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TMI Blog2021 (3) TMI 112X X X X Extracts X X X X X X X X Extracts X X X X ..... rigger the CIR Process . Section 9(1) of the Code confers a substantive right to file and to initiate CIRP against the Corporate Debtor. It is needless for this Tribunal to point out that upon an application being filed by the concerned person in terms of the ingredients of Section 9(1) of the Code and the default sum is quite in tune with Section 4 of the Code, the application is to be admitted by the Adjudicating Authority , of course subject to the ingredients of Sections 9(2) 9(5) of the Code. The Notification dated 24.03.2020 does not save the Applicant from the initiation of insolvency especially in cases where defaults towards creditors have taken place before the pandemic and the resultant financial crisis. Such an interpretation would be contrary to the intention of the executive in exercise of its power of delegated legislation. Thus, if the intention was to provide for a blanket protection to Corporate Debtors from being dragged to the NCLT irrespective of when or what extent a default has taken place, it would necessarily require a legislative amendment, and that a mere issuance of the notification would not suffice. This Tribunal vide order dated 16.10.2020 ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orate Debtor. Application admitted - moratorium declared. - IBA/35/KOB/2020 - - - Dated:- 26-2-2021 - Hon ble Shri Ashok Kumar Borah , Member ( Judicial ) For the Operational Creditor : Shri Maninder Singh, Advocate With Mr.Sharad Joseph Kodianthara, Advocate For the Corporate Debtor : Mr. Vinod PV, Advocate ORDER This application has been filed on 16.09.2020 under Section 9 of the Insolvency Bankruptcy Code, 2016 (hereinafter referred to as I B Code) read with Rule 6 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016 (hereinafter referred to as Rules) by the applicant M/s. AL SADIQ SWEETS (hereinafter referred to as Operational Creditor/Applicant ) through Mr. Ladley Mohan Mathur against M/S KRISENTER IMPEX PRIVATE LIMITED (hereinafter referred to as Corporate Debtor ) having its Registered Office at Room No. 105, 4th Floor, D D Corner Stone, Kadavanthra, Kochi 682 020, Kerala. 2. In the requisite Form, under the head Particulars of Operational Debt the total amount claimed to be in default is stated to be USD $ 1,13,500/- as on 31.08.2020. The date of default as per Form I is mentioned to be 03.01.2020. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erefore, the Corporate Debtor was requested to return the advance payment on 30.04.2020 to which they assured the same would be transferred/ returned soon. 7. The applicant submitted that in all the communications, the Corporate Debtor had acknowledged his debt and had sought further time to discharge the same, but the Corporate Debtor kept delaying on the said commitment of refunding the money due to the Operational Creditor on one pretext or the other. The debt has not been paid and is outstanding till date. 8. It is further submitted that the principal amount of the debt became due and payable on 03.01.2020 and, therefore, the date of default in sending the shipment is 03.01.2020 and the debt has not been paid back to the Operational Creditor and is outstanding till date despite various assurances and promises. Therefore, the total amount of principal debt, i.e. the total amount of payments advanced to the Corporate Debtor per the Proforma Invoice which the Corporate Debtor had failed to return and had acknowledged as a debt is USD $ 1,00,000/- (US Dollars One Lakh Only) with interest. 9. The Operational Creditor stated that they have issued a demand notice dated 01.08. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a Company appeal (AT) Insolvency No. 557 of 2020. 13. The Corporate Debtor further stated that the operational creditor has initiated the Corporate Insolvency Proceedings on 16.09.2020, which is after the notification on24.03.2020. Initiation of date does not mean the date of default, which is the date when actually the application is filed before this Tribunal. The learned counsel further stated that Section 5(11) and Section 9 is further makes it clear that even issuing demand notice under Section 8 can also not to be considered as a date of initiation of the Corporation Insolvency Resolution Process. 14. It is further submitted that legislature has not specifically excluded default occurred prior to 24.03.2020 from the purview of Section 4 of the Code. If the intention of the legislature was to exclude default occurred prior to 24.03.2020 from the purview of notification, then the notification does to serve the purpose to save the MSME and became redundant because after 25.03.2020 the default is considered as covid default for a period of one year a no application can ever be filed for initiating Corporate Insolvency Resolution Process under Section 10A of the Code. Ther ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ate Debtor does not make the Applicant Operational Creditor. There should be a delivery of goods or provision of service in order to come within the purview of Operational Debt. To fortify this argument, the learned counsel has referred to the order of Hon'ble NCLAT in Company Appeal (AT) Insolvency No.752 of 2019 Smt. Andal Bonumalla vs. Tomato Trading LLP and Ors dated 20 August, 2020. iv. Pre-existing dispute between the Applicant and Respondent. 19. The learned counsel for the Corporate Debtor stated that the purchase order was issued through various negotiations and sample testing in the month of September 2018 and the purchase order was placed after a period of one year ie on 25.11.2019. Though the Corporate Debtor was willing to deliver the goods, there was complete disruption in the procurement and processing in the month of February, March and April and hence the Corporate Debtor could not deliver the goods before the agreed date of 25.04.2020 as the Central Government and State Government imposed lockdown with effect from 25.03.2020. It is further stated that a mere perusal of the WhatsApp communication between the parties shows that the Corporate Debtor was w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lt, the Operational Creditor gets the right to trigger the CIR Process . Section 9(1) of the Code confers a substantive right to file and to initiate CIRP against the Corporate Debtor. It is needless for this Tribunal to point out that upon an application being filed by the concerned person in terms of the ingredients of Section 9(1) of the Code and the default sum is quite in tune with Section 4 of the Code, the application is to be admitted by the Adjudicating Authority , of course subject to the ingredients of Sections 9(2) 9(5) of the Code. 25. Coming to the issue in this case, this Tribunal, after carefully going through the contents of the notification dated 24.03.2020 issued by the Ministry of Corporate Affairs, Government of India, whereby the minimum amount of default limit was specified as Rs. One Crore (obviously raising the minimum amount from Rs. One Lakh to One Crore) precisely comes to a definite conclusion that the said notification is only prospective in nature and not a retrospective one because for the simple reason that the said notification does not in express term speaks about the applicability of retrospective or retroactive operation. 26. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2020. 29. In the present case, the Corporate Debtor prayed for dismissal of the application on the basis of the newly inserted provisions of Section 10A. Before proceeding, it is necessary to preface the discussion with reference to three significant dates which have a bearing on the present proceedings: 3rd January 2020 date of default as set up in Form 3 (Demand Notice); 16th September 2020 date of institution of the application under Section 9; and 5th June 2020 date on which Section 10A was inserted in the IBC 30. Under Section 9(1), the Operational Creditor may file an application before the Adjudicating Authority for initiating the Corporate Insolvency Resolution Process ( CIRP ), after the expiry of a period of ten days from the date of delivery of the notice (or invoice demanding payment) under Sub-Section (1) of Section 8, if the operational creditor does not receive payment from the Corporate Debtor or a notice of the dispute under Sub-Section (2) of Section 8. In the present case, it was asserted that the onset of Covid-19, which was the reason for the insertion of Section 10A, has nothing to do with the default as the part of the respo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... andemic. Parliament has stepped in legislatively because of the widespread distress caused by an unheralded public health crisis. It was cognizant of the fact that resolution applicants may not come forth to take up the process of the resolution of insolvencies (this as we have seen was referred to in the recitals to the Ordinance), which would lead to instances of the corporate debtors going under liquidation and no longer remaining a going concern. This would go against the very object of the IBC, as has been noted by a two-Judge bench of this Court in its judgment in Swiss Ribbons (P) Ltd. v. Union of India. 32. Section 5(11) stipulates that the date on which a financial creditor, corporate applicant or operational creditor makes an application to the Adjudicating Authority for initiating the CIRP is the initiation date . Distinguished from this is the insolvency commencement date , which is the date on which the application for initiating the CIRP under Sections 7, 9 or 10, as the case may be, is admitted by the Adjudicating Authority. 33. In view of the above discussions, this Tribunal is of the view that the Executive in the Promulgation of the Ordinance to meet an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot fall under the definition of 'dispute' as provided under Section 5(6) of the IBC, 2016. 35. In view of the aforesaid detailed discussions, this Tribunal finds that the application made by the Operational Creditor is complete in all respects as required by law and that the Corporate Debtor is in default of a debt due and payable, and the default is in excess of minimum amount of One Lakh rupees stipulated under Section 4(1) of the IBC. Therefore, the default stands established and there is no reason to deny the admission of the Application. Hence, the Adjudicating Authority decided to admit this application and orders initiation of CIRP against the Corporate Debtor. 36. The Operational Creditor has not proposed the name of the Interim Resolution Professional. Hence, this Tribunal decided to appoint one of the Insolvency Professional from the list of IPs for the period from 01.01.2021 to 30.06.2021. Therefore, It is, accordingly, ordered as follows: - (a) The petition filed by M/s Al Sadiq Sweets under Section 9 of the IBC read with Rule 6 of the Insolvency Bankruptcy (Application to Adjudicating Authority) Rules, 2016 for initiating CIRP against the Corporat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7, 18, 19, 20 and 21 of the IBC. The fee payable to IRP/RP shall be in compliance with Regulations, Circulars and Directions issued by the Insolvency Bankruptcy Board of India (IBBI) as may be applicable. (g) During the CIRP period, the management of the Corporate Debtor shall vest in the IRP/RP in terms of Section 17 of the IBC. The officers and managers of the Corporate Debtor shall provide all documents in their possession and furnish every information in their knowledge to the IRP within a period of one week from the date of receipt of this Order, in default of which coercive steps will follow. (h) The Operational Creditor shall deposit a sum of ₹ 2,00,000/- (Rupees Two Lakhs only) with the IRP to meet the expenses towards issue of public notice and inviting claims etc. These expenses are subject to approval by the Committee of Creditors (CoC). (i) The Registry is directed to communicate this order to the Operational Creditor, the Corporate Debtor and the IRP by Speed Post and email within two days from the date of this Order. (j) A copy of this Order be also sent to the Registrar of Companies, Kerala, for updating the Master Data of the Corporate Debtor, wh ..... X X X X Extracts X X X X X X X X Extracts X X X X
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