2023 (9) TMI 960 - AT - Insolvency and Bankruptcy

Maintainability of application u/s 7 of IBC - default prior to the Section 10 A period - Application barred by Section 10A or not - HELD THAT - The Adjudicating Authority has noticed and returned a finding that the default recorded in the NESL is 31.01.2020. The default on 31.01.2020 is obviously prior to the Section 10 A period. When default has been committed by the Corporate Debtor prior to Section 10A period, any default committed during the Section 10A period can not be held to bar the application which is filed on the basis of default prior to Section 10A and subsequent to Section 10A period. The Application which has been filed under Section 7 gives the detail for Part-IV of the Application which part of the appeal itself indicate the date of default as 31.01.2020. In appeal book, the date of default due date has been mentioned as 31st March, 2019 for the financial year 2018-19. Reading of the Application indicates that default was committed by the Corporate Debtor prior to Section 10A period. Thus, no error has been committed by the Adjudicating Authority in admitting Section 7 Application. There is no merit in the Appeal, the Appeal is dismissed.

Summary

Issues involved:
The appeal against the order admitting Section 7 Application filed by the Respondent, challenge of the application being barred by Section 10A, consideration of default dates, and the argument of restructuring indicating default post Section 10A period.

Admission of Section 7 Application:
The Adjudicating Authority admitted the Section 7 Application based on the proof of debt and default provided by the Financial Creditor, including the default date recorded in NESL. The default date being prior to Section 10A period, any default during Section 10A period cannot bar the application. The appointment of a proposed IRP was also found to meet legal requirements for admission.

Challenge of Section 10A Bar:
The Appellant argued that the application was barred by Section 10A, which was rejected by the Adjudicating Authority. The restructuring permitted on 17.08.2020 indicated a default post Section 10A period, but the Application detailed a default date of 31.01.2020, showing the default occurred before the Section 10A period. The Adjudicating Authority found no error in admitting the Section 7 Application, dismissing the appeal for lack of merit.