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TMI Blog2022 (9) TMI 1296X X X X Extracts X X X X X X X X Extracts X X X X ..... hen minimum amount of default is Rs. 1 Crore (w.e.f. 24th March, 2020). Thus initiation of an Application under Section 9 has to conform to the requirement under Section 4. Section 4, as it is in operation with effect from 24th March, 2020, is not a mere procedural provision but provides a substantive condition to be fulfilled by an Applicant to initiate CIRP. The period of default after 25.03.2020 as provided in Section 10-A was entirely for different purpose. The purpose was to protect the corporate debtor from insolvency initiation for default committed on or after 25.03.2020 when whole country was suffering from Covid-19 and all corporate debtors were unable to function effectively, hence default in the said period legislatively was treated to be not giving rise to initiate insolvency. The threshold in Section 4 is entirely different from the protection given under Section 10 A hence Section 10-A has no relevance with regard to interpreting requirement of Section 4. Application filed by the Appellant under Section 9 on 08.09.2021 for an amount of Rs. 46,64,249/- was not entertainable due to not fulfilling the threshold of Rs. 1 Crore as statutorily required under Section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ication hence the Application of revival was dismissed without cost. Aggrieved by the said Order, the Appellant has come up in this Appeal. 3. Mr. Ravi Raghunath, Learned Counsel for the Appellant challenging the Order submits that the Adjudicating Authority erroneously held that there is no power for revival of the Insolvency Application under the Code. It is submitted that the Adjudicating Authority has failed to consider the decision in Shree Bhadra Parks and Resorts Ltd. vs. Sri Ramani Resorts and Hotels Pvt. Ltd. , (Company Appeal (AT) (CH) Ins. No. 06 of 2021). It is further submitted that the Adjudicating Authority considered the issue of pecuniary jurisdiction without first reviving the Insolvency Application and listing the main Insolvency Application for hearing. Learned Counsel further submits that in the present case right to apply for initiating Corporate Insolvency Resolution Process (CIRP in short) under the Code arose to the Appellant prior to notification dated 24th March, 2020 and Demand Notice was issued to the Corporate Debtor prior to notification dated 24th March 2020. It is further submitted that the notification dated 24th March, 2020 has to be read ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sans merits. 6. Another Judgement of this Tribunal relied on by Learned Counsel for the Appellant in Company Appeal (AT) Ins. No. 103 of 2022 in Pooja Finlease Ltd. Vs. Auto Needs (India) Pvt. Ltd. Anr. where this Tribunal has set aside the Order of the Adjudicating Authority refusing to revive the Company Petition. 7. We thus are of the view that Adjudicating Authority did not lack jurisdiction to revive the Company Petition and the observations of the Adjudicating Authority in the Impugned Order in so far as it held that there is no enabling provision in the Code to revive the Application is erroneous. 8. Now we come to the second aspect of the matter due to which the Adjudicating Authority has held that Application filed under Section 9 being for a claim amount of Rs. 46,64,249/-, the Tribunal is unable to entertain the Application. 9. From the facts as have been noticed above, it is clear that Application under Section 9 was filed by the Appellant before the Adjudicating Authority on 08.09.2021. The Appellant s case in the Appeal is that the Appellant had issued a demand notice on 05.02.2020 demanding an amount of Rs. 31,14,620/- which was before the notifi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 4 was notified with effect from 24th March, 2020. Section 6 of the Code deals with the persons who may initiate CIRP. Section 6 is as follows: Section 6: Persons who may initiate corporate insolvency resolution process.- Where any corporate debtor commits a default, a financial creditor, an operational creditor or the corporate debtor itself may initiate corporate insolvency resolution process in respect of such corporate debtor in the manner as provided under this Chapter. 14. Section 9 provides for Application for initiation of CIRP by Operational Creditor. The word initiation is defined in Section 5(11) to the following effect:- 5(11). initiation date means the date on which a financial creditor, corporate applicant or operational creditor, as the case may be, makes an application to the Adjudicating Authority for initiating corporate insolvency resolution process or prepackaged insolvency resolution process, as the case may be 15. Initiation of proceeding under Section 9 by filing an Application to the Adjudicating Authority has to be made by Operational Creditor which must comply with requirement of Section 4. Part-II of the Code which deals with I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ourt while considering a case of amendment in a statute reiterated the principles. Following was stated in paragraph 26: 26. .From the law settled by this Court in various cases the illustrative though not exhaustive principles which emerge with regard to the ambit and scope of an Amending Act and its retrospective operation may be called out as follows: (i) A statute which affects substantive rights is presumed to be prospective in operation unless made retrospective, either expressly or by necessary intendment, whereas a statute which merely affects procedure, unless such a construction is textually impossible, is presumed to be retrospective in its application, should not be given an extended meaning and should be strictly confined to its clearly defined limits. ii. Law relating to forum and limitation is procedural in nature, whereas law relating to right of action and right of appeal even though remedial is substantive in nature. iii. Every litigant has a vested right in substantive law but no such right exists in procedural law. iv. A procedural statute should not generally speaking be applied retrospectively where the result would be to create ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 24.03.2020 is not applicable. Para 4 of the order notices the contentions of the Appellant in the above case and the consideration of submissions was in Para 6, 7 and 8. In Paras 6, 7, and 8 following was laid down:- 6. Section 4 of the Code provided initially threshold of Rs. 1 Lakh which was substituted vide Notification dated 24th March, 2020 to 1 Crore. The Submissions which has been pressed by the Learned Counsel for the Appellant is that the notification being prospective as has been held by this Tribunal in Madhusudan Tantia (supra) it should not apply on the default which had occurred prior to 24th March, 2020. We have perused the Judgment of this Tribunal in Madhusudan Tantia . In the above case, the Application under Section 9 was filed prior to 24th March, 2020 which fact is noticed in paragraph 5 of the Judgement. Emphasis has been laid by Learned Counsel of the Appellant in paragraphs 56 and 57 which are to the following effect: 56. As far as the present case is concerned, this Tribunal, after carefully and with great circumspection, ongoing through the contents of the notification dated 24.03.2020 issued by the Ministry of Corporate Affairs, Government ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sultantly, the instant Appeal fails. 7. When we read paragraphs 56 and 57, it is clear that this Tribunal categorically held that Notification dated 24th March, 2020 is only prospective and not a retrospective. This Tribunal held that the said notification will not apply to pending application of IBC. It is clear that Applications under Section 9 filed prior to 24th March, 2020 shall not be affected by the Notification dated 24th March, 2020 and notification being prospective shall apply to Applications filed thereafter. The provision is clear that the amendment shall come into force after its publication in the Gazette and Application filed thereafter has to fulfil the threshold as provided in Section 4 i.e. threshold of Rs. 1 Crore. In the present case, the Judgment relied by Learned Counsel for the Appellant does not contain any ratio that in event the default has been committed prior to 24th March, 2020 and Application is filed thereafter the same shall be governed by the unamended provision of Section 4 of the Code. 8. The Application in the Appellant s case filed on 27th March, 2021 was rightly hit by threshold of Rs. 1 Crore as implemented with effect from 24th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... udgment of this Tribunal in Company Appeal (AT) Ins. No. 1036 of 2022 in the matter of Hyline Mediconz Pvt. Ltd. Vs. Anandalok Medical Centre Pvt. Ltd. decided on 20.09.2022, where this Tribunal after referring to Judgment of the Hon ble Supreme Court in the matter of Manish Kumar Vs. UoI [(2021) 5 SCC 1] laid down following: 25. The law laid down by the Hon ble Supreme Court in the above case lend support to our conclusion that threshold of Rupees One Crore has to be fulfilled by an applicant under Section 9 on the date of filing of the application. The fact that default was committed prior to 24.03.2020 and notice under Section 8 was issued and served prior to 24.03.2020 are not determinative or material although they are condition precedent for initiating an application under Section 9. We have noticed the provision of Section 6 which provides that where any Corporate Debtor commits a default, a Financial Creditor, an Operational Creditor or the Corporate Debtor itself may initiate Corporate Insolvency Resolution Process in respect of such Corporate Debtor in the manner as provided under this Chapter. Thus, a default is a condition precedent. Part II of the Code becomes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vil suit and a law is passed, during the pendency of a civil suit, which again does not expressly bar the suits, which had already been filed? Since we are in the regions of vested rights, and every right must have a title to the right, and since every civil suit is based on a cause of action, could it not be said that the right to sue becomes vested from the point of time when the cause of action arises? Since, for every civil suit, there is a period of limitation prescribed, could it not be said that since a period of limitation has been prescribed for instituting a suit, the right to sue becomes vested from the first day when the period of limitation starts to run? .. 384. We may, in this context also, notice that one of the five characteristics for a legal right to exist, is that every legal right has a title. It is further stated, in Salmond on Jurisprudence that every legal right has a title, which are apparently the facts or events by reason of which the right has become vested in its owner. Now, it must be noticed also, at this stage that the Limitation Act, in fact, contemplates the time, within which the suit must be brought, beginning necessarily on the sup ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion is clearly non-entertainable, no purpose will be served by reviving the Application of the Operational Creditor and asking the Adjudicating Authority to again decide the entertainability of the Application. 23. One of the submissions of Learned Counsel for the Appellant is that Notification dated 20.03.2020 be construed in accordance with Section 10-A. Section 10-A is as follows: Section 10A: Suspension of initiation of corporate insolvency resolution process.- Notwithstanding anything contained in sections 7, 9 and 10, no application for initiation of corporate insolvency resolution process of a corporate debtor shall be filed, for any default arising on or after 25th March, 2020 for a period of six months or such further period, not exceeding one year from such date, as may be notified2 in this behalf: Provided that no application shall ever be filed for initiation of corporate insolvency resolution process of a corporate debtor for the said default occurring during the said period. Explanation. For the removal of doubts, it is hereby clarified that the provisions of this section shall not apply to any default committed under the said sections before 25t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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