2021 (12) TMI 1054 - Tri - Insolvency and Bankruptcy

Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - existence of debt and dispute or not - minimum threshold limit for filing an application under sections 7, 9 and 10 of the IBC, 2016 - HELD THAT - In proceedings before the Tribunal, when a liberty is being granted to a person, it goes without saying that the said liberty can be availed only if it is in consonance within the procedure established under the law for the time being in force. It is to be noted that as on the date when the liberty was granted to the operational creditor, the minimum threshold limit for filing an application under sections 7, 9 and 10 of the IBC, 2016 was ₹ 1 lakh. However, the Central Government through the Ministry of Corporate Affairs vide Notification No. S. O. 1205(E), dated March 24, 2020 has increased the minimum threshold limited from ₹ 1 lakh to ₹ 1 crore. Hence, on and from March 24, 2020 all the applications filed under sections 7, 9 and 10 of the IBC, 2016 before this Tribunal are required to satisfy the said condition and the debt amount due as claimed in Part-IV of the application is required to cross the threshold limit of ₹ 1 crore. A liberty granted by this Tribunal, cannot act in derogation or in violation of the law which is prevailing time being in force - a liberty being granted to the operational creditor to file a fresh application in case a default occurs cannot be stretched to such an extent that would circumvent the law which is prevailing as on date. It is now trite, that the Notification issued by the Central Government vide S. O. No. 1205(E), dated March 24, 2020 by increasing the pecuniary jurisdiction of this Tribunal from ₹ 1 lakh to ₹ 1 crore would operate prospectively, that is to say the said notification would be applicable to the matters which are filed before this Tribunal on and from March 24, 2020 - the application filed by the operational creditor before this Tribunal falls well short of the pecuniary limit of ₹ 1 crore and as a consequence thereof, the application is liable to be dismissed. Application dismissed.

Issues:
1. Application filed by operational creditor seeking initiation of corporate insolvency resolution process against corporate debtor under section 9 of IBC, 2016.
2. Allegations of irregular salary payments, resignation, pending salary dues, and interest by operational creditor against corporate debtor.
3. Failure of corporate debtor to make payment as per joint memo, leading to demand notice and subsequent application by operational creditor.
4. Counter arguments by corporate debtor regarding maintainability of the application based on increased threshold limit and alleged communication of agreement to pay pending dues.
5. Dispute regarding notice of dispute issued by corporate debtor and suppression of facts by operational creditor.
6. Interpretation of the effect of liberty granted by the Tribunal in a previous case in light of increased threshold limit under Notification No. S. O. 1205(E), dated March 24, 2020.
7. Analysis of the prospective application of the increased pecuniary jurisdiction under the Notification by the Central Government.

Detailed Analysis:
1. The operational creditor filed an application under section 9 of the IBC, 2016 against the corporate debtor, citing irregularities in salary payments, resignation, and pending dues totaling ?26,66,000. The corporate debtor failed to make the payment as per a joint memo, leading to a demand notice and subsequent application by the operational creditor.
2. The corporate debtor argued against the maintainability of the application, citing an increased threshold limit of ?1 crore under Notification No. S. O. 1205(E), dated March 24, 2020. They claimed to have communicated an agreement to pay the pending dues, subject to an undertaking from the operational creditor.
3. The Tribunal analyzed the effect of the liberty granted to the operational creditor in a previous case in light of the increased threshold limit. It concluded that the liberty granted cannot circumvent the prevailing law and that the increased threshold limit must be satisfied for applications filed after March 24, 2020.
4. Referring to the decision in Madhusudan Tantia v. Amit Choraria, the Tribunal determined that the increased pecuniary jurisdiction operates prospectively from March 24, 2020. Therefore, the application filed by the operational creditor fell short of the revised pecuniary limit and was dismissed accordingly.

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