TaxTMI 
TaxTMI 
2025 (3) TMI 338
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....d the Section 9 application filed by the Operational Creditor and admitted the Corporate Debtor into Corporate Insolvency Resolution Process ('CIRP' in short). Aggrieved by the impugned order, the present appeal has been preferred by the Appellant-suspended director of the Corporate Debtor. 2. Coming to the factual matrix of the present case, we notice that the Operational Creditor-Srinivasa Cloth Mills had business relationship with the Corporate Debtor-Chandrima Fashion Fabrics Private Limited for supply of fabric materials. The Operational Creditor had raised invoices for supply of goods between April 2019 to October 2019 and not having received payment had issued a Section 8 Demand Notice on 25.11.2019 following which a Settlement Deed was executed on 31.01.2020 mutually between the Operational Creditor and the Corporate Debtor. In terms of this Settlement Deed dated 31.01.2020, the Operational Creditor had agreed to accept Rs 1,14,84,292/- from the Corporate Debtor. After the execution of the Settlement Deed, the Corporate Debtor made certain part payments to the Operational Creditor which sum had also been accepted by them. However, the Operational Creditor issued another ....
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....t have been paid. It is submitted that CoC has not yet been constituted. In view of the aforesaid, we issue notice in the application. IRP is present in person and submits that CoC has not yet been constituted. List this appeal on 03.09.2024. Reply, if any, may be filed before the next date. In the meantime, CoC may not constituted." 5. On 03.09.2024, when the matter was again heard, the Operational Creditor admitted having received the entire settlement amount from the Corporate Debtor. The Resolution Professional also acknowledged receipt of his fees and expenses. This was recorded in the interim order passed by this Tribunal on 03.09.2024 which is as reproduced below: "Learned Counsel for the Appellant seeks liberty to file settlement with the Operational Creditor on record. He may do so during the course of the day. 2. Counsel for the Operational Creditor submits that the Operational Creditor has received the entire amount. 3. Resolution Professional has also submitted that he has received his fee and expenses. 4. As prayed, list the matter on 05.09.2024. Interim order to continue." ....
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....to return the amount received in settlement nor he will file Application under 12A by giving Form F. Learned counsel for the Respondent submits that agreement/settlement has failed. Heard learned counsel for the parties. Order reserved. Both the parties are at liberty to file their Short Notes of Submission of not more than two pages within a week." 8. Since the Respondent-Operational Creditor was steadfast in their refusal to withdraw the Section 9 application, we are proceeding to look into the matter on merit. 9. Shri Abhijeet Sinha, Ld. Sr. Counsel for the Appellant submitted that the Operational Creditor had admittedly received the entire settlement amount of Rs 64,53,250/- in terms of the Settlement Deed dated 29.09.2023. It was asserted that this categorical admission of the settlement amount was noted in clear terms in the order of this Tribunal dated 03.09.2024. The Operational Creditor even after admitting before the Appellate Tribunal that the entire amount as per Settlement Deed was fully received on 17.07.2024 has now resiled and is not providing the hard copy of the signed Settlement Deed. Admitting that there was slight delay on their part in ....
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....long with penalty was a legally enforceable right as per the Settlement Deed. 12. When we look at the impugned order, we find that the Adjudicating Authority has taken note of the Settlement Deed of 31.01.2020 between the two parties. However, the Adjudicating Authority has recorded the finding that it is not clear as to what payments were made by the Corporate Debtor to the Operational Creditor in respect of the Settlement Deed. It was also held that the default was more than the minimum amount stipulated under Section 4(1) of the IBC at the relevant point of time which was only Rs 1 Lakh. The Adjudicating Authority also held that since the Corporate Debtor had not raised any defence in terms of pre-existing dispute and there being debt and default, the Section 9 application was admitted. 13. We have duly considered the arguments advanced by the Learned Counsel for both the parties and perused the records carefully. 14. The short issue for our consideration is whether the Section 9 application filed by the Operational Creditor was not maintainable since it was premised on default which had arisen during the prohibited period of Section 10A. 15. It is the case of the Appel....
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....imposed by Section 10A in the present factual matrix, it would be relevant to notice the provisions of Section 10A of the IBC, 2016 which is reproduced as follows: Section 10A: Suspension of initiation of corporate insolvency resolution process. 10A. Notwithstanding anything contained in sections 7, 9 and 10, no application for initiation of corporate insolvency resolution process of a corporate debtor shall be filed, for any default arising on or after 25th March, 2020 for a period of six months or such further period, not exceeding one year from such date, as may be notified in this behalf: Provided that no application shall ever be filed for initiation of corporate insolvency resolution process of a corporate debtor for the said default occurring during the said period. Explanation- For the removal of doubts, it is hereby clarified that the provisions of this section shall not apply to any default committed under the said sections before 25th March, 2020. 18. As regards the ambit and scope of Section 10A, is concerned, the law is well settled in the landmark judgment of the Hon'ble Supreme Court in Ramesh Kymal Vs Siemens Gamesha Renewable ....
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.... Creditor. The total amount of outstanding default has to be recalculated by excluding the portion protected under Section 10A and when done so in the present case it falls below the threshold requirement. The immunity and protection offered by the legislative fiat of Section 10A in respect of any default committed by a Corporate Debtor cannot be wished away. No liability can be fastened on the Corporate Debtor for default committed during Section 10A period. 21. In the present case, when the portion of debt claimed by the Operational Creditor falling within the Section 10A period is excluded, the remaining debt does not fulfil the mandatory threshold of Rs 1 Cr. We are therefore of the considered view that the default amount having failed to cross the threshold bar as laid down by Section 4 of IBC, the Section 9 application of the Operational Creditor was rendered non-maintainable. 22. When operational debt above the threshold limit is neither due nor payable, Section 9 proceeding under IBC cannot be initiated at the instance of the Operational Creditor. Further, in terms of the objectives of the IBC and settled proposition of law as expressed and explained time and again by....