TaxTMI 
TaxTMI 
2021 (3) TMI 112
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....he head "Particulars of Operational Debt" the total amount claimed to be in default is stated to be USD $ 1,13,500/- as on 31.08.2020. The date of default as per Form I is mentioned to be 03.01.2020. Submissions by the Operational Creditor: 3. The applicant submitted that the Operational Creditor is a registered company with ministry of Economy and Commerce in Qatar. The company is engaged, inter alia, in the business of restaurants, confectioneries and trading in nuts. The Corporate Debtor offered to supply different grades of Indian Cashew Kernels to the Operational Creditor. It was categorically stated that they must have the Cashew Nuts in Doha, Qatar by January, 2020 as the festival of Ramadan was approaching and they were expecting sales of Cashew nuts in that festival. The Corporate Debtor assured that the consignment would reach Doha, Qatar with the Operational Creditor within a period of 30 days from the date of advance payment of 70% as per the Proforma Invoice which would be sent by them. 4. The learned counsel for the applicant stated that based on the above inducements and representations the Operational Creditor entered into an agreement (through Whats-app me....
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....had failed to return and had acknowledged as a debt is USD $ 1,00,000/- (US Dollars One Lakh Only) with interest. 9. The Operational Creditor stated that they have issued a demand notice dated 01.08.2020 under Section 8 of the Insolvency and Bankruptey Code 2016, for the unpaid debt in Form 3 of the Insolvency and Bankruptcy Code (Application to Adjudicating Authority) Rules, 2016 which was sufficiently served on the Corporate Debtor through Whats- app" and Email on 01.08.2020 as well as by way of speed-post on 04.08.2020 and the same was received on 10.08.2020. The Corporate Debtor has neither made any payment of Debt nor has the Corporate Debtor ever raised any dispute regarding the debt within 10 days (i.e., on or before 20.08.2020) of the receipt of the said notice under Section 8 of Insolvency and Bankruptcy Code, 2016. 10. Hence, the Operational Creditor prayed to initiate the Corporate Insolvency Resolution Process under Section 9 of the Insolvency and Bankruptcy Code, 2016 against the Corporate Debtor. Submissions by the Corporate Debtor: 11. The Corporate Debtor has challenged the maintainability of this petition on the following grounds: i. Application is n....
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.... default is considered as covid default for a period of one year a no application can ever be filed for initiating Corporate Insolvency Resolution Process under Section 10A of the Code. Therefore, legislature has issued notification dated 24.03.2020 only to deal with default which occurred prior to 24.03.2020 and the present application is not maintainable under Section 4 of the Code and is liable to be dismissed. ii. The application is not maintainable under Section 10A of Insolvency and Bankruptcy Code, 2016. 15. The Corporate Debtor stated that the default stated in the application is a Covid default and applicant has no right to file application under Section 10A of the IBC for ever. It is also submitted that the Parliament has vide Insolvency and Bankruptcy Code ( Second Amendment) Act, 2020, under Section 10A of IBC, suspended the initiation of Corporate Insolvency Resolution Process under Section 7,9 and 10 of the IBC from 25th March 2020 for a period of six months initially, which was further extended til1 25th March 2022. 16. It is further stated that the applicant admitted in the application that the debt is due and payable on 30.04.2020, which is after the cut o....
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....overnment imposed lockdown with effect from 25.03.2020. It is further stated that a mere perusal of the WhatsApp communication between the parties shows that the Corporate Debtor was willing to ship the entire goods except W180 Grade 300 Cartons initially. However, the Applicant refused to take partial delivery. Immediately thereafter the lockdown started, the contract was frustrated on account of force majeure event. 20. The Operational creditor has filed a rejoinder reiterating more or less the same facts that they canvassed in the Application. To fortify the pleadings of the respective parties, the Counsel on either side vehemently argued the matter at length. Findings: 21. On hearing the arguments advanced by both the sides and on perusal of the documents and evidences placed on record, this Bench finds it necessary to deal with each issue separately. The Central Government by notification dated 24.03.2020 enhanced the minimum amount of default limit from One lakh to One Crore for initiating CIRP as against small and medium scale industries. So the first question raised by the Ld. Counsel of the Corporate Debtor is that whether Notification under Section 4 of the Co....
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....etrospective one' because for the simple reason that the said notification does not in express term speaks about the applicability of 'retrospective' or 'retroactive' operation. 26. On a perusal of the records, it is seen that the Notification dated 24.03.2020 does not save the Applicant from the initiation of insolvency especially in cases where defaults towards creditors have taken place before the pandemic and the resultant financial crisis. Such an interpretation would be contrary to the intention of the executive in exercise of its power of delegated legislation. Thus, if the intention was to provide for a blanket protection to Corporate Debtors from being dragged to the NCLT irrespective of when or what extent a default has taken place, it would necessarily require a legislative amendment, and that a mere issuance of the notification would not suffice. This Tribunal vide order dated 16.10.2020 had already observed that since the cause of action arose (on 03.01.2020) before 25.03.2020, this application is maintainable and therefore, this point of non-maintainability has no legs to stand. 27. The next issue which falls for determination in this application is whether the ....
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....on (2) of Section 8. In the present case, it was asserted that the onset of Covid-19, which was the reason for the insertion of Section 10A, has nothing to do with the default as the part of the respondent in paying the outstanding operational debt of the applicant, which owes its existence even before the onset of the pandemic. The proviso to Section 10A stipulates that "no application shall ever be filed" for the initiation of the CIRP of a corporate debtor "for the said default occurring during the said period". The explanation which has been inserted for the removal of doubts clarifies that Section 10A shall not apply to any default which has been committed under Sections 7, 9 and 10 before 25 March 2020. 31. For further clarification the decision of the Hon'ble Supreme Court in Ramesh Kymal Versus M/s Siemens Gamesa Renewable Power Pvt Ltd- Civil Appeal No. 4050 of 2020 may be referred to the relevant portions, are quoted below: "17. Section 10A makes a reference to the initiation of the CIRP. Clauses (11) and (12) of Section 5 of the IBC define two distinct concepts, namely: 11 (i) the initiation date; and (ii) the insolvency commencement date. 18. The "i....
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....CIRP under Sections 7, 9 or 10, as the case may be, is admitted by the Adjudicating Authority. 33. In view of the above discussions, this Tribunal is of the view that the Executive in the Promulgation of the Ordinance to meet an extraordinary situation and to avoid causing further stress to the already beleaguered businesses due to COVID pandemic throughout the world and also in addition affected by the lock down enforced by the State of the Union, all beyond their control have chosen to suspend the filing of any application in relation to defaults arising on or after 25.03.2020 and not prior to it. In this application, the Corporate Debtor on 31.12.2019 assured the Operational Creditor that the shipment of goods would be made within one week, but the same was not shipped on 14.01.2020. The date of refusal to deliver the goods and return the money is not to be treated as the date of default, as the date of default occurred on the date of shipment which was not fulfilled and complied by the Corporate Debtor and the acknowledgement made thereafter. The date of deafault is the date on which the Corporate Debtor failed to fulfil the obligation. Therefore, it seems that the Corporate....
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....d as follows: - (a) The petition filed by M/s Al Sadiq Sweets under Section 9 of the IBC read with Rule 6 of the Insolvency & Bankruptcy (Application to Adjudicating Authority) Rules, 2016 for initiating CIRP against the Corporate Debtor i.e., M/s Krisenter Impex Pvt. Ltd. (CIN: U52201KL2009PTC023851), is ADMITTED. (b) There shall be a moratorium under section 14 of the IBC, in regard to the following: (i) The institution of suits or continuation of pending suits or proceedings against the Corporate Debtor including execution of any judgment, decree or (ii) Transferring, encumbering, alienating or disposing of by the corporate debtor any of its assets or any legal right or beneficial interest therein; (iii) Any action to foreclose, recover or enforce any security interest created by the Corporate Debtor in respect of its property including any action under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest (SARFAESI) Act, 2002; (iv) The recovery of any property by an owner or lessor where such property is occupied by or in possession of the corporate debtor. (c) Notwithstanding the abo....