TMI Blog2020 (12) TMI 192X X X X Extracts X X X X X X X X Extracts X X X X ..... d Bankruptcy Code, 2016 demanding payment of ₹ 31,33,595/- was sent to the Corporate Debtor at its Registered Office through speed post. However, no reply raising any dispute has been received by the Respondent/Operational Creditor within the stipulated period of ten days from 25.02.2020. It is therefore, evident that despite the expiry of 10 days from the date of service of the demand notice, neither dispute nor repayment of the due amount has been brought to the notice of the Operational Creditor. This would clearly show that Applicant/Corporate Debtor is not able to pay its debts taken in the normal course of business. Since, the Demand Notice in Form 3 has been sent by the Operational Creditor to the Corporate Debtor and after waiting for 10 days form that date only, Operational Creditor filed the application, the contention of the Applicant/ Corporate Debtor has no legs to stand. Application challenging the maintainability of the Application is dismissed. - IA No. 175/KOB/2020 IBA/34//KOB/2020 - - - Dated:- 1-12-2020 - Hon ble Mr. Ashok Kumar Borah, Member (Judicial) For the Applicant : Shri Joseph Kodianthara, Sr.Advocate For the Respondent : Shri Akhil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd (e) any other proof confirming that there is no payment of an unpaid operational debt by the corporate debtor or such other information, as may be prescribed; (4) An operational creditor initiating a corporate insolvency resolution process under this section, may propose a resolution professional to act as an interim resolution professional. (5) The Adjudicating Authority shall, within fourteen days of the receipt of the application under sub-section (2), by an order_ (i) admit the application and communicate such decision to the operational creditor and the corporate debtor if_, (a) the application made under sub-section (2) is complete; (b) there is no [payment] of the unpaid operational debt; (c) the invoice or notice for payment to the corporate debtor has been delivered by the operational creditor; (d) no notice of dispute has been received by the operational creditor or there is no record of dispute in the information utility; and (e) there is no disciplinary proceeding pending against any resolution professional proposed under sub-section (4), if any; (ii) reject the application and communicate such decision to th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vent, delay in filing the complaint will be treated as having been condoned under the proviso to clause (b) of Section 142 of the NI Act. This direction shall be deemed to be applicable to all such pending cases where the complaint does not proceed further in view of our answer to question (i). As we have already held that a complaint filed before the expiry of 15 days from the date of receipt of notice issued under clause (c) of the proviso to Section 138 is not maintainable, the complainant cannot be permitted to present the very same complaint at any later stage. His remedy is only to file a fresh complaint; and if the same could not be filed within the time prescribed under Section 142(b), his recourse is to seek the benefit of the proviso, satisfying the Court of sufficient cause. Question (ii) is answered accordingly . Relying on this decision the Hon ble Himachal Pradesh High Court in Rajeev Gupta Vs. Prem Singh (Cr. MMO No. 219 of 2017) held that no cause of action can arise before the expiry of the said 15 days. 5. The learned counsel for the Applicant stated the scheme of the IBC is also similar, if not identical in nature. In so far as an application under Sectio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9 of the IBC, is only to be dismissed, without going into the merits. 8. It is further stated that on a verification from the Registry of this Tribunal, it is learnt that even though the application is dated 07.03.2020, the same was filed on 25.09.2020. It is the said date therefore that would have to be considered as 'initiation date' for the purpose of Section 5(11) of the Insolvency and Bankruptcy Code. 9. They have further referred to Section 4 of the Code which reads as under: - Section 4. Application of this Part (1) This Part shall apply to matters relating to the insolvency and liquidation of corporate debtors where the minimum amount of the default is one lakh rupees: PROVIDED that the Central Government may, by notification, specify the minimum amount of default of higher value which shall not be more than one crore rupees. 10. The said provision was modified vide Notification No. S. O. 1205(E) dated 24.03.2020 by the Ministry of Corporate Affairs enhancing the minimum amount of default as ₹ 1crore with effect from 24.03.2020. Therefore, the date of initiation of the proceedings on the part of the Operational Creditor now having ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cation dated 24.03.2020 is applicable only prospectively. If a Corporate Debtor has already defaulted on any debts prior to the Notification. i.e. before 24.03.2020, initiation of CIRP under Section 9 of the I B Code will be valid. 14. Their further contention is that the intention of the notification can be reasonably interpreted as constituting a relief-oriented measure to protect Corporate Debtors from the deleterious impact of the Covid-19 pandemic upon their businesses. The said notification docs not result in any general relaxation or waiver of the provisions of the Code and does not change or in any manner affect what happens after a default is committed (both of which, in any event, cannot be done under the guise of the proviso to Section 4). The notification only enhances the limit of what constitutes a default. 15. It is also contended that the above facts do not save the Applicants/Corporate Debtors from the trigger of insolvency especially in cases where defaults towards creditors have taken place before the pandemic and the resultant financial crisis. Such an interpretation would be contrary to the intention of the executive in exercise of its powers of delegat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ify the above arguments the learned counsel for the Respondent/Operational Creditor, has referred to the following case laws: - DIRECTOR GENERAL OF FOREIGN TRADE AND ANOTHER VS. M/S. KANAK EXPORTS AND ANOTHER in (Civil Appeal No. 554 of 2006) dated 27.10.2015. DR. INDRAMANI PYARELAL GUPTA VS. W.R. NATH ORS., April 11, 1962, (AIR 1963 SC 274). BAKUL CASHEW CO. ORS.' VS. 'SALES TAX OFFICER ANR. QUILON, March 12, 1986, 1987 AIR 2239, 1986 SCR (1) 610. 18. The Respondent/Operational Creditor stated that he cannot be deprived of filing an application under Section 9 of the Code to initiate Corporate Insolvency Resolution Process against a defaulting Corporate Debtor for a debt that has occurred prior to the Notification. It is further stated that this would amount to a differential treatment between a petitioning creditor who has filed an insolvency petition prior to the Notification, and the one who has not filed, although the date of default in both cases is prior to the date of the Notification, and the amounts of default are similar. This is in clear violation of the Principles of Equality and equal treatment before law enshrined under Article 14 of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r further submitted that the amendment to Section 7 of the Act further makes it clear that the legislature has exercised the power of retrospective application in cases where it was necessary to do so. When provisions of Section 7 of the Act were abused by the Homebuyers, the legislature made the amendment applicable to those cases which are pending admission as well those which are yet to be filed. If that was the intent of the legislature, nothing prevented them from passing the impugned Notification/ Ordinance/Amendment making it applicable to cases where the debt became due prior to 24.03.2020. The right of action, that is, a right to sue or a right to apply etc., is a vested right. Hence, in the present case, a right to apply for initiating Insolvency Resolution Proceedings under the IBC became a vested right when the condition precedent of issuing a Demand Notice under Section 8 of the Act was satisfied. 22. I have meticulously heard the arguments advanced by the learned senior counsel for the Applicant and the learned counsel for the Respondent. The Notification dated 24.03.2020 was issued by the Ministry of Corporate Affairs, stating that In exercise of the powers confe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nal, on 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 1BC (waiting for admission), prior to the issuance of the aforesaid notification, as opined by this Tribunal. Viewed in the above prospective, 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 application filed by the 2nd Respondent Operational Creditor are fee from legal infirmities. 25 I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 595/- (Rupees Thirty-One Lakhs Thirty-Three Thousand Five Hundred and Ninety-Five Only) was sent to the Corporate Debtor at its Registered Office through speed post. However, no reply raising any dispute has been received by the Respondent/Operational Creditor within the stipulated period of ten days from 25.02.2020. It is therefore, evident that despite the expiry of 10 days from the date of service of the demand notice, neither dispute nor repayment of the due amount has been brought to the notice of the Operational Creditor. This would clearly show that Applicant/Corporate Debtor is not able to pay its debts taken in the normal course of business. Since, the Demand Notice in Form 3 has been sent by the Operational Creditor to the Corporate Debtor and after waiting for 10 days form that date only, Operational Creditor filed the application, the contention of the Applicant/ Corporate Debtor has no legs to stand. 28. Therefore, since the application IBA/34/KOB/2020 has been filed by the Applicant after exhausting the remedy by issuing the statutory notice, the application is in order. Hence, IA/175/KOB/2020 challenging the maintainability of the Application is dismissed. Date ..... X X X X Extracts X X X X X X X X Extracts X X X X
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