2022 (10) TMI 1273 - AT - IBC

Maintainability of application filed u/s 9 of the Insolvency and Bankruptcy Code 2016 (IBC) by the appellant was barred by Section 10A of IBC - HELD THAT - On looking into the proviso to Section 10A the expression is provided that no Application shall ever be filed for initiation of CIRP of a Corporate Debtor for the said default occurring during the said period thus default which has been committed from 16.09.2020 to 28.02.2021 no Application could have ever been filed. The Appellant s submission that cumulatively application can be filed taking all amounts cannot be accepted. The said submission goes contrary to the statutory scheme delineated by Section 10A proviso. When Appellant could not have filed the Application for the default which was committed the Adjudicating Authority did not commit any error in rejecting the Application as barred by Section 10A of the Code. In so far as the last two default on 31st March 2021 and 30 th April 2021 is concerned the Adjudicating Authority has noticed that the total amount of the aforesaid two defaults is only Rs. 37, 50, 000/- which is below the threshold as provided under Section 4 of the Code. Conclusion - Section 10A creates a permanent bar on initiating CIRP for defaults occurring within the specified period and emphasizes the necessity of meeting the threshold requirement under Section 4 for defaults outside this period. There are no error has been committed in rejecting the Application filed under Section 9 of the Code - appeal dismissed.

2025 (2) TMI 71 - AT

ISSUES PRESENTED and CONSIDERED

The core legal questions considered in this judgment are:

Whether the application filed under Section 9 of the Insolvency and Bankruptcy Code, 2016 (IBC) by the appellant was barred by Section 10A of the Code.
Whether the cumulative defaults, including those occurring during the period specified in Section 10A, can be considered for initiating the corporate insolvency resolution process (CIRP).
Whether the defaults occurring on 31st March 2021 and 30th April 2021 meet the threshold requirement under Section 4 of the IBC.

ISSUE-WISE DETAILED ANALYSIS

1. Applicability of Section 10A of the IBC

Relevant legal framework and precedents: Section 10A of the IBC suspends the initiation of CIRP for defaults arising on or after 25th March 2020, for a period specified therein. The proviso to Section 10A explicitly states that no application shall ever be filed for defaults occurring during this period.
Court's interpretation and reasoning: The Tribunal interpreted the proviso to Section 10A as a clear legislative intent to bar any CIRP application for defaults occurring during the specified period. The Tribunal emphasized that the language "no application shall ever be filed" indicates a permanent bar on such applications.
Key evidence and findings: The payment schedule outlined in the Sale Agreement showed defaults occurring between 16th September 2020 and 28th February 2021, which fall within the period specified in Section 10A.
Application of law to facts: The Tribunal applied Section 10A to conclude that defaults occurring during the specified period cannot be considered for initiating CIRP, thus barring the appellant's application.
Treatment of competing arguments: The appellant argued for a cumulative consideration of all defaults, including those during the Section 10A period. The Tribunal rejected this argument, stating it contradicts the statutory scheme of Section 10A.
Conclusions: The Tribunal concluded that the application under Section 9 was rightly rejected by the Adjudicating Authority as barred by Section 10A.

2. Consideration of Defaults Beyond Section 10A Period

Relevant legal framework and precedents: Section 4 of the IBC specifies the minimum threshold for default to initiate CIRP.
Court's interpretation and reasoning: The Tribunal noted that the defaults on 31st March 2021 and 30th April 2021 amounted to Rs. 37,50,000/-, which is below the threshold specified under Section 4.
Key evidence and findings: The Tribunal considered the amounts of the last two defaults separately and found them insufficient to meet the threshold requirement.
Application of law to facts: The Tribunal applied Section 4 to determine that the application could not be sustained based on the defaults outside the Section 10A period due to the insufficiency of the amount.
Treatment of competing arguments: The appellant did not provide arguments to counter the threshold issue for the defaults on 31st March 2021 and 30th April 2021.
Conclusions: The Tribunal concluded that the application was not maintainable due to the failure to meet the threshold requirement under Section 4.

SIGNIFICANT HOLDINGS

Preserve verbatim quotes of crucial legal reasoning: The Tribunal stated, "When Appellant could not have filed the Application for the default which was committed, the Adjudicating Authority did not commit any error in rejecting the Application as barred by Section 10A of the Code."
Core principles established: The judgment reaffirms the principle that Section 10A creates a permanent bar on initiating CIRP for defaults occurring within the specified period and emphasizes the necessity of meeting the threshold requirement under Section 4 for defaults outside this period.
Final determinations on each issue: The Tribunal dismissed the appeal, upholding the Adjudicating Authority's decision to reject the application under Section 9 of the IBC as barred by Section 10A and for failing to meet the threshold requirement under Section 4.