TMI Blog2022 (4) TMI 428X X X X Extracts X X X X X X X X Extracts X X X X ..... may on the occurrence of a default deliver a demand notice under Section 8 of the Code must be read as including an Operational Creditor's authorized agent and lawyer, as has been fleshed out in Form Nos. 3 and 5 appended to the Adjudicating Authority Rules. In this case the Power of Attorney was given to one Mr. A.M. Sridhar by the Operational Creditor to issue notice in Form No. 3. The Counsel for the Operational Creditor contends that the said Power of Attorney would also empower the Power of Attorney Agent to appoint any Advocate practicing to issue notice. However, irrespective of the said Power of Attorney, in view of the Judgment cited above the notice issued by the Advocate would be a valid notice. Whether any debt is due to the Operational Creditor from the Corporate Debtor and whether the Corporate Debtor has committed any default in respect of the said debt and whether CIRP can be initiated against the Corporate Debtor? - HELD THAT:- There is no dispute that the debt is due to the Operational Creditor by the Corporate Debtor. But, for the said debt and default committed by the Corporate Debtor the initiation of CIRP cannot be done due to the debt being less ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ich a bill dated 31.03.2018 was raised. In the said mail it requested the Operational Creditor to submit the bills on low weight basis. The Corporate Debtor by its email dated 29.03.2018 requested the Operational Creditor to furnish the bank details for the purpose of making the payment and the Operational Creditor furnished as such. The Corporate Debtor in its purchase order stated that it would make the payment within 30 days after the submission of the bills. Hence, the Corporate Debtor should have made payment for the bill raised on 15.03.2018 by 14.04.2018 and for the bill raised on 31.03.2018 by 30.04.2018. The bills became due on 14.04.2018 and 30.04.2018 respectively. v. The Operational Creditor was requesting time and again for the payment. The Vice-President of the Corporate Debtor vide email dated 13.04.2019 informed that since, it was doing major over hauling, he would do the needful the moment it undertakes normal operations and till then requested to bear with it. vi. The Operational Creditor once again reminded the Corporate Debtor for payment, by emails dated 05.09.2019 and 01.10.2019 and a reply was issued for the same, asking them to bear with them for s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tor. Form-3 demand notice is not issued by the Proprietrix or her Attorney by virtue of the SPA but it was issued by an Advocate. In view of the Judgment in Macquarie Bank Limited case an Advocate is entitled to issue Form-3 demand notice provided the Advocate is authorised by the Operational Creditor. Hence, the petition is liable to be dismissed for lack of proper notice under Section 8 of IBC. Apart from the above two contentions, the Corporate Debtor also disputes the outstanding amount and contends that he has been disputing the outstanding amount right from the beginning of the supply of the goods. 4. Heard both the Counsel and perused the written submissions made by the Operational Creditor. From the pleadings and the arguments the points that fall for consideration are as follows: i. Whether the claim amount is within the pecuniary jurisdiction of this Tribunal. ii. Whether the demand notice under Section 8 of IBC is in accordance with law. iii. Whether any debt is due to the Operational Creditor from the Corporate Debtor and whether the Corporate Debtor has committed any default in respect of the said debt and whether CIRP can be initiated against the Corp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted for the word default in Section 4(1) it does not produce any absurd result. He submits that if such substitution is made Section 4(1) reads as under: this part shall apply to matters relating to insolvency and liquidation of Corporate Persons where the minimum amount of non-payment debt when whole or any part or instalment of the amount of debt has become due and payable and is not paid by the Corporate Debtor as the case may be ₹ 1 Lakh . Hence, according to him what was the minimum amount prescribed under Section 4(1) i.e., the date on which the debt became due and payable but not is paid has to be seen for the purpose of filing an application under Section 7 and 9 of IBC. He contends that the notification came into effect from 24.03.2020 hence, the applications filed in respect of the default arising prior to 24.03.2020 cannot be applied with the said notification. He contends that the cause of action arises on the commission of the default. He also compares Section 4 with Section 10A and contends that prior to 24.03.2020 the minimum amount of default is only ₹ 1 Lakh. He submits that the words the date of application or at the time the petition is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... here are certain circumstances for which no direction is given in the notification regarding its applicability. The circumstances are: (i) In the case of an operational Debt where demand notice under Section 8 of IBC has already been delivered prior to the notification dated 24.03.2020 but the application is filed after 24.03.2020. (ii) Where the default has occurred prior to the issuance of the notification dated 24.03.2020 but no demand notice was sent in case of the application filed under Section 9. (iii) Where the application has already been filed but not admitted by the Adjudicating Authority against the Corporate Debtor. (iv) Where the application has been admitted for initiation of CIRP against the Corporate Debtor. In this case the demand notice is delivered not prior to the said notification but only after the notification hence. It does not come within situation (i). In order to come under the situation (ii), no demand notice should have been issued. But since the demand notice is issued in this case, it does not fall under situation (ii), situations (iii) (iv) are not applicable to the facts of this case. From the situation (ii), enumerated b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eld that in the matter in which the default has occurred prior to the issuance of the notification dated 24.03.2020 and no demand notice (as in the case of section 9 of IBC) was delivered prior to that notification, in that case too, the said notification is not applicable. It concluded by saying that the notification is applicable only in respect of default which has occurred on or after 24.03.2020 and not prior to that. The judgement of NCLT, Kochi Bench in IBA/35/KOB/2020 between Al Sadiq Sweets vs. Krisenter Impex P Ltd., held that the notification is prospective in nature and not a retrospective one. Since it does not expressly speak about the applicability of retrospective or retroactive operation. It observed that the notification dated 24.03.2020 does not save the Applicant from the initiation of insolvency especially in cases where default towards creditors have taken place before the pandemic and the resultant financial crisis and such an interpretation would be contrary to the intention of the executive in exercise of its power of delegated legislation. It is also observed that if the intention was to provide for a blanket protection to the Corporate Debtors from be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d counsel for Appellant broadly lay down that any statute/law can be applied retrospectively only if explicit provision regarding retrospective application is made in the statute. It is seen that notification dated 24.03.2020 makes it unambiguously clear that the threshold limit to be considered for Section 9 application will be ₹ 1 Crore. This threshold limit will be applicable when the application filed under Section 7 or 9 on or after 24.03.2020 even if debt is of a date earlier than 24.03.2020. Since, the application under Section 9 which is the subject matter of this appeal was filed on 30.09.2020, therefore the threshold limit of ₹ 1 Crore of the debt is applicable in the present case . The Counsel for the Corporate Debtor brings to the notice of this Tribunal that an appeal is pending against the said judgment of NCLAT, in the Supreme Court but the Counsel for the Operational Creditor insists that the application be decided on the basis of the law as it stands on today. Clarity with regard to the date of application of the notification is given in the above cited judgment as the date of filing of the application and since the judgment is a binding prece ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch a financial creditor, operational creditor or corporate applicant makes an application to the adjudicating authority for initiating the process. On the other hand, the insolvency commencement date is the date of the admission of the application. This distinction is also evident from the provisions of sub-section (6) of Section 7, sub-section (6) of Section 9 and sub-section (5) of Section 10. Section 7 deals with the initiation of the CIRP by a financial creditor; Section 8 provides for the insolvency resolution by an operational creditor; Section 9 provides for the application for initiation of the CIRP by an operational creditor; and Section 10 provides for the initiation of the CIRP by a corporate applicant. 34: NCLAT has explained the difference between the initiation of the CIRP and its commencement succinctly, when it observed: 13. Reading the two definition clauses in juxtaposition, it emerges that while the first viz. 'initiation date' is referable to filing of application by the eligible applicant, the later viz. 'commencement date' refers to passing of order of admission of application by the Adjudicating Authority. The 'initiation date ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cluding an Operational Creditor's authorized agent and lawyer, as has been fleshed out in Form Nos. 3 and 5 appended to the Adjudicating Authority Rules. In this case the Power of Attorney was given to one Mr. A.M. Sridhar by the Operational Creditor to issue notice in Form No. 3. The Counsel for the Operational Creditor contends that the said Power of Attorney would also empower the Power of Attorney Agent to appoint any Advocate practicing to issue notice. However, irrespective of the said Power of Attorney, in view of the Judgment cited above the notice issued by the Advocate would be a valid notice. III. Whether any debt is due to the Operational Creditor from the Corporate Debtor and whether the Corporate Debtor has committed any default in respect of the said debt and whether CIRP can be initiated against the Corporate Debtor. There is no dispute that the debt is due to the Operational Creditor by the Corporate Debtor. But, for the said debt and default committed by the Corporate Debtor the initiation of CIRP cannot be done due to the debt being less than the pecuniary Limits of jurisdiction of this Tribunal. It however can recover the same by moving the appropr ..... X X X X Extracts X X X X X X X X Extracts X X X X
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