TaxTMI 
TaxTMI 
TaxTMI 
2020 (10) TMI 547
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....following: - "The Central Government by notification dated 24.03.2020 enhanced the minimum amount of default limit from one lakh to 1 crore for initiating CIRP as against small and medium scale industries. So, question raised by the learned counsel is that whether notification is under section 4 of the Code raising the minimum default limit be applicable to the applications pending for admission? It is a well settled law that a statute is presumed to be prospective unless it is held to be retrospective, either expressly or by necessary implication. When the amendment to Section 4 of IBC was inserted a proviso enhancing the pecuniary jurisdiction for filing applications as against small and medium scale industries nowhere in the notification mentioned that its application will be retrospective. Therefore, it appears to me that the amendment shall be considered as prospective and not retrospective. The facts in the cited decisions are not at all similar to the facts in the case in hand and hence not helpful to strengthen the said submission on the side of the CD. In view of the matter, I do not find any illegality in pronouncing the order on today through VC. This is an applicati....
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....existing dispute also alleged or proved. The Ld. Counsel for the CD not raised any dispute at the time of hearing, other than his request for time to settle the matter. There is no disciplinary proceedings against the RP proposed under sub-sec. (4) of sec. 9 of IB code, 2016 and accordingly this application is complete and therefore, liable to be admitted." and resultantly admitted the application for CIRP against the 'Corporate Debtor' and further declared a moratorium etc. Resume of Facts 3. According to the Appellant he is a majority shareholder and one of the Directors on the 'Suspended Board of Directors' of the 'Corporate Debtor' and he is affected and prejudiced by the Impugned Order in admitting the application and initiating 'Corporate Insolvency Resolution Process' as against the 'Corporate Debtor' (Om Boseco Rail Products Ltd., Bengal). 4. During September, 2019, the 2nd Respondent / Operational Creditor projected an application against the 'Corporate Debtor' under section 9 of the 'I&B' Code being C.P. (IB) No.1735/KB/2019 before the 'Adjudicating Authority' ('NCLT') Kolkata Bench, Kolkata and that the said application was taken up for consideration by the 'Adjudica....
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....oning of all 'Courts' and 'Tribunals' all over the country was disrupted. 8. Because of the closure of the 'Adjudicating Authority' ('NCLT') Kolkata Bench since March 23rd, 2020, the matter had not appeared in the 'Cause List' till May, 20th and that in the meantime, the 'Operational Creditor' had through e.mail dated 01.04.2020 reverted to the 'Corporate Debtor's' e.mail dated 17.03.2020 declining the settlement proposal forwarded by the 'Corporate Debtor' and suggesting an alternative proposal instead. 9. On 16.05.2020, the Learned Counsel on record for the 'Corporate Debtor' received a call from the registry of the 'Adjudicating Authority' wherefrom the 'Corporate Debtor' came to learn that the said application filed by the 'Operational Creditor' would be appearing on May, 20th, 2020 for pronouncement of order by video conferencing. When the said application was taken up on 20.05.2020 through video conferencing the Learned Counsels representing the 'Operational Creditor' and the 'Corporate Debtor' made submissions and that on behalf of the 'Corporate Debtor' to judicial precedents in support of the proposition that amendment to Section 4 of the 'I&B' Code ought to be given a r....
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....ounsel for the Appellant contends that in the decisions of Hon'ble Supreme Court in 'Thirumalai Chemicals Ltd.' v. 'UOI & Ors.' reported in (2011) 6 SCC at page 739 and 'B.K. Educational Services(P) Ltd.' (2019) 11 SCC 633 that the right conferred on an applicant to file an application under the Code may be a substantive right but the requirement to be meted out for initiating CIRP process upon filing an application under the Code is procedural in nature. 15. It is represented on behalf of the Learned Counsel for the Appellant that a primary duty of the court is to give effect to the intention of the legislature as expressed in the words used by it and no outside consideration can be called in aid to find that intention and relies on the decisions of Hon'ble Supreme Court (i) 'Union of India' V. 'Deoki Nandan Aggarwal' (1992) Supplement (1) SCC 323(para 14); (ii) 'Nasiruddin & Ors.' V. 'Sita Ram Agarwal' (2003) 2 SCC page 577 (para 37; and (iii) 'Satheedevi' V. 'Prasana & Anr.' (2010) 5 SCC page 622 (para 12,13). 16. The Learned Counsel for the Appellant takes a plea that interpretation that language in certain statute cannot be regarded as strictly accurate is not permitted and ....
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....he context in which they occur." 18. The Learned Counsel for the Appellant emphatically projects an argument that the ambit of Section 4 is not confined only to filing of applications u/s 9(1) of the Code, but extends to all matters under part II including the admission of such applications u/s 9(5)(i) is clear from the use of expression 'relating to the Insolvency & Liquidation of Corporate Debtors' and refers to the decision of Hon'ble Supreme Court 'Renusagar Power Company Ltd.' V. 'General Electric Company' (1984), 4 SCC page 679 (para 25), followed in 'Govind Prasad Sharma' V. 'Doon Valley Officers Cooperative Housing Society Limited' (2018) 11 SC 501 (para 4); 'Thyssen Stahlunion GMBH' V. 'SAIL (1999) 9 SCC 334 (para 23,24); 'Mansukhlal Dhanraj Jain' V. 'Eknath Vithal Ogale (1995) 2 SCC 665; 'Dhanrajmal Gobindram' V. 'Shamji Kalidas & Co.' AIR 1961 SC 1285; 'Navin Chemicals' V. 'Collector of Customs'-(1993) 4 SCC 320. 19. Advancing his arguments, the Learned Counsel for the Appellant contends that the advent of notification of 24.03.2020 divests the Learned 'Adjudicating Authority' of jurisdiction in respect of pending applications u/s 9(1) pertaining to the minimum default....
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.... 1956 Act has to be given effect to and the suit decided accordingly. It must therefore be held that the relationship of landlord and tenant ceased between the parties on the date when the order under Section 16(3) was made." 21. Also, on behalf of the Appellant, the following decisions are referred to: - (a) In the decision 'Rao Shiv Bahadur Singh' V. 'State of 'Vindhya Pradesh' AIR 1953 Supreme Court at page 394 wherein at paragraph 10 and 24 it is interalia observed as under: - "10..........It cannot therefore be doubted that the phrase "law in force" as used in Article 20 must be understood in its natural sense as being the law in fact in existence and in operation at the time of the commission of the offence as distinct from the law "deemed" to have become operative by virtue of the power of legislature to pass retrospective laws it follows that if the appellants are able to substantiate their contention that the acts charged as offences in this case have become such only by virtue of Ordinance 48 of 1949 which has admittedly been passed subsequent to the commission thereof, then they would be entitled to the benefit of Article 20 of constitution and to have the conviction....
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....gar Works Ltd.' V. 'UOI' (2000) 2 SCC 536; 'General Finance Co.' V. 'Assistant Commissioner of Income Tax' (2002) 7 SCC 1 (para 4). 24. It is the contention of Learned Counsel for the Appellant that Section 6 of the General Clauses Act provides for the effect of the Appeal unless a contrary 'intention appears' and further that the contrary intention in the instant case is apparent from the language of Section 4 of the Code itself which relates to the entirety of part II of the Code. Besides this, it is the submission of the Learned Counsel for the Appellant that even if it be held that no different intention appears, section 4 of the Code being procedural in nature, the notification of 24th March, 2020 must have 'Retrospective Operation'. 25. The Learned Counsel for the Appellant contends that Laws are made justly for the benefit of individuals and the community as a whole may relate to a time antecedent to their commencement and that the presumption against retrospectivity may in such cases be rebutted by necessary implication from the language employed in the statute as per decision of the Hon'ble Supreme Court in 'Mithilesh Kumari' V. 'Prem Bihari Khare' (1989) 2 SCC page 95. ....
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....ly changes the procedure but also creates new rights and liabilities shall be construed to be prospective in operation unless otherwise provided, either expressly or by necessary implication as per decisions (i) 'Hitendra Vishnu Thakur & Ors.' V. 'State of Maharashtra & Ors.' 1995 CRI LJ 517 (ii) 'Shyam Sunder' V. 'Ram Kumar & Anr.' (2001) 8 SCC 24 (iii) 'Janardan Reddy' V. 'The State' (1950) 1 SCR 940. 31. It is represented on behalf of the Learned Counsel for the 2nd Respondent that under 'Delegated Legislation' could not issue a 'Notification' with retrospective effect or to deprive the rights already accrued to the parties at the time of filing of the petition and refers to the Hon'ble Supreme Court decisions (1) Dr. Indramani Pyarelal Gupta V. 'W.R. Nath & Ors.', April 11, 1962, AIR 1963 SC 274 (ii) 'Bakul Cashew Co. & Ors.' V. 'Sales Tax Officer & Anr.' Quilon, March 12, 1986, 1987 AIR 2239, 1986 SCR (1) 610. 32. The Learned Counsel for the 2nd Respondent brings it to the notice of this Tribunal that in the present case multiple defaults took place in 2018 and that the 'Demand Notice' was issued on 31.07.2019 and that the petition or application was filed in form 5 on 05.09....
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....f the 'I&B' Code, the Central Government was well within its right to make the notification 'Retrospective' in its operation. 36. The Learned Counsel for the Appellant points out that in the decision of Hon'ble Supreme Court 'Dr. Indramani Pyarelal Gupta V. 'W.R. Nath & Ors.', April 11, 1962, AIR 1963 SC 274 at paragraph 14 it is observed that - "What we are here concerned with is whether it is legally competent to vest a particular power in a statutory body, and in regard to this, the proper rule of interpretation of this would be that unless the nature of the power is such as to be incompatible for the purpose for which the body is created, or unless the particular power is contra-indicated by and specific provision of the enactment bringing the body into existence, any power which would further the provisions of the act could be legally conferred on it". 37. Apart from that, in the aforesaid decision at paragraph 27 "it is clear law that a statute which could validly enact a law with retrospective effect, in expressed terms validly confer upon a rule making authority a power to make a rule or frame a byelaw having retrospective operation." 38. It is the stand of the Appellant....
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....e Legislature. According to Viscount Simon L.c. the Golden rule is that the words of 'Statute' must Prima facie be given their ordinary meaning as per decision 'Nokes' V. 'Doncaster Amalgamated Collieries Ltd.' (1940) A.C. 1014. 43. In the words of Lord Brougham, the rule of construction is 'to take the words as the Legislature have given that and to take the meaning which the words naturally imply, unless the construction of those words is either by the preamble or by the context of the words in question controlled or altered' as per decision 'Crawford' V. 'S Pooner' (1846) 4 MIA 179 at 181. Analysis 44. Before the 'Adjudicating Authority' the 2nd Respondent / Applicant / Operational Creditor (Foseco India Ltd.) filed an application for commencing the 'Corporate Insolvency Resolution Process' as per Section 9 of 'I&B' Code r/w Rule 6 of the Insolvency & Bankruptcy(Application to Adjudicating Authority) Rules, 2016 in the form 5 filed by the 2nd Respondent / Operational Creditor in part-IV S.No. 1, the total amount of debt is mentioned as 'Principal amount of debt: Rs. 78,52,663.00 (Rupees seventy-eight lakhs fifty-two thousand six hundred and sixty-three only) plus interest upt....
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....and Notice in issue, the 'Corporate Debtor' had not given any reply to the 2nd Respondent / Operational Creditor. Although, adequate opportunities were provided to the 'Corporate Debtor' by the 'Adjudicating Authority' no endeavor was made to make payment in respect of the outstanding debt. 48. The 2nd Respondent / Operational Creditor before the 'Adjudicating Authority' had produced the statement of 'Bank Account' and also an Affidavit and as such the 2nd Respondent / Operational Creditor had fulfilled the requirements as per the ingredients of 'I&B' Code. To put it succinctly, there was no payment made on the part of the 'Corporate Debtor' after receipt of Demand Notice from the 2nd Respondent / Operational Creditor. Hence, this Tribunal without any haziness comes to a consequent conclusion that the 'Adjudicating Authority' had rightly admitted the application and in this regard, there is no legal flaw, as opined by this Tribunal. 49. Dealing with the aspect of as to whether the notification issued by the Jt. Secy. of Ministry of Corporate Affairs, Govt. of India dated 24.03.2020 in Section 4 of the 'I&B' Code has a retrospective or prospective effect, at this juncture, this Tr....
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....e present case, notwithstanding the fact, the Central Government is delegated with a power to quantify the amount of default at any time after the enactment of the 'I&B' Code, this power will not deprive / deny the right which had already accrued to the concerned stakeholders, (including the 2nd Respondent / Operational Creditor) at the time of projecting the C.P. (IB) No.1735/KB/2019 before the 'Adjudicating Authority'. 54. Section 3(12) of the 'I&B' Code defines "default" meaning non-payment of debt when whole or any part or instalment of the amount of debt has become due and payable and is not (paid) by the debtor or the corporate debtor, as the case may be. Section 4 of Chapter I preliminary speaks of 'Application of this Part' [Part III]. Section 8 of the Code deals with 'Insolvency resolution by operational creditor'. Section 9 pertains to 'Application for initiation of corporate insolvency resolution process by operational creditor'. 55. It is to be remembered that on the occurrence of default, the operational creditor gets the right to trigger the 'CIRP' process. Section 9(1) of the Code confers a substantive right to file and to initiate 'CIRP' against the corporate debt....