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2025 (4) TMI 318 - AT - IBCDismissal of Section 9 application filed by the Operational Creditor - pre-existing dispute - date of default fell within the Section 10A period - HELD THAT - On perusal of Part IV of Form 5 as annexed in the Section 9 petition it is found that the dates of default have been clearly shown as 03.05.2020 15.08.2020 and 01.01.2021 in respect of the outstanding operational debt claimed by the Operational Creditor. The same dates of default have also been mentioned in Form 3 of the Demand Notice dated 27.01.2022 as is seen at page 170 of APB. Whether these three dates of default mentioned in Section 8 Demand Notice and Section 9 application fall within the purview of the prohibited period prescribed under Section 10A and consequentially hit by the bar imposed by Section 10A of the IBC? - HELD THAT - The ambit and scope of Section 10A has been well settled in the landmark judgment of the Hon ble Supreme Court in Ramesh Kymal Vs Siemens Gamesha Renewable Power Pvt. Ltd. 2021 (2) TMI 394 - SUPREME COURT wherein it was held that no application for initiation of CIRP under Section 9 can be initiated for default which is committed during the Section 10A period - In the present case the dates of default of the claims basis which the Section 9 application has been filed the dates indisputably fall during the prohibited period of Section 10A of IBC. The dates of default in the present facts of the case fell between 03.05.2020 and 01.01.2021 which dates were hit by Section 10A of the IBC. In terms of the statutory provision of Section 10A and as held by the Hon ble Supreme Court in Ramesh Kymal judgment no default falling within this period can form the basis for initiating CIRP since the default which occur during the Section 10A period cannot be included in the calculation of debt and default for initiating CIRP. No liability can be fastened on the Corporate Debtor for default committed during Section 10A period. The Adjudicating Authority has therefore not committed any error in holding the Section 9 application as non-maintainable. There are no error in the impugned order holding that since the date of default falls within the Section 10A period Section 9 proceedings under IBC cannot be initiated at the instance of Operational Creditor. The contention of the Appellant that the Adjudicating Authority should have modified the date of default after examining the records is an absurd proposition. If the date of default required any change or modification the onus was on the Appellant to have sought leave of the Adjudicating Authority to file an amendment application. To expect the Adjudicating Authority to have amended the date of default without any amendment application or specific pleading made for such a modification would tantamount to the Adjudicating Authority exceeding its jurisdiction which cannot be countenanced. Conclusion - The Section 9 application is non-maintainable due to the dates of default falling within the Section 10A period.The Adjudicating Authority correctly dismissed the application without amending the dates of default. There are no merit in the Appeal. The Appeal is dismissed.
ISSUES PRESENTED and CONSIDERED
The core legal questions considered in this judgment include:
ISSUE-WISE DETAILED ANALYSIS 1. Maintainability of the Section 9 Application under Section 10A of IBC Relevant Legal Framework and Precedents: Section 10A of the IBC provides a suspension on the initiation of the corporate insolvency resolution process (CIRP) for defaults arising on or after March 25, 2020, for a period of six months, extendable up to one year. The section explicitly prohibits any application for defaults occurring during this period. The Supreme Court's decision in Ramesh Kymal Vs Siemens Gamesha Renewable Power Pvt. Ltd. established that defaults during this period cannot be grounds for initiating CIRP. Court's Interpretation and Reasoning: The Tribunal examined the dates of default mentioned in the Section 9 application and the demand notice, noting that they fell within the Section 10A period. The Tribunal referenced the Supreme Court's decision in Ramesh Kymal to affirm that defaults during the Section 10A period cannot be used to initiate CIRP. Key Evidence and Findings: The dates of default were listed as May 3, 2020, August 15, 2020, and January 1, 2021. These dates were consistently mentioned in both the demand notice and the Section 9 application. Application of Law to Facts: Given the dates of default fell within the prohibited period under Section 10A, the Tribunal concluded that the Section 9 application was non-maintainable. Treatment of Competing Arguments: The Appellant argued that the Adjudicating Authority should have independently verified the dates of default. However, the Tribunal found this argument unpersuasive, stating that any need for modification should have been raised by the Appellant through an amendment application. Conclusions: The Tribunal upheld the Adjudicating Authority's decision, confirming the non-maintainability of the Section 9 application due to the dates of default falling within the Section 10A period. 2. Responsibility for Amending Dates of Default Relevant Legal Framework and Precedents: The Tribunal emphasized that the responsibility to amend or correct dates of default lies with the party filing the application. The Adjudicating Authority is not obligated to modify dates without a formal request from the applicant. Court's Interpretation and Reasoning: The Tribunal rejected the Appellant's contention that the Adjudicating Authority should have amended the dates independently. It was deemed an unreasonable expectation and beyond the Authority's jurisdiction without a formal amendment application. Key Evidence and Findings: The Appellant did not file any amendment application to correct the dates of default. Application of Law to Facts: Without a formal request to amend the dates, the Tribunal found no error in the Adjudicating Authority's reliance on the dates provided in the application and demand notice. Treatment of Competing Arguments: The Appellant's argument for independent amendment by the Adjudicating Authority was dismissed as lacking merit and procedural basis. Conclusions: The Tribunal concluded that the Adjudicating Authority acted correctly in not amending the dates of default sua sponte. SIGNIFICANT HOLDINGS Preserve Verbatim Quotes of Crucial Legal Reasoning: The Tribunal noted, "No liability can be fastened on the Corporate Debtor for default committed during Section 10A period." Core Principles Established:
Final Determinations on Each Issue:
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