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2022 (8) TMI 1470 - AT - Insolvency and BankruptcyDismissal of Application filed by the Appellant under Section 9 of the Insolvency and Bankruptcy Code, 2016 - dismissed on the ground that it does not fulfil the threshold as provided in Section 4 of the Code - HELD THAT - Section 4 of the Code provided initially threshold of Rs. 1 Lakh which was substituted vide Notification dated 24th March, 2020 to 1 Crore. The Submissions which has been pressed by the Learned Counsel for the Appellant is that the notification being prospective as has been held by this Tribunal in Madhusudan Tantia 2020 (10) TMI 547 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, NEW DELHI it should not apply on the default which had occurred prior to 24th March, 2020 - this Tribunal categorically held that Notification dated 24th March, 2020 is only prospective and not a retrospective. This Tribunal held that the said notification will not apply to pending application of IBC. It is clear that Applications under Section 9 filed prior to 24th March, 2020 shall not be affected by the Notification dated 24th March, 2020 and notification being prospective shall apply to Applications filed thereafter. The provision is clear that the amendment shall come into force after its publication in the Gazette and Application filed thereafter has to fulfil the threshold as provided in Section 4 i.e. threshold of Rs. 1 Crore. The Application in the Appellant s case filed on 27th March, 2021 was rightly hit by threshold of Rs. 1 Crore as implemented with effect from 24th March, 2020. There is no error in the Order of the Adjudicating Authority - Appeal dismissed.
Issues:
- Appeal against dismissal of application under Section 9 of the Insolvency and Bankruptcy Code, 2016 for not meeting the threshold. - Interpretation of the notification dated 24th March, 2020 regarding the threshold amount under Section 4 of the Code. - Application of the notification to cases where default occurred before its implementation. Analysis: The judgment pertains to an appeal filed against the dismissal of an application under Section 9 of the Insolvency and Bankruptcy Code, 2016, on the grounds of not meeting the threshold requirement as per Section 4 of the Code. The application was filed by the Appellant for an amount of Rs. 20,27,659, which was rejected by the Adjudicating Authority. The main contention raised by the Appellant was that since the default occurred before 24th March, 2020, the notification dated 24th March, 2020, which increased the threshold from Rs. 1 Lakh to Rs. 1 Crore, should not be applicable to their case. The Appellant relied on a judgment of the Tribunal in a similar matter to support their argument. Upon considering the submissions and perusing the record, the Tribunal examined the implications of the notification dated 24th March, 2020, which increased the threshold amount under Section 4 of the Code from Rs. 1 Lakh to Rs. 1 Crore. The Tribunal referred to a previous judgment to establish that the notification was prospective and not retrospective in nature. It was clarified that the notification would not affect applications filed under Section 9 before 24th March, 2020, and would only apply to applications filed thereafter. The Tribunal emphasized that the amended provision of Section 4, with the increased threshold, would be applicable to applications filed post the notification's implementation date. The Tribunal concluded that the application filed by the Appellant on 27th March, 2021, was rightly subject to the threshold of Rs. 1 Crore, as per the amended provision effective from 24th March, 2020. The judgment highlighted that the relied-upon precedent did not support the Appellant's argument regarding the application of the unamended provision of Section 4 to cases where the default occurred before the threshold amendment. Consequently, the Tribunal upheld the dismissal of the Appellant's application by the Adjudicating Authority, thereby dismissing the appeal.
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