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TMI Blog2022 (10) TMI 325X X X X Extracts X X X X X X X X Extracts X X X X ..... ioner Vishnu Oil Mill Pvt. Ltd. has approached this Court through this writ petition seeking to assail the validity of Section 7 of the Insolvency and Bankruptcy Code, 2016 (hereinafter referred to as 'IBC') and so also the order dated 22.12.2021 passed by the National Company Law Tribunal, Jaipur Bench (hereinafter referred to as 'NCLT') against the petitioner. Section 7, the validity whereof assailed in the instant writ petition reads thus:- Section.7 Initiation of corporate insolvency resolution process by financial creditor. "7. (1) A financial creditor either by itself or jointly with other financial creditors may file an application for initiating corporate insolvency resolution process against a corporate debtor be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he purposes of this sub-section, a default includes a default in respect of a financial debt owed not only to the applicant financial creditor but to any other financial creditor of the corporate debtor. (2) The financial creditor shall make an application under sub-section (1) in such form and manner and accompanied with such fee as may be prescribed. (3) The financial creditor shall, along with the application furnish- (a) record of the default recorded with the information utility or such other record or evidence of default as may be specified; (b) the name of the resolution professional proposed to act as an interim resolution professional; and (c) any other information as may be specified by the Board. (4) The Adjudicating ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tor and the corporate debtor; (b) the order under clause (b) of sub-section (5) to the financial creditor, within seven days of admission or rejection of such application, as the case may be." Shri Hemant Kothari, learned counsel representing the petitioner vehemently and fervently contended that previously, the threshold limit for triggering Corporate Insolvency Resolution Process (hereinafter referred to as "CIRP") qua the private financial creditors was Rs.1 lakh only. However, because of the serious financial distress brought around by the Covid-19 pandemic, the Government of India increased the minimum amount of default to Rs. 1 crore from the existing threshold of Rs. 1 lakh. He referred to the Press Release dated 24.03.2021 issued ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lakh to Rs.1 crore, the clear intent of the legislature was that a joint application could be entertained but the individual liability towards every financial creditor should not be less than Rs.1 crore. He urged that in the present case, the private respondents Nos.4 to 7 do not claim individual debt or default of Rs.1 crore against the petitioner but despite that, by unjustly invoking the clause of joint application by financial creditors under Section 7 of the IBC, CIRP has been initiated against the petitioner which is an MSME. As per Shri Kothari, the provision needs to be read in a purposive manner so as to lay down a principle that where financial creditors file a joint application under Section 7 of the IBC, the minimum default of R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n cannot be envisaged by any stretch of imagination. We have given our thoughtful consideration to the submissions advanced at bar and have gone through the material available on record. We have carefully perused the language of Section 7 of the IBC and the corresponding amendments. At the outset, we may state here that validity of Section 7 of the IBC was examined by Hon'ble the Supreme Court in the case of Swiss Ribbons Pvt. Ltd. (supra) and the same was found to be compliant to the Constitution of India and the challenge to the validity of the statute was repelled by Hon'ble the Supreme Court in unequivocal terms. Despite that, the petitioner has ventured into questioning the validity of Section 7 of the IBC claiming that the c ..... X X X X Extracts X X X X X X X X Extracts X X X X
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