TaxTMI 
TaxTMI 
2026 (2) TMI 541
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....he Corporate Debtor-Chetanya Buildcon Pvt. Ltd. on the ground that the outstanding amount fell below the threshold prescribed under Section 4 of IBC. Aggrieved by the impugned order, the present appeal has been preferred by the ex-Director of the Corporate Debtor. 2. Coming to the sequence of events facts of the present case, the Appellant had entered into an Agreement to Sell ('ATS' in short) dated 16.02.2017 with Saluja Construction Company Limited which went through several iterations until a fresh ATS dated 27.12.2018 was entered into with the Respondent- Corporate Debtor in respect of a property situated at Friends Colony, New Delhi. Thereafter the ATS was cancelled through a Cancellation Agreement dated 30.01.2020, under which the Respondent undertook to refund a sum of Rs. 2.65 Cr which was payable in 3 tranches viz Rs 65 lakhs in March 2020 and Rs 1 Cr each in March and April 2020. It was also agreed that applicable interest of 9% p.a would be payable on the outstanding amount from 01.10.2019 onwards. However, as the Respondent failed to discharge the said obligation within the stipulated time, the Appellant filed a Section 7 petition on 23.05.2024, being CP IB No. 359 o....
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....on 7 petition by them, basis liberty given by this Tribunal, adequate care was taken to exclude the debt liability which became due and payable during the Section 10A period. Accordingly, the second Section 7 petition was filed with an amount of default of Rs 2.65 Cr. as principal amount alongwith interest liability of Rs. 93.41 lakhs for the period 01.04.2021 to 01.03.2025 which was beyond the Section 10A period. It was asserted that the interest liability for the period 25.03.2020 to 25.03.2021 which fell during the Section 10A period was consciously excluded to ensure that the second Section 7 petition was not hit by Section 10A. However, the Adjudicating Authority by erroneously held that the second Section 7 petition could have only included the interest amount of Rs 93.41 lakh and not the principal amount of Rs 2.65 Cr. because the latter amount fell in default during the excluded period under Section 10A though it was a continuing default. The Adjudicating Authority had thus wrongly held the Section 7 petition to be non-maintainable on the ground that the default amount fell below the threshold limit. 4. It was further contended that when the definition of the words "debt....
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.... of the principal amount on the respective due dates constituted a completed default and this is not a case of continuing default. 6. We have duly considered the arguments advanced by the Learned Counsel for the parties and perused the records carefully. 7. The short question before us for our consideration is whether the Section 7 application filed by the Appellant was not maintainable since it was predicated on a default which had arisen during the prohibited period of Section 10A and that whether on exclusion of the portion of debt and default which arose during the Section 10A embargo, the default amount boils down to a figure below the threshold limit prescribed by Section 4 of IBC. 8. To answer the above issue outlined by us, it would be appropriate for us to take notice of Section 10A of the IBC which reads as under: 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....
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....1.10.2019 onwards till the actual date of payment. 11. This brings us to the relevant portion of Part-IV of the Section 7 application filed vide CP No. 234 of 2025 which is as extracted below: Part IV PARTICULARS OF FINANCIAL DEBT 2. TOTAL AMOUNT CLAIMED TO BE IN DEFAULT AND THE DATE ON WHICH DEFAULT OCCURRED (ATTACH THE WORKING FOR COMPUTATION OF AMOUNT AND DATES OF DEFAULT IN TABULAR FORM) Rs. 2,65,00,000/- (Rupees Two Crore Sixty-five Lakhs Only) along with interest of Rs.93,41,250 (Rupees Ninety-three lacs forty-one thousand and two hundred fifty Only) (computed as per the agreed terms) for the period from 01 April 2021 to 01 March 2025, excluding the period exempt under S.10A of the IBC. The date of default in the present case would be 01 April 2021. When we look at the Part-IV above of the second Section 7 petition which is under consideration, it is clear that the principal amount of the debt claimed is again Rs 2.65 Cr. which is the same amount as the one claimed in the first Section 7 petition. Needless to add, the principal amount having remained the same, it can be safely concluded that the default had arisen in March, April and May 2020, as was o....
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....020 which fell during the Section 10A protected period and therefore the Appellant stood squarely barred from including this amount in the second Section 7 petition. The Appellant having themselves pleaded in Part-IV of the first Section 7 application that the default occurred in March, April, and May 2020, the subsequent plea of continuing default is an impermissible afterthought aimed at circumventing Section 10A of the IBC. In support of their contention, reliance has been placed on the judgment of the Hon'ble Supreme Court in Ramesh Kymal judgment supra which categorically held that no CIRP application shall ever be filed for a default occurring during the Section 10A period. Reliance was also placed on the judgment of this Tribunal in Manish Mukim v. Ms. Rakhi & Anr. in CA(AT)(Ins.) No. 617 of 2023 which held that defaults cropping up during the Section 10A period enjoy complete immunity and must be excluded while computing debt and default. However while asserting that the principal amount of Rs 2.65 could not be added, on the interest amount claimed by the Appellant, it was conceded that the calculation was in order since this revised amount excluded the liability which aros....
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....r sub-Section (1) of Section 8, if the operational creditor does not receive payment from the corporate debtor or a notice of the dispute under sub- Section (2) of Section 8. The appellant having specified 30 April 2020 as the date of default, this appeal must proceed on that basis. It is necessary to make this clear at the outset because an attempt has been made during the course of the submissions by Mr Neeraj Kishan Kaul, learned Senior Counsel appearing on behalf of the appellant, to submit that though the demand notice mentions the date of default as 30 April 2020, the "actual first date of default" was 21 January 2020 when the letter of resignation was tendered and that the "second date of default' was 23 March 2020 when the sixty days' notice period from the letter of resignation submitted by the appellant concluded. This attempt to set back the date of default to either 21 January 2020 or 23 March 2020 is plainly untenable for the reason that it is contrary to the disclosure made by the appellant in the demand notice which has been issued in pursuance of the provisions of Section 8(1) and Section 9 of the IBC. The demand notice triggers further actions which are adopted....