2022 (6) TMI 1185 - 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 - threshold limit applicable on debt arising post 24.03.2020 - Section 4 of the IBC, 2016 - HELD THAT - On perusal of records it is seen that the present IB/1424/ND/2019 had been revived vide order dated 31.03.2022 in IA 1399/ND/2022 and the amount of debt claimed by the Applicant in the said application was Rs. 4,97,902/- as on 31.03.2022. Therefore, the notification of MCA dated 24.3.2020, shall be applicable on the present application. As per notification of MCA dated 24.3.2020, the threshold limit to be considered for application filed u/s. 7 or 9 will be Rs. 1 Crore. This threshold limit will be applicable for applications filed on or after 24.3.3020 even if the debt is of date earlier than 24.03.2020. Since the present application under section 9 of the code had been revived on 31.03.2022, therefore the threshold limit of Rs. 1 Crore of debt will be applicable in the given facts. The intent of legislation to fix the threshold limit was to save the Companies from being rotted to NCLT for initiation of CIRP proceedings, due to COIVD-19 effect. The said notification was always prospective in nature but having retrospective repercussion also. Hence, even if the amount was due prior to 24.03.2020 and the demand notice was send prior to that the petition u/s. 7 or 9 of the Code cannot be filed against the Corporate Debtor. Henceforth, for the above-mentioned reasons, the present Application cannot be admitted. Application dismissed being not maintainable.

Summary

Issues:
- Application under section 9 of the Insolvency and Bankruptcy Code, 2016 for initiation of Corporate Insolvency Resolution Process.
- Maintainability of the application by the operational creditor.
- Dispute regarding the outstanding debt and non-payment by the corporate debtor.
- Threshold limit for debt arising post 24.03.2020 and its applicability on the present application.

Analysis:
1. Application under section 9 of the Insolvency and Bankruptcy Code, 2016:
The applicant, an operational creditor, filed an application seeking initiation of Corporate Insolvency Resolution Process against the respondent company, claiming to be the corporate debtor. The applicant detailed the transactions leading to the petition, including the unpaid invoice, settlement agreements, and subsequent non-payment by the corporate debtor.

2. Maintainability of the application:
The corporate debtor raised objections to the application's maintainability, citing reasons such as being time-barred, lack of authority letter, incomplete filing as per Section 9 of the Code, and a pre-existing dispute regarding goods supplied. The parties presented their contentions, and the Tribunal examined the compliance with the provisions of the Code.

3. Dispute regarding the outstanding debt:
The operational creditor alleged non-payment of a significant amount by the corporate debtor despite follow-ups and a demand notice. The corporate debtor disputed the claim, asserting that the debt was time-barred, and there were unresolved issues concerning the quality of goods supplied. The Tribunal considered these contentions and the evidence presented by both parties.

4. Threshold limit for debt post 24.03.2020:
The Tribunal analyzed the threshold limit applicable to the debt arising post 24.03.2020 as per the notification of the Ministry of Corporate Affairs. Referring to relevant judgments, the Tribunal clarified that the threshold limit of Rs. 1 crore applied to applications filed under section 9 of the Code after the specified date, irrespective of the debt's origin. Based on this interpretation, the Tribunal found that the operational creditor's claim fell below the threshold limit, rendering the application not maintainable.

5. Conclusion:
Considering the threshold limit and the retrospective application of the notification, the Tribunal dismissed the application, ruling it as not maintainable due to the debt amount being below the prescribed threshold. The judgment highlighted the legislative intent behind setting the threshold to prevent unnecessary CIRP proceedings during the COVID-19 impact, emphasizing the prospective nature with retrospective implications. The order was served to the parties, and the file was consigned to the record room.