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TMI Blog2021 (7) TMI 1331X X X X Extracts X X X X X X X X Extracts X X X X ..... - Under such circumstances, a situation may arise, when a person has delivered the demand notice prior to the issuance of notification dated 24.03.2020 but the reply to the demand notice was filed after the issuance of said notification but within ten days from the delivery of the demand notice, as it has happened, in the case in hand. Whether by issuance of said notification dated 24.03.2020 under proviso to Section 4 of IBC, can a right, which has already accrued to a person, can be taken away by that notification, which is admittedly issued thereafter? - HELD THAT:- Every notification has prospective effect and so far as the filing of application either under Section 7 or 9 or 10 is concerned, it can only be filed, if the default in making payment has occurred, except in the matter of Section 9 of IBC, where Demand Notice is to be delivered after the default. Under the IBC, a right to apply accrues when default has occurred. Therefore, the application under Section 7 or 9 of IBC can be filed within three years from the date when right accrues, i.e. when the default has occurred. If the statute provides a person to file an application within a prescribed period, when the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ereinafter referred as IBC ) for initiation of Corporate Insolvency Resolution Process (hereinafter referred as CIRP ) against the Corporate Debtor for the total defaulted amount of ₹ 35,74,942/-, which includes both the principal and interest amount. 2. In the course of hearing, a preliminary objection was raised in the light of the notification no. CG-DL-E-24032020-218898 (hereinafter referred to as notification ) dated 24.03.2020, issued by Ministry of Corporate Affairs, by exercising its powers under proviso of Section 4 of IBC, 2016, by which the minimum threshold amount to trigger the insolvency proceedings is enhanced from one lakh to one crore. 3. Heard the Ld. Counsel for the petitioner and perused the averments made in the application. 4. The following are the admitted facts : i. The invoice was raised by the petitioner on 07.08.2019 05.09.2019 in pursuance of the purchase order dated 04.09.2019 received through email. ii. The demand notice was delivered on 16.03.2020, prior to the issuance of the notification dated 24.03.2020. iii. As per the averments made by the Corporate Debtor in its reply to the Demand notice, the Corporate Debtor has rec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecision of Hon ble Supreme Court in Manish Kumar vs Union of India, 2021 SCC OnLine SC 30 and submits that the right to sue or the right to apply is a vested right and the cause of action arose as the result of default by the Debtor. 14. He further contended that a statute is presumed to have a prospective effect unless it is held to be retrospective either expressly or by necessary implication. The Notification nowhere mentions that the enhancement of the threshold amount will have a retrospective or retroactive effect and this has also been held by the Hon ble NCLAT in case of Madhusudan Tantia vs Amit Choraria, Company Appeal (AT) (Insolvency) No. 557 of 2020. 15. He further contended that nowhere in the IBC, the Central Government is empowered to issue any notification, under the delegated legislation power, which have retrospective effect. 16. He also placed reliance upon the decision of Hon ble Supreme Court in Indramani Pyarelal Gupta (Dr.) vs W.R. Natu, (1963) 1 SCR 721. 17. He further submitted that even the intention of legislature is to tackle large scale insolvencies as a result of lockdown due to COVID-19 pandemic and for that reason, a new Section 10A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng its applicability. Those circumstances are: i, In the case of an operational debt, where demand notice under Section 8 of IBC has already been delivered prior to the notification dated 24.03.2020) but the application is filed after 24.03.2020. ii. Where the default has occurred prior to the issuance of notification dated 24.03.2020 (but no demand notice was sent in case of application filed Under Section 9. iii. Where the application has already been filed but not admitted by the Adjudicating Authority against the Corporate Debtor. iv. Where application has been admitted for initiation of CIRP against the Corporate Debtor. 24. So far as the circumstances referred to point nos. (iii) (iv) are concerned, there is no dispute regarding the non-applicability of the notification dated 24.03.2020 because every notification has prospective effect unless and until it is specifically mentioned in the notification that the same will have the retrospective effect. 25. Now, we consider the circumstance no. (i) where the default has occurred prior to the issuance of the notification dated 24.03.2020 and demand notice is also duly delivered but the application is filed a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or. (2) (3) (a) (b) (c) (4) (5) (a) (b) (6) (7) (a) (b) IBC Section 8 - Insolvency resolution by operational creditor. (1) An operational creditor may, on the occurrence of a default, deliver a demand notice of unpaid operational debtor copy of an invoice demanding payment of the amount involved in the default to the corporate debtor in such form and manner as may be prescribed. (2) (a) (b) (i) (ii) IBC Section 9 - Application for initiation of corporate insolvency resolution process by operational creditor. (1) After the expiry of the 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 n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the issuance of said notification but within ten days from the delivery of the demand notice, as it has happened, in the case in hand. 30. The question is whether by issuance of said notification dated 24.03.2020 under proviso to Section 4 of IBC, can a right, which has already accrued to a person, can be taken away by that notification, which is admittedly issued thereafter. As we have observed that every notification has prospective effect and so far as the filing of application either under Section 7 or 9 or 10 is concerned, it can only be filed, if the default in making payment has occurred, except in the matter of Section 9 of IBC, where Demand Notice is to be delivered after the default. 31. The Limitation Act is also applicable from the date when the default has occurred. 32. At this juncture, we consider the Article 137 of Limitation Act, 1963 and the same is quoted below: Three Years, When the right to apply accrues. 33. As discussed in the aforementioned paragraphs, under the IBC, a right to apply accrues when default has occurred. Therefore, the application under Section 7 or 9 of IBC can be filed within three years from the date when right accrues, i.e. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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