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2024 (4) TMI 867 - AT - Insolvency and BankruptcyAdmission of Section 9 application filed by Operational Creditor - time limitation - Section 10A of IBC - HELD THAT - Section 10A of the Code prohibited filing an application under Sections 7, 9 10 for any default arising on or after 25.03.2020. The prohibition continues for one year from 25.03.2020 i.e., upto 24.03.2021. On looking into the Part IV of the application as well as the statement showing particulars of claim it is clear that apart from lease rental from April 2021, all claim was within the 10A period. For lease rental of April 2021, no CIRP can be commenced since it did not fulfil the threshold. The Adjudicating Authority was of the view that Company Petition is hit by Section 10A and not maintainable. Despite the above observation, the Adjudicating Authority proceeded to admit Section 9 application by the impugned order. It is further relevant to notice that in paragraph 5 of the order dated 09.02.2024, Adjudicating Authority noted the Operational Creditor s admission, that amount falls within a period stipulated in Section 10A of the Code - Section 10A came to considered by the Hon ble Supreme Court in Ramesh Kymal Vs. Siemens Gamesa Renewable Power (P) Ltd. 2021 (2) TMI 394 - SUPREME COURT , Hon ble Supreme Court after noticing the legislative scheme noticed that Section 10A provides that no application for initiation of CIRP can be initiated for a default occurring on or after 25.03.2020. The Hon ble Supreme Court held that the expression shall never be filed with the clear indicator that the intent of legislature is to bar the institution of any application . When there is a bar of initiation of an application, the mere fact that in the Reply filed of the Corporate Debtor no plea of the Bar was taken is in consequential. Further, Adjudicating Authority itself is aware of plea of Section 10A and has rejected the Amendment Application filed by the Operational Creditor on the ground that Company Petition is barred by Section 10A. Adjudicating Authority committed an error in proceeding to admit Section 9 application without adverting to the bar under Section 10A. Although in paragraph 5 itself the bar of Section 10A was noted which was admission of the Operational Creditor itself. The purpose and object of Section 9 sub-Section (1) Section 10A is entirely different. The scheme of the Sections 8 9 clearly indicate that Demand Notice can be issued only when there is a default, thus default has to be prior to Demand Notice. In the present case Demand Notice was issued dated 20.04.2021 and the default in the Part IV mentions from March 2020. The lease rental period which was claimed in the Part IV was from March 2020 till April 2021 - even if the lease rental of April 2021 is excluded, the entire claim of Operational Debt falls within 10A period and no application ever could have been filed for the default of the lease rental during the 10A period. The application filed by the Operational Creditor was clearly hit by Section 10A and ought not to have been admitted. Adjudicating Authority committed error in admitting Section 9 application disregarding the bar under Section 10A - The application filed by the Operational Creditor under Section 9 was clearly barred by Section 10A, and the Adjudicating Authority committed an error in admitting Section 9 application by the impugned order dated 09.02.2024. The Corporate Debtor is freed from CIRP. The IRP fee and expenses as fixed by the Adjudicating Authority in the impugned order i.e., ₹2,00,000/- shall be paid by Operational Creditor to the IRP if not already paid - the impugned order is set aside - appeal allowed.
Issues Involved:
1. Whether the Section 9 application filed by the Operational Creditor was barred by Section 10A of the Insolvency and Bankruptcy Code, 2016. 2. Whether the Adjudicating Authority erred in admitting the Section 9 application despite the bar under Section 10A. 3. Whether the Operational Creditor's application for withdrawal of the Company Petition was appropriately handled. Summary: Issue 1: Bar of Section 10A The Appellant contended that the Section 9 application filed by the Operational Creditor was barred by Section 10A since the debt fell due from March 2020, which falls within the period stipulated under Section 10A of the Insolvency and Bankruptcy Code, 2016. The Adjudicating Authority noted in its order that the amount claimed fell within the 10A period but failed to consider this bar while admitting the application. The Supreme Court in `Ramesh Kymal' Vs. `Siemens Gamesa Renewable Power (P) Ltd.' held that no application for initiation of CIRP can be initiated for a default occurring on or after 25.03.2020 for a period of one year. The Adjudicating Authority's rejection of the Amendment Application on the ground that the Company Petition is barred by Section 10A further supports this contention. Issue 2: Error in Admitting Section 9 Application Despite acknowledging that the amount claimed fell within the 10A period, the Adjudicating Authority admitted the Section 9 application. The Tribunal held that the Adjudicating Authority committed an error in admitting the application without considering the bar under Section 10A. The Tribunal emphasized that the mere fact that the Corporate Debtor did not raise the bar in its reply is inconsequential when the bar is evident and acknowledged by the Operational Creditor. Issue 3: Application for Withdrawal The Operational Creditor had filed an application for withdrawal of the Company Petition but later filed an Amendment Application, indicating that they did not wish to pursue the withdrawal. The Tribunal noted that the Withdrawal Application was never pressed and the Amendment Application was rejected. The Tribunal clarified that for any default committed by the Corporate Debtor subsequent to the 10A period, a fresh application under Section 9 is maintainable. Conclusion: The Tribunal concluded that the Section 9 application filed by the Operational Creditor was barred by Section 10A and the Adjudicating Authority erred in admitting the application. The impugned order dated 09.02.2024 was set aside, and the Corporate Debtor was freed from CIRP. The IRP fee and expenses fixed by the Adjudicating Authority shall be paid by the Operational Creditor if not already paid. The Operational Creditor is at liberty to file a fresh application for defaults committed after the 10A period and seek appropriate remedies for their dues in accordance with the law. The Appeal was allowed subject to this liberty.
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