TMI Blog2020 (10) TMI 547X X X X Extracts X X X X X X X X Extracts X X X X ..... ed to the Corporate Debtor by the Adjudicating Authority no endeavor was made to make payment in respect of the outstanding debt. On a careful consideration of respective contentions advanced on either side and considering the facts and circumstances of the instant case in a conspectus fashion holds unhesitatingly that the notification dated 24.03.2020 of the Ministry of Corporate Affairs, Government of India, is prospective in nature and it is not retrospective or retroactive in nature. Further, the said notification will not apply to the pending applications filed before the concerned Adjudicating Authority (Authorities), under IBC (waiting for admission), prior to the issuance of the aforesaid notification, as opined by this Tribunal - the conclusion arrived at by the Adjudicating Authority in the impugned order to the effect that the notification dated 24.03.2020 of the Ministry of Corporate Affairs, Government of India, shall be considered as prospective and not retrospective and the finding that there was no payment on the side of Corporate Debtor after receipt of Demand Notice, no pre-existing dispute also alleged or proved and ultimately admitting the applicati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ith business of manufacturing and supply of chemicals and allied products related to foundry and steel industries, such as, resins, coating for ferrous and non-ferrous foundries, sleeves, fluxes, metal treatment products of foundries. According to the Ld. PCS for the operational creditor, since the corporate debtor failed to pay the amount, it is entitled to claim the amount due to the tune of ₹ 90,00,919.10. None of the invoices contains the terms stipulating the corporate debtor to pay interest for the delayed payment of the amount found due to the operational creditor. The corporate debtor having not disputed its liability, the amount as claimed by the operational creditor towards the material cost less the interest is found due and payable by the corporate debtor. The Ld. P CS for the operational creditors further submits that despite repeated demands, the corporate debtor failed to pay the operational debt and therefore a demand notice under Rule 5 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) 2016 was issued and the corporate debtor was in receipt of the demand notice. The CD neither sent a reply nor paid the amount found due to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Debtor was not represented. After coming to know of the fact that the Corporate Debtor was proceeded ex-parte, an application was filed by the Corporate Debtor in CA No. 107/KB/2020 praying for setting aside the direction given by the Adjudicating Authority whereby among other things, the matter was marked ex-parte . 5. The Learned Adjudicating Authority after hearing the submissions made in CA No. 107/KB/2020 passed an order on 17.01.2020 by permitting the Corporate Debtor to file its Reply Affidavit on payment of cost of Rs. one lakh to the 2nd Respondent / Operational Creditor . On 03.02.2020, for further consideration, the matter was taken up for consideration and the application of the Corporate Debtor bearing CA No. 107/KB/2020 was dismissed. Although, as directed, the Corporate Debtor had paid the cost, the Corporate Debtor could not file a Reply Affidavit within the time specified by the Adjudicating Authority and no further extension of time in this regard was granted. On 13.03.2020, the matter was fixed for final hearing, in the absence of any Reply Affidavit of the Corporate Debtor . 6. The matter was taken up on 13.03.2020 and the Or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 20.05.2020 pronounced the impugned order whereby and whereunder the said application was admitted. Appellant s Contentions 10. The Learned Counsel for the Appellant submits that the Adjudicating Authority while passing the impugned order had committed an error in Law and on facts by failing to appreciate that by reason of the amendment to Section 4 of the I B Code, the application was no longer maintainable in Law and was barred by Law and hence the Authority should have dismissed the application because of the simple reason that the amendment in issue is having retrospective effect. 11. The Learned Counsel for the Appellant submits that in the application, the total claim of the Operational Creditor is ₹ 90,009,19.10 (Rupees ninety lakhs nine hundred and nineteen and ten paise only) which is below the threshold limit of Rs. one crore as the minimum amount of default for the purpose of preferring an application under Sections 7 or 9 and 10 of the I B Code. 12. The Learned Counsel for the Appellant points out that the Adjudicating Authority had failed to appreciate the ratio of the decision in CP (IB) No. 615/KB/2018 dated 15th November, 2018 (Re: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Avtar Singh V. State of Punjab AIR 1965 Supreme Court page 666 para 6. Further, it is the stand of the Appellant that no part of a statute can be considered to be a surplus age as per decision of Hon ble Supreme Court Hardeep Singh V. State of Punjab (2014)3 SCC page 92 (paras 44,45). 17. The Learned Counsel for the Appellant refers to the decision of Hon ble Supreme Court Rafiquennessa V. Lal Bahadur Chetri AIR 1964 Supreme Court page 1511 wherein at paragraph 9 it is observed as under: - .It is not disputed by him that the legislature is competent to take away vested rights by means of retrospective legislation similarly, the legislature is undoubtedly competent to make laws which over ride and materially affect the terms of contracts between the parties; but the argument is that unless a clear and unambiguous intention is indicated by the legislature by adopting suitable words in that behalf, no provision of a statute should be given retrospective operation if by such operation vested rights are likely to be affected. These principles are unexceptionable and as a matter of law, no objection can be taken to them. Mr. Chatterjee has relied upon the well-kno ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e and there is no vested right in pending proceedings. In this connection, the Learned Counsel for the Appellant refers to the decision of Hon ble Supreme Court Durga Hotel Complex V. Reserve Bank of India reported in (2007) 5 SCC page 120 (vide paragraphs 12 to 14) wherein it was held that the Banking Ombudsman was divested of jurisdiction upon a proceeding being filed before the Debt Recovery Tribunal although the complaint made before him was prior at point of time. 20. The Learned Counsel for the Appellant cites the decision Sefali Roy Chowdhury V. A.K.Dutta 1976 (3) Supreme Court Cases at page 602 at special page 606 wherein at paragraph 6 it is among other things observed as follows:- According to him the suit must continue to be governed by the 1950 Act even after its repeal in view of Section 40 unaffected by the provisions of the 1956 Act. Section of 40 of the 1956 Act keeps alive a proceeding pending on the date when the 1950 Act was repealed as if it is still in force and has not been repealed. This however, does not mean that even if the 1956 Act created a new right in favour of the sub-tenant, he would be denied this right because a suit for eje ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nts in the Criminal Procedure Code brought about by Ordinances 15 of 1948 dated 31st December, 1948, and 27 of 1949 dated 3rd May, 1949, no detailed consideration is necessary in view of what has been held at the outset that the constitutional objection under Article 20 does not apply to a change in procedure or change of code. Items 62 and 63 of Section 2 of Ordinance 15 of 1948 would seem to indicate that the jurisdiction which the criminal courts of Vindhya Pradesh previously had to tried extra-territorial offences was probably lost thereby. If so, the jurisdiction was restored under Ordinance 27 of 1949 by the amendment thereby of the said items 62 and 63 thus bringing it into line with section 188 of the Criminal Procedure Code, with a requisite adaptation. Hence, the power of the Vindhya Pradesh courts to hold trials for extra-territorial offences which was probably interrupted from 31st December, 1948 was restored on 3rd May, 1949, before the trial in this case, commenced with retrospective operation i.e. as from the date of the prior Ordinance i.e. 31st December, 1948. 22. In the decision of Hon ble Supreme Court Securities and Exchange Board of India V. Classic Cre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is advanced on behalf of the Appellant that the presumption against retrospective operation is not applicable to curative or declaratory statutes as per decision of the Hon ble Supreme Court Zile Singh V. State of Haryana (2004) 8 SCC 1 (para 14). Also that, a plea is projected on the side of the Appellant that a new Law is made to cure and acknowledge evil for the benefit of community as a whole and in short from a holistic reading of Section 4 coupled with Section 9(1) and Section 9(5)(i) of the I B Code and together with the rules of statutory interpretation, there can be no modicum of doubt that it is the intendment of the Ministry of Corporate Affairs, Govt. of India for the notification of 24.03.2020 to have retrospective operation barring the admission of pending applications which alleged default below the minimum threshold of ₹ 1 crore. 27. The Learned Counsel for the Appellant submits that the impugned order passed by the Adjudicating Authority is not sustainable pursuant to the notification dated 24.03.2020 issued by the Ministry of Corporate Affairs, Govt. of India. Pleas of 1st Respondent 28. Section 12 of the I B Code prescribes that with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . In this connection, the Learned Counsel for the 2nd Respondent comes out with an argument that a conjoin reading of the definition of the term Default together with the provisions of Section 4, 8 and 9 of I B Code would show that an Operational Creditor acquires the right to come under the provisions of the Code by issuing a Demand Notice u/s 8 on the occurrence of default. 33. The Learned Counsel for the 2nd Respondent takes a stand that the scheme of Section 9 would exhibit that once an application or petition has been filed u/s 9(1) of the Code, the same must be admitted, if the conditions are satisfied as per Section 9(5) r/w Section 9(2) to Section 9(4). Added further, the expression in Section 4 of the I B Code that this section shall apply to part II of IBC, 2016 refer to the machinery of the statute and the provisions as applicable at the time of filing the application or petition would continued to be applied inspite of subsequent amendment as the right of action being a substantive right cannot be affected as per decision of Hon ble Supreme Court in Govind Das Ors. V. Income Tax Officer Ors. reported in AIR 1977 Supreme Court page 552. 34. The Le ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Appellant that the proviso to Section 4 of the I B Code clearly gave the Central Government power to make such notification and that the Central Government is well within its rights to make the notification retrospective in its operation, because of the fact that the said proviso is not contrary to any specific provision of the I B Code. Legal Scenario 39. Be it noted, that a Statute is an edict of Legislature. Further, a Statute is to be construed according to the intent of those that make it as per decision Stock V. Frank Jones Tipton Ltd. (1978) All ER 948, 951. As a matter of fact, the duty of Judicature is to act based on the true intention of the legislature the mens or sententia legis. 40. It must be borne in mind that the correct interpretation is one that best harmonises the words with the object of the Statute . If two interpretations are quite possible, the Court / Tribunal is to prefer that which advances the remedy and suppress the mischief as the legislature envisaged. Further, a construction giving rise to anomalies should be avoided as per decision of the Hon ble Supreme Court Veluswami Thevar V. G.Raja Nainar reported in AIR 19 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d and sixty-three only) plus interest upto 31st July, 2019 @ PLR + 1%: ₹ 11,48,256.10 (Rupees eleven lakhs forty-eight thousand two hundred and fifty-six ten paise only). The total debt was mentioned as ₹ 90,00,919.10 (Rupees Ninety Lakh Nine Hundred Nineteen and Ten Paisa only). According to the 2nd Respondent / Operational Creditor the total debt as on August 26th, 2019 was ₹ 90,68,563.96. 45. In fact, the dates of default were (i) 11.4.2018, 28.4.2018 and 17.6.2018 the date of demand notice was on 31.07.2019. The Section 9 Application was filed before the Adjudicating Authority on 5.9.2019. The date of first hearing was on 17.10.2019 and on 20.12.2019 an Ex-parte order was passed. The Corporate Debtor was provided with an opportunity to project its reply on 17.01.2020 and prayed for further time on 03.02.2020 etc. Further, order was reserved on 13.03.2020 and the same was pronounced on 20.05.2020. 46. A mere glance of the letter dated 17.03.2020 of the Director of the Corporate Debtor addressed to the 2nd Respondent / Operational Creditor merely points out that the business of the Company was severely affected and that the Bank Account of the Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the I B Code has a retrospective or prospective effect, at this juncture, this Tribunal makes a useful reference to the said notification which runs to the effect S.O. 1205(E).- In exercise of the powers conferred by the proviso to section 4 of the Insolvency and Bankruptcy Code, 2016 (31 of 2016), the Central Government hereby specifies one crore rupees as the minimum amount of default for the purposes of the said section . [F.No. 30/9/2020 Insolvency] 50. The plea taken on behalf of the Appellant is that the amendment which was introduced in Section 4 of the I B Code was retrospective in nature and would apply to the date of commencement. Per contra, the stand of the 2nd Respondent / Operational Creditor is that Section 9 of the Code provides substantive right to file an application in triggering the Corporate Insolvency Resolution Process which cannot be taken away on a future date with retrospective effect. Further, the Learned Counsel for the 2nd Respondent points out that when a Statute which changes not only the procedure but also confers / creates new rights and liabilities, the same shall be construed to be prospective in operation unless otherwise provide ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 / petition 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 / petition is to be admitted by the Adjudicating Authority , of course subject to the ingredients of Section 9(2) to Section 9(5) of the Code. 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 of India, whereby and whereunder the minimum amount of default limit was specified as Rs. one crore (obviously raising the minimum amount from Rs. one lakh to one crore) unerringly comes to a definite conclusion that the said notification is only Prospective in nature and not a retrospective one because of the simple reason the said notification does not in express term speaks about the applicability of retrospective or retroactive operation. Suffice it fo ..... X X X X Extracts X X X X X X X X Extracts X X X X
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