2022 (5) TMI 753 - Tri - Insolvency and Bankruptcy

Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - existence of debt and dispute or not - service of demand notice - HELD THAT - Considering the facts and circumstances of the instant case in a conspectus fashion holds unhesitatingly that the notification dated 24/03/2020 of the Ministry of Corporate Affairs, Government of India, is prospective in nature and it is not retrospective or retroactive in nature. Further, the said notification will not apply to the pending applications filed before the concerned Adjudicating Authority' (Authorities), under IBC (waiting for admission), prior to the issuance of the aforesaid notification, as opined by this Tribunal. Viewed in the above prospectives, the conclusion arrived at by the Adjudicating Authority' in the impugned order to the effect that the notification dated 24/03/2020 of the Ministry of Corporate Affairs, Government of India, shall be considered as prospective and not retrospective and the finding that there was no payment on the side of 'Corporate Debtor' after receipt of Demand Notice, no pre-existing dispute also alleged or proved and ultimately admitting the application filed by the 2nd Respondent/Operational Creditor are free from legal infirmities. Petition dismissed.

Issues:
1. Application filed under Section 9 of the Insolvency and Bankruptcy Code, 2016 for initiation of Corporate Insolvency Resolution Process against a Corporate Debtor.
2. Dispute regarding the threshold limit for initiating Corporate Insolvency Resolution Process.
3. Applicability of notification dated 24/03/2020 issued by the Ministry of Corporate Affairs regarding the threshold limit increase from one lakh to one crore.
4. Interpretation of judgments by NCLAT regarding the retrospective or prospective nature of the notification.
5. Consideration of judgments by NCLAT in similar cases for determining the threshold limit for applications filed after 24/03/2020.

Analysis:
1. The application was filed by the Operational Creditor against the Corporate Debtor for a claimed debt of Rs. 8,21,294 under Section 9 of the IBC. The Operational Creditor had provided services to the Corporate Debtor and issued invoices for the same. Despite a demand notice and notice of hearing, the Corporate Debtor did not repay the debt or respond to the notices.
2. The Corporate Debtor contended that the notification dated 24/03/2020 increased the threshold limit for initiating CIRP to one crore, which was below the claimed debt amount in this case. The Corporate Debtor argued that the notification should apply retroactively to their case.
3. The Tribunal analyzed the NCLAT judgment in the case of Madhusudhan Tantia Versus Amit Choraria, which held that the notification was prospective and not retrospective. The Tribunal noted that the judgment was relevant for applications filed before the amendment in section 4 of the IB Code, which was not the case in the present matter.
4. Another NCLAT judgment in the case of Jumbo Paper Products versus Hansraj Agrofresh Pvt. Ltd. clarified that the threshold limit of one crore would apply to applications filed after 24/03/2020, even if the debt was incurred earlier. The Tribunal found this judgment applicable to the present case, where the application was filed after the notification date.
5. Considering the above judgments and the date of application filing, the Tribunal concluded that the application was not maintainable as the default amount was below the threshold limit prescribed under section 4 of the IB Code. Therefore, the petition was dismissed with no cost.

In conclusion, the judgment delves into the intricacies of the threshold limit for initiating Corporate Insolvency Resolution Process post the notification dated 24/03/2020, interpreting relevant NCLAT judgments to determine the applicability of the threshold limit to the present case.

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