TaxTMI 
TaxTMI 
2022 (9) TMI 954
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....s come up in this Appeal. 2. The brief facts of the case necessary to be noticed for deciding this Appeal are: (i) The Appellant has rendered services related to installation of Modulation Operation Theatre and General Operation Theatre alongwith the supply of related equipment. (ii) Invoices were raised by the Appellant upon the Respondent from 24.07.2018 to 31.03.2019. (iii) Invoices being not paid a Demand Notice dated 05.03.2020 under section 8 of the I&B Code was issued demanding an amount of Rs.41,10,166/- including principal and interest. (iv) After the demand notice was delivered on 11.03.2020, an application under Section 9 was filed by the Operational Creditor on 18.01.2021, which came to be rejected by the Adjudicating Authority. The Adjudicating Authority by the impugned order accepting the submission of the Corporate Debtor, amount claimed being 41,10,166/-, which is below the threshold limit of Rupees One Crore held that the petition is non-maintainable. 3. Shri Pankaj Jain, learned counsel for the Appellant challenging the impugned order of the Adjudicating Authority has raised following submissions: (i) The default by the Corporate Debtor in paying the o....
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.... shall not be more than one crore rupees, for matters relating to the pre-packaged insolvency resolution process of corporate debtors under Chapter III-A.]" 7. Under Section 4 proviso, a Notification has been issued by the Central Government on 24.03.2020, which is to the following effect:- "MINISTRY OF CORPORATE AFFAIRS NOTIFICATION New Delhi, the 24th March, 2020 S. O. 1205 ( E ) . - In exercise of the powers conferred by the proviso to section 4 of the Insolvency and Bankruptcy Code, 2016 (31 of 2016), the Central Government hereby specifies one crore rupees as the minimum amount of default for the purposes of the said section." 8. Section 4(1) provides that "this Part shall apply to matters relating to the insolvency and liquidation of corporate debtors where the minimum amount of the default is one lakh rupees". Part II of the Code deals with 'Insolvency Resolution and Liquidation for Corporate Persons'. The applicability of the Part II is dependent on minimum amount of default as prescribed in Section 4(1). Minimum amount to default was Rupees One Lakh which has been subsequently amended to Rupees One Crore by Notification dated 24.03.2020. The applicability of Part I....
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....d served, the applicant has right to file application even after 24.03.2020 on the basis of earlier threshold. 13. When we look into the scheme of the Code, provision of Section 4, 6, 7, 8, 9 and 10 indicate that the provisions which provides for initiation of Corporate Insolvency Resolution Process and Part II of the Code applied to matters relating to insolvency Resolution Process for Corporate Debtor, where minimum default is Rupees One Crore (as on 24.03.2020). Thus, Part II of the Code is applicable only when default is of Rupees One Crore or more. There is no right to initiate an application under Section 9 on 24.03.2020 or thereafter if the minimum default of Rupees One Crore is not fulfilled. Thus, crucial date to find out applicability of the threshold is the date when application to initiate CIRP is made. If we accept the submission of learned counsel for the Appellant that date of default or date of demand notice under Section 8 is to be taken and if default is less than Rupees One Crore which occurred prior to 24.032020 right should be given to the applicant to initiate the CIRP after 24.03.2020, it will be clearly contrary to the scheme of the Code as delineated by Se....
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....ly 'Prospective in nature' and not a 'retrospective' one because of the simple reason the said notification does not in express term speaks about the applicability of 'retrospective' or 'retroactive' operation. Suffice it for this Tribunal to point out that from the tenor, spirit and the plain words employed in the notification dated 24.03.2020 of the Ministry of Corporate Affairs, Government of India, one cannot infer an intention to take or make it retrospective as in this regard, the relevant words are conspicuously absent and besides there being no implicit inference to be drawn for such a construction in the context in issue. That apart, if the notification dated 24.03.2020 of the Ministry of Corporate Affairs, Government of India, is made applicable to the pending applications of IBC (filed earlier to the notification in issue) it will create absurd results of wider implications / complications. 57. In view of the upshot and also this Tribunal, on a careful consideration of respective contentions advanced on either side and considering the facts and circumstances of the instant case in a conspectus fashion holds unhesitatingly that the notification dated 24.03.2020 of the ....
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....Pvt. Ltd.". Learned counsel for the Appellant submits that against the aforesaid judgment of this Tribunal Civil Appeal No. 7032 of 2021 has been filed before the Hon'ble Supreme Court where notices have been issued. The order passed by the Hon'ble Supreme Court dated 01.04.2022 is as follows:- "ORDER Issue notice on the applications for intervention, stay as well as on appeal, returnable in six weeks." The above order passed by the Hon'ble Supreme Court indicates that judgment of this Tribunal has not been stayed so as to take away the precedential value of the judgment. 16. Learned counsel for the Appellant has placed much reliance on the judgment of three member Bench in "Company Appeal (AT) (Insolvency) No. 557 of 2020, Madhusudan Tantia vs. Amit Choraria & Anr.". Facts of the case indicates that in the above case as application under section 9 was filed in September, 2019 before the Adjudicating Authority being C.P. (IB) No.1735/KB/2019, subsequently, on 17.01.2020, Adjudicating Authority directed the Corporate Debtor to file a reply. When the Appeal came for hearing, submission was raised by the Corporate Debtor that operational debt is Rs.90,00,919.10/- only which is b....
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....fication, as opined by this Tribunal. Viewed in the above prospectives, the conclusion arrived at by the 'Adjudicating Authority' in the impugned order to the effect that the notification dated 24.03.2020 of the Ministry of Corporate Affairs, Government of India, shall be considered as prospective and not retrospective and the finding that there was no payment on the side of 'Corporate Debtor' after receipt of Demand Notice, no pre-existing dispute also alleged or proved and ultimately admitting the application filed by the 2nd Respondent / Operational Creditor are free from legal infirmities. Resultantly, the instant Appeal fails." 17. The judgment in 'Madhusudan Tantia' (supra), thus, lays down that the Notification dated 24.03.2020 is prospective in nature and shall not be applicable on pending applications. The said judgment does not contain any ratio that when default was committed prior to 24.03.2020 and application was filed after 24.03.2020 the earlier threshold of Rupees One Lakh has to be looked into. 18. We may also refer to a judgment of this Tribunal in "Company Appeal (AT) (CH) (INS) No. 55 of 2021, B. Sreekala vs. Al Sadiq Sweets and Ors." decided on 13.12.2021. I....
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.... second proviso to the following effect:- "Provided further that for financial creditors who are allottees under a real estate project, an application for initiating corporate insolvency resolution process against the corporate debtor shall be filed jointly by not less than one hundred of such allottees under the same real estate project or not less than ten per cent of the total number of such allottees under the same real estate project, whichever is less:" 21. The amendment in Section 7 came to be challenged before the Hon'ble Supreme Court by Writ Petitions. One of the submission raised before the Hon'ble Supreme Court was that the date of default of different allottees may be different and Section 7 proviso which now adds fulfilment of conditions for filing Section 7 application would adversely impinge on the absolute right which otherwise exists with an allottee. The above submission of the petitioner was noticed in Para 159 of the judgment, which is to the following effect:- "159. It is urged on behalf of the petitioners that the provisos requiring support of one hundred persons or one-tenth of the allottees, whichever is lower, is unworkable and arbitrary having regar....
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....er filing of the application, and till the date, the application is admitted under Section 7(5)? There can be no doubt that the requirement of a threshold under the impugned proviso, in Section 7(1), must be fulfilled as on the date of the filing of the application." 25. The law laid down by the Hon'ble Supreme Court in the above case lend support to our conclusion that threshold of Rupees One Crore has to be fulfilled by an applicant under Section 9 on the date of filing of the application. The fact that default was committed prior to 24.03.2020 and notice under Section 8 was issued and served prior to 24.03.2020 are not determinative or material although they are condition precedent for initiating an application under Section 9. We have noticed the provision of Section 6 which provides that where any Corporate Debtor commits a default, a Financial Creditor, an Operational Creditor or the Corporate Debtor itself may initiate Corporate Insolvency Resolution Process in respect of such Corporate Debtor in the manner as provided under this Chapter. Thus, a default is a condition precedent. Part II of the Code becomes applicable only when default is Rupees One Crore or more w.e.f. 24....
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....nation to Section 10A comes to any aid in Appellant's case. Section 10A was introduced for entirely different object and purpose and could not be read to give any support to the submissions which have been made by the Appellant in the present case. 28. Another judgment of three member Bench in "Company Appeal (AT) (Ins.) No. 129 of 2022, Saru International Pvt. Ltd vs. Arumani Traders" is also a case where default was of Rs.39 Lakhs and application was filed on 10.08.2020. In the above case, the Adjudicating Authority passed an interim order which was challenged in the Appeal before this Tribunal. This Tribunal considered the Notification dated 24.03.2020 and held that application filed on 10.08.2020 under Section 9 for a default of Rs.39 Lakhs was not maintainable and thus liable to be dismissed. In Para 8 and 9 following has been held:- "8. By Notification dated 24.03.2020, the threshold for entertaining an Application under Section 9 has been raised from Rs. 1 Lakh to Rs. 1 Crore. The Notification and the provisions for increasing threshold, shall operate prospectively i.e. after 24.03.2020. In the present case, the Application was filed by the Operational Creditor on 10.08.2....