2023 (5) TMI 1245 - AT - Insolvency and Bankruptcy

Maintainability of application - barred in terms of Section 10(A) of the Insolvency and Bankruptcy Code, 2016 - date of default - HELD THAT - Prima facie there is a merit in the argument of the Counsel for Appellant and therefore we issue a formal Notice to the Respondents for 27th June, 2023. The Appellants shall deposit the requisite process fee etc. for effecting service upon the Respondents. In the meantime, operation of the Impugned Order shall remain stayed.

Summary

Issues involved:
The appeal challenges the Order admitting an Application under Section 7 by the Respondent UCO Bank for the resolution of a specified amount. The main issue revolves around the "date of default" mentioned in the application and its implications under the Insolvency and Bankruptcy Code, 2016.

Summary:

Regarding the "date of default":
The Counsel for the Appellant argued that the application under Section 7 was not maintainable if the "date of default" was indeed 01.11.2020, citing Section 10(A) of the Insolvency and Bankruptcy Code, 2016. This argument was supported by referencing a Supreme Court decision in the case of 'Ramesh Kymal Vs. Siemens Gamesha Renewable Power Private Limited', which emphasized that the "date of default" cannot be shifted.

Counter-argument by Respondent's Counsel:
In response, the Counsel for the Respondent contended that the cited Supreme Court decision was specific to applications under Section 9, where the notice under Section 8 is mandatory. They argued that in applications under Section 7, the "date of default" is not crucial and can be considered as the date of NPA or the issuance of the recovery certificate by the Debt Recovery Tribunal.

Tribunal's Decision:
After hearing arguments from both sides, the Tribunal found merit in the Appellant's argument regarding the "date of default." Consequently, a formal Notice was issued to the Respondents for further proceedings on 27th June 2023. The Tribunal also ordered the stay of the Impugned Order's operation until further developments.