2022 (2) TMI 1176 - AT - Insolvency and Bankruptcy

Pecuniary jurisdiction for entertaining the Petition - amount involved in the appeal after 24.03.2020 - applicability of Section 4 of the I B Code - relevant date on which debt becomes dues - on the date of application or not - HELD THAT - In the present case, the Application in Form 5 before the Adjudicating Authority was filed by the Appellant/Applicant on 12.03.2021. The Notice of Demand was issued by the Appellant/Applicant to the Respondent/Corporate Debtor on 10.10.2020. The Respondent/Corporate Debtor had issued a Reply dated 02.11.2020 praying for 5-6 months time to pay the dues in question - It must be borne in mind that Section 4 of the I B Code specifies the minimum threshold limit of ₹ 1,00,00,000/- for the Default and in fact, the Central Government had raised the limit from ₹ 1,00,000/- to ₹ 1,00,00,000/- as per notification dated 24.03.2020. A mere running of the eye of the ingredients of Section 9 of the I B Code makes it lucidly clear that the date of initiation of Corporate Insolvency Resolution Process shall be on the date on which an application is made. To put it precisely, the date of default is not to come into operative play and the same ought not to be taken into account for anything but computing the period of limitation - in the present case, the application was made before the Adjudicating Authority by the Applicant/Appellant which came to be listed on 12.03.2021, however, the Demand Notice was issued on 10.02.2020, after the date of amendment to Section 4 of the Code. Even though the Appellant/Applicant had averred that ₹ 17,91,112/- being the outstanding sum claimed in the Application from the due date i.e. 29.12.2018 till 10.10.2020, in regard to the outstanding invoice dated 02.07.2018, the threshold limit under Section 10A of the Code for initiation of CIRP is ₹ 1 crore (vide Notification to Section 4 of the Code dated 24.03.2020), this Tribunal taking note of the fact that the Section 4 of the Code which specifies the minimum threshold of ₹ 1 crore, the same shall apply and since the sum claimed in the Application was ₹ 17,91,112/-, below the sum of ₹ 1 crore and the present application having been filed on 12.03.2021, before the Adjudicating Authority after the Notification dated 24.3.2020 in and by which, the threshold limit was increased from ₹ 1 lakh to ₹ 1 Crore, this Tribunal comes to an inevitable, inescapable and consequent conclusion that the Application filed by the Appellant is not per se maintainable because of the lack of pecuniary jurisdiction to the Adjudicating Authority, (National Company Law Tribunal, Division Bench, Court No.1, Chennai). Appeal dismissed.

Summary

Issues Involved:
1. Pecuniary Jurisdiction
2. Notification Applicability (Prospective vs. Retrospective)
3. Principles of Natural Justice
4. Date of Default vs. Date of Application

Issue-wise Detailed Analysis:

1. Pecuniary Jurisdiction:
The Adjudicating Authority dismissed the petition due to lack of pecuniary jurisdiction, as the claimed amount was ?17,91,112/-, which is below the threshold limit of ?1,00,00,000/- set by the Notification dated 24.03.2020. The Tribunal upheld this decision, emphasizing that the application was filed after the threshold increase, making it non-maintainable.

2. Notification Applicability (Prospective vs. Retrospective):
The Appellant argued that the Notification dated 24.03.2020 should apply prospectively, meaning defaults before this date should adhere to the previous threshold of ?1,00,000/-. The Tribunal, referencing its own judgment in Madhusudan Tantia Vs Amit Chauraria and Another, concluded that the Notification is prospective and does not apply to pending applications filed before its issuance. However, since the application was filed after the Notification, the new threshold limit applies.

3. Principles of Natural Justice:
The Appellant contended that the Adjudicating Authority violated principles of natural justice by not providing an opportunity to present its case and not referring to judicial precedents. The Tribunal did not find merit in this argument, focusing instead on the adherence to the updated pecuniary jurisdiction requirements.

4. Date of Default vs. Date of Application:
The Respondent argued that the relevant date for determining the applicability of the threshold limit is the date of filing the application, not the date of default. The Tribunal agreed, stating that Section 4 of the I&B Code, which sets the minimum threshold, applies as it stood on the application date. The Tribunal also referenced the Hon’ble Supreme Court's decision in Ramesh Kymal V. Siemens Ganesa Renewable Power Pvt Ltd, which clarified that the initiation date is when the application is made, not the default date.

Appraisal:
The Tribunal noted that the Appellant's application was filed on 12.03.2021, after the Notification date, and the claimed amount was below the ?1,00,00,000/- threshold. Therefore, the application was not maintainable due to lack of pecuniary jurisdiction. The Tribunal emphasized that a litigant must adhere to the current law, and changes in law are procedural.

Result:
The Tribunal dismissed the Company Appeal (AT)(CH)(Ins) No.243/2021 due to lack of pecuniary jurisdiction, affirming the Adjudicating Authority's decision. No costs were awarded.