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TMI Blog2025 (3) TMI 14X X X X Extracts X X X X X X X X Extracts X X X X ..... nued even after the moratorium period. The intention of the legislature is to give relief by suspending initiation of CIRP. This Court, from the plain reading of Section 10-A is unable to agree with the learned Senior Counsel that even in a case where the default continued after the period of moratorium, no application can be filed.
Since proviso to Section 10-A mandate that no application shall ever be filed for initiation of CIRP of the Corporate Debtor for the default occurring during the moratorium period, the above judgment relied upon by the learned Senior counsel is in tune with the statutory provision. However, the proviso cannot be extended to cases where the default is continued beyond the moratorium period. Therefore, there is no jurisdictional error to entertain a writ bye-passing an effective alternative remedy.
Conclusion - The writ petition was not maintainable, as the NCLT had jurisdiction to entertain the petition due to the continued default beyond the moratorium period.
Petition dismissed. X X X X Extracts X X X X X X X X Extracts X X X X ..... y provisions and the admitted facts, the Tribunal admitted the Company Petition with a few directions. Aggrieved by the same, the above writ petition is filed even though a statutory appeal is also provided as against the order of the Tribunal. (5) This Court, taking note of the alternative remedy available to the petitioners, admitted the writ petition after recording the submission of the learned Senior counsel that no application under Section 7 is maintainable before NCLT as the default is committed between 25.03.2020 and 24.03.2021. This Court also recorded the argument of the learned Senior counsel that relying upon the judgment of Hon'ble Supreme Court in Ramesh Kymal Vs. SiemensGamesa Renewable Power Private Limited reported in 2021 [3] SCC 224. (6) This Court granted interim order and the same was extended thereafter. The only ground on which the order of NCLT was challenged before this Court is by relying upon Section 10-A of IBC, 2016, which reads as follows:- ''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 resolutio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nal has made an enquiry and pointed out several irregularities against the petitioner after a Forensic Audit and the report of the Auditor. (12) In the counter affidavit of the 1st respondent, it is pointed out that the petitioners have admitted their default and the outstanding liability of the Corporate Debtor in every proposal submitted by them for OTS. The 1st respondent in the counter affidavit raised an objection as to the maintainability of the writ petition referring to the judgment of Hon'ble Supreme Court in the case of M/s. Dhammanagi and Sanu Developers Private Limited and Another Vs. State of Karnataka and Others [2020 [1] MLJ 65]. It is further contended by the 1st respondent/Bank that the petitioners have admitted the default as per the statement of Accounts from the Bank. It is also contended by the 1st respondent that the liability as on the date of filing the petition before NCLT, i.e., 29.12.2023, is Rs.78,85,09,547.45p. and the liability has now grown to Rs.92.26 Crores as on 04.03.2024. Referring to the facts and conduct of the petitioners, it is stated in the counter affidavit that there is no bona fide in the writ petition and the purpose of the writ pet ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ture is to bar the institution of any application for the commencement of the CIRP in respect of a default which has occurred on or after 25- 3-2020 for a period of six months, extendable up to one year as notified. The Explanation which has been introduced to remove doubts places the matter beyond doubt by clarifying that the statutory provision shall not apply to any default before 25-3-2020. 28. The substantive part of Section 10-A is to be construed harmoniously with the first proviso and the Explanation. Reading the provisions together, it is evident that Parliament intended to impose a bar on the filing of applications for the commencement of the CIRP in respect of a corporate debtor for a default occurring on or after 25-3-2020; the embargo remaining in force for a period of six months, extendable to one year. Acceptance of the submission of the appellant would defeat the very purpose and object underlying the insertion of Section 10-A. For, it would leave a whole class of corporate debtors where the default has occurred on or after 25-3-2020 outside the pale of protection because the application was filed before 5-6-2020. 29. We have already clarified that the correct i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nks and financial institutions. Above all, ultimately, the interests of all stakeholders are looked after as the corporate debtor itself becomes a beneficiary of the resolution scheme-workers are paid, the creditors in the long run will be repaid in full, and shareholders/investors are able to maximise their investment. Timely resolution of a corporate debtor who is in the red, by an effective legal framework, would go a long way to support the development of credit markets. Since more investment can be made with funds that have come back into the economy, business then eases up, which leads, overall, to higher economic growth and development of the Indian economy. What is interesting to note is that the Preamble does not, in any manner, refer to liquidation, which is only availed of as a last resort if there is either no resolution plan or the resolution plans submitted are not up to the mark. Even in liquidation, the liquidator can sell the business of the corporate debtor as a going concern. (See Arcelor Mittal [Arcelor Mittal (India) (P) Ltd. v. Satish Kumar Gupta, (2019) 2 SCC 1] at SCC p. 89, para 86, footnote 46.)" 32. Hence, the embargo contained in Section 10-A must rece ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Supreme Court that debt owed by the Corporate Debtor is not extinguished is the law declared by the Hon'ble Supreme Court, but their being clear prohibition for filing an application under Sections 7, 9 and 10 for default occurring in 10A period there is apparent case. The language of the statute provides no application for initiation of Corporate Insolvency Resolution Process of a Corporate Debtor shall be filed for any default arising on or after 25.03.2020. The provision cannot be read to mean that after the period is over the application can be filed. If such interpretation is accepted, the whole purpose and object shall be defeated. The purpose and object of introduction of Section 10A was to give relief to Corporate Debtor who committed default during the period which is covered by Section 10A. The debt is not wiped out is only for the purpose that other proceedings are not prohibited but Sections 7, 9 and 10 applications are clearly barred. No application can be filed, even after the expiry of the period under Section 10A for the default which occurred during the 10A period.'' (22) Since proviso to Section 10-A mandate that no application shall ever be filed for ..... X X X X Extracts X X X X X X X X Extracts X X X X
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