https://www.taxtmi.com/css/info/rss_sitemap/rss_feed.css?v=1746094055 https://www.taxtmi.com Business/Tax/Law/GST/India/Taxation/Policies/Legal/Corporate Tax/Personal Tax/Vat Law/Legal Information/Tax Information/Legal Services/Tax Services Tax Management India. Com / MS Knowledge Processing Pvt. Ltd. All rights reserved. One stop solution for Direct Taxes and Indirect Taxes https://www.taxtmi.com/caselaws?id=770306 https://www.taxtmi.com/caselaws?id=770306 Rejection of Section 9 application filed by the Appellants on the ground that Appellants do not fulfill the threshold for filing the application - HELD THAT:- Section 4 of the I&B Code provides that matter relating to insolvency of corporate debtors where the minimum amount of the default is one lakh rupees which now has been specified as Rs. 1 Crore by Notification dated 24.03.2020 by the Central Government. The purpose of keeping a threshold of default for initiating Corporate Insolvency Resolution Process against a Corporate Debtor has its own statutory object. The debts of lesser amount cannot be basis for initiating any CIRP against the Corporate Debtor. Coming to the case of workmen/ employees as submitted by learned counsel for the Appellants which according to the Appellants has to be read as exception with regard to other Operational Creditors. Debt or default of each employee may arise at different period and may have different amount. Demand Notice as contemplated under Section 8 gives an opportunity to the Corporate Debtor to make the payment within 10 days. Thus, in event there are employees who have given notice under Section 8, the Corporate Debtor is entitled to avail the provision by making payment within 10 days. Each employee is a different Operational Creditor and are required to give separate notice under Section 8(1) and any clubbing of operational debts cannot be done to complete threshold for Corporate Debtor to make payment within 10 days. In the present case, copy of demand notice dated 11.03.2022 has been brought on record as 'Annexure-O' to the appeal, which gives details of dues of all Appellants individually. Perusal of said details indicate that dues of Appellant No.1 - Mr. Kavindra Kumar is Rs.35,26,000/- and similarly the dues of all other Appellants' are less than amount of Rs.1 Crore individually. Thus, none of the Appellants' fulfill the threshold of Rs.1 Crore for initiating CIRP. Judgment of Hon'ble Supreme Court in JK Jute Mill Mazdoor Morcha Vs. Juggilal Kamlapat Jute Mills Company Ltd. through its Director & Ors., [2019 (5) TMI 236 - SUPREME COURT] has been noticed by this Tribunal in Sadashiv Nomaya Nayak's Case also, where it was held by the Hon'ble Supreme Court that a Trade Union falls within the definition of person under Section 3(23) of the I&B Code. Conclusion - i) The minimum threshold of default prescribed under Section 4 of the Code is mandatory and debts of lesser amount cannot be basis for initiating any CIRP against the Corporate Debtor. ii) The Adjudicating Authority did not commit any error in rejecting Section 9 application filed by the Appellants. The Adjudicating Authority did not commit any error in rejecting Section 9 application filed by the Appellants - Appeal dismissed. Case-Laws IBC Thu, 01 May 2025 00:00:00 +0530