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TMI Blog2022 (8) TMI 1060X X X X Extracts X X X X X X X X Extracts X X X X ..... a plain reading of Section 7, it becomes clear that there is no ambiguity in the provision which requires any interpretation other than what is conveyed in its literary sense. The section clearly stipulates that the application for triggering CIRP may be initiated by a financial creditor either individually or jointly with other financial creditors. Previously the threshold default limit for filing the CIRP application was only Rs.1 lakh and it has been drastically increased to Rs.1 crore vide Gazette Notification dated 24.03.2020. It can easily be envisaged that in cases of MSMEs, there may not exist financial creditors whose individual debt is Rs.1 crore or above. If the threshold limit was to be fixed at Rs.1 crore qua each individual financial creditor, then there was no reason whatsoever for allowing joint applications by financial creditors. The statute i.e., Section 7 of the IBC as amended vide Gazette Notification dated 05.06.2020, admits no other interpretation except that a group of financial creditors can converge and join hands to touch the financial limit of Rs.1 crore stipulated under Section 7 so as to initiate a CIRP under the IBC. There are no merit in this w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... authority before the commencement of the insolvency and bankruptcy Code (Amendment) Act, 2020, such application shall be modified to comply with the requirements of the first and second provisos within 30 days of the first commencement of the said Act failing which the application shall be deemed to be withdrawn before its admission.) Explanation.-For the purposes of this sub-section, a default includes a default in respect of a financial debt owed not only to the applicant financial creditor but to any other financial creditor of the corporate debtor. (2) The financial creditor shall make an application under sub-section (1) in such form and manner and accompanied with such fee as may be prescribed. (3) The financial creditor shall, along with the application furnish- (a) record of the default recorded with the information utility or such other record or evidence of default as may be specified; (b) the name of the resolution professional proposed to act as an interim resolution professional; and (c) any other information as may be specified by the Board. (4) The Adjudicating Authority shall, within fourteen days of the receipt of the appl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tress caused by COVID 19, it has been decided to raise the threshold of default under section 4 of the IBC 2016 to Rs 1 crore (from the existing threshold of Rs 1 lakh). This will by and large prevent triggering of insolvency proceedings against MSMEs. If the current situation continues beyond 30th of April 2020, we may consider suspending section 7, 9 and 10 of the IBC 2016 for a period of 6 months so as to stop companies at large from being forced into insolvency proceedings in such force majeure causes of default. (Emphasis Added) Shri Kothari urged that in order to offset the adverse impact of Covid-19 pandemic on the MSMEs, the IBC was further amended vide Insolvency and Bankruptcy Code (Amendment) Ordinance, 2020 promulgated on 05.06.2020 and Section 10A was inserted therein whereby, the default period for initiation of CIRP was extended. He submitted that CIRP may be triggered under the IBC against a corporate debtor in three ways;- (i) Section 7: By financial creditor, either by itself or jointly with other financial creditors; (ii) Section 9: By operational creditors and (iii) Section 10: By corporate debtor itself. He contended that while increa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nnot be envisaged by any stretch of imagination. We have given our thoughtful consideration to the submissions advanced at bar and have gone through the material available on record. We have carefully perused the language of Section 7 of the IBC and the corresponding amendments. At the outset, we may state here that validity of Section 7 of the IBC was examined by Hon'ble the Supreme Court in the case of Swiss Ribbons Pvt. Ltd. (supra) and the same was found to be compliant to the Constitution of India and the challenge to the validity of the statute was repelled by Hon'ble the Supreme Court in unequivocal terms. Despite that, the petitioner has ventured into questioning the validity of Section 7 of the IBC claiming that the challenge so laid is on a totally different proposition i.e., permissibility of a group of financial creditors jointly triggering CIRP without adhering to the requirement of default threshold of Rs.1 crore in individual capacity. On a plain reading of Section 7, it becomes clear that there is no ambiguity in the provision which requires any interpretation other than what is conveyed in its literary sense. The section clearly stipulates that the ap ..... X X X X Extracts X X X X X X X X Extracts X X X X
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