2022 (2) TMI 672 - Tri - Insolvency and Bankruptcy

Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - Threshold amount of debt - HELD THAT - As can be seen from Notification No. S.O. 1205 (E) dated 24.3.2020, the threshold limit of debt has been raised from ₹ 1 lakh to ₹ 1 crore. Accordingly, the application under section 7 or section 9 will be admissible only if the debt in default is more than the threshold amount of ₹ 1 crore - Since the present application under section 9 was filed on 15.09.2021, which is after 24.03.2020, therefore the threshold limit of ₹ 1 crore of debt will be applicable in the present case. This application stands dismissed.

Summary

Issues:
- Adjudication of an application under Section 9 of the Insolvency & Bankruptcy Code 2016 against a Corporate Debtor.
- Determination of the threshold amount of debt for admissibility of the application post the notification raising the limit to ?1 crore.

Adjudication of Application under Section 9:
The case involved an application filed by an Operational Creditor against a Private Limited Company, the Corporate Debtor, seeking to initiate the Corporate Insolvency Resolution Process under Section 9 of the Insolvency & Bankruptcy Code 2016. The Operational Creditor prayed for the admission of the application, declaration of a moratorium, and appointment of an Interim Resolution Professional. The application detailed the debt amount, outstanding dues, particulars of operational debt, and evidence of default, including purchase orders, invoices, and email correspondence acknowledging the debt. The Operational Creditor, an authorized distributor of orthodontic materials, had raised invoices against the Corporate Debtor for materials delivered between April 2017 and March 2018, which the Corporate Debtor failed to honor despite acknowledging the debt in response to an email inquiry. Subsequently, a Demand Notice was issued, followed by the application for CIRP initiation due to non-response and non-repayment by the Corporate Debtor.

Threshold Amount of Debt for Admissibility:
The Tribunal deliberated on the threshold amount of debt for admissibility of the application under Section 9 post the notification issued by the Ministry of Corporate Affairs raising the limit to ?1 crore. The Central Government's notification specified the new threshold amount, making it applicable for applications filed under Section 7 or 9 on or after the specified date. Citing a precedent, the Tribunal emphasized that the increased threshold of ?1 crore would be applicable for applications filed after the notification date, even if the debt pertained to a period before the notification. As the application in question was filed post the notification date, the Tribunal concluded that the threshold limit of ?1 crore for debt would apply, leading to the dismissal of the application.

In conclusion, the Tribunal dismissed the application under Section 9 of the IBC 2016 against the Corporate Debtor based on the determination that the threshold limit for debt admissibility had been raised to ?1 crore by a notification, which was applicable to applications filed after the specified date, even if the debt was from a prior period. The detailed analysis of the debt, default, and legal precedents formed the basis for the Tribunal's decision, emphasizing the importance of compliance with the revised threshold amount for maintaining the application's admissibility.