted settlement shifting due dates, and noted that the Section 9 application was predicated on invoices that matured in 2019. The Tribunal held that issuance and later dishonour of cheques given to discharge pre-2019 liabilities do not alter the original due dates of the invoices or convert pre-25.03.2020 defaults into defaults arising during the suspension period. The Tribunal further relied on applicable definitions of default and precedent addressing reckoning of default dates.

Conclusion: The running account/dishonour of cheques does not change the date of default to fall within the Section 10A suspension period (in favour of Respondent).

Final Conclusion: The appeal is devoid of merit because the indebtedness relied upon accrued prior to the Section 10A suspension period and the subsequent dishonour of cheques does not re-characterise the date of default; accordingly the impugned initiation of CIRP under Section 9 is sustainable and the appeal is rejected.

Ratio Decidendi: The date of default is determined by when the debt became due and payable under the contractual terms of the invoices (here, 30 days after invoice dates in 2019) and defaults that accrued prior to 25 March 2020 are not subject to the moratorium under Section 10A of the Insolvency and Bankruptcy Code, 2016.

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