Govind Singh vs Naina Rajkumar Bansal And Anr

IN THE MATTER OF: Govind Singh ...Appellant

Versus Naina Rajkumar Bansal & Anr. ...Respondents

Present: For Appellant: Mr. Sanjay Rathi, Mr. Manish Kumar Shekhari, Ms. Anisha Mahajan, Advocates For Respondent: Ms. Sunita Yadav, Advocate for R1 Mr. Gautam Singhal, Advocate for R2 and Mr. Mukesh Chand Jain, RP, R2

ORDER

(Virtual Mode) (ORAL) Per: Justice Rakesh Kumar Jain.

27.07.2022: This appeal is directed against the order dated

10.12.2021 by which the Adjudicating Authority (National Company Law

Tribunal, New Delhi, Court -III), while entertaining an application filed

under Section 9 of the Insolvency and Bankruptcy Code, 2016 (in short

'Code') read with Rule 6 of the Insolvency and Bankruptcy (Application to

Adjudicating Authority), Rules, 2016 (in short 'Rule') has passed the order of

admission, while proceeding ex-parte against the Corporate Debtor and

appointed Interim Resolution Professional and declared the moratorium in

terms of Section 14 of the Code.

2. The Corporate Debtor has filed this appeal, inter alia, on the issues,

namely, that it has wrongly been proceeded against ex-parte and the

Adjudicating Authority had no jurisdiction to entertain and to admit the application filed under Section 9 of the Code as the amount involved is Rs.

27,49,090/- which is less than the threshold of Rs. 1 Crore and that there

is a pre-existing dispute.

3. Counsel for the Appellant has submitted that it was wrongly

proceeded against ex-parte by the Adjudicating Authority as according to

him when the case was adjourned on 22.09.2021 for 29.10.2021, the date

was wrongly noted as 29.12.2021 by him in his diary. In respect of the order

dated 03.12.2021, it is submitted that the Appellant was never served. He

further submitted that the application was filed on 02.12.2020 after the

amendment dated 24.03.2020 in Section 4 whereby the threshold of Rs. 1

Crore has been fixed and was not maintainable even if the notice under

Section 8 was issued on 15.01.2020. It is thus argued that the Adjudicating

Authority has committed a patent error while entertaining the application

filed under Section 9 of the Code in violation of the provision of Section 4 of

the Code.

4. Counsel for Respondent No. 1 has submitted that the Appellant has

rightly been proceeded against ex-parte because all the orders passed by the

Adjudicating Authority were uploaded on its website and might have been

downloaded by the Appellant or his Counsel but a lame excuse has been

made that the date was wrongly entered in his case diary as 29.12.2021

instead of 29.10.2021. As regards the maintainability of the application

under Section 9 of the Code before the Adjudicating Authority in view of the

bar created in Section 4 of the Code vide amendment dated 24.03.2020 is

concerned, it is submitted that since the notice under Section 8 was issued

on 15.01.2020 or the default had occurred before the notification, therefore, the amendment would not apply. However, no precedent is cited to support

her arguments.

5. We have heard Counsel for the parties and perused the record with

their able assistance.

6. Insofar as the issue as to whether the Appellant has wrongly been

proceeded against ex-parte is concerned, it would be sufficed to say that the

Appellant had already appeared after the service before the Adjudicating

Authority on 22.09.2021 which is also admitted by the Counsel. The only

lame excuse presented before us is that the date for which the case was

adjourned on 29.10.2021 was wrongly mentioned in his case diary as

29.12.2021 instead of 29.10.2021.

7. However, Counsel for the Appellant has failed to explain the order

dated 03.12.2021 in which it has been categorically mentioned that the

Respondent No. 1 was duly served. The said order is reproduced as under:-

"Counsel for the Operational Creditor is present. There is no representation on behalf of the Corporate Debtor. Counsel for the Operational Creditor submits that he has complied with the order dated 29.10.2021 by sending once again the present Petition by all means on the Corporate Debtor.

In this connection, he has filed proof of service along with an affidavit. We have gone through the said documents and it is confirmed that the present Petition has been duly served on the Corporate Debtor against proper acknowledgement. In addition, we have also seen the Petition along with proof of service of Petition at the time of initial filing of the Petition before this Tribunal. From the said proof of service, it is seen that the Petition was firstly served on company on 03.12.2020 and the Directors on 04.12.2020 against proper proof of delivery. From the above it is made clear that the Corporate Debtor in the present case is intentionally avoiding the proceedings initiated by Operational Creditor under Section 9 of IBC.

Accordingly, this Tribunal proceeds ex-parte against the Corporate Debtor and directs the Counsel for the Operational Creditor to make his final submissions about the present application.

We have heard the Counsel for the Operational Creditor in detail and gone through the present application for the purpose of initiation of CIRP against the Corporate Debtor."

8. Thus, from the aforesaid facts, we are satisfied that the Appellant did

not deliberately appear before the Adjudicating Authority on the date when

the case was taken up for hearing on 29.10.2021 and 03.12.2021 and was

thus, rightly proceeded against the ex-parte. The Appellant, instead of, filing

an application before the Adjudicating Authority for setting aside the ex-

parte order has preferred the present appeal in which a lame excuse has

been made for the purpose of setting aside not only the order dated

03.12.2021 but also the impugned order by which the application filed

under Section 9 has been admitted. In view, thereof, the plea raised by the

Appellant that it was wrongly proceeded against ex-parte is hereby rejected.

9. Now, we come to the second issue raised in this case about the

maintainability of the application filed under Section 9 of the Code before

the Adjudicating Authority. In this regard, it will be worthwhile to refer to

Section 4 of the Code which is reproduced as under:-

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.

Provided further that the Central Government may, by notification, specify such minimum amount of default of higher value, which shall not be more than one Crore rupees, for matters relating to the pre-packaged insolvency resolution process of corporation debtors under Chapter III-A.

10. It is pertinent to mention that the amendment in Section 4 was

brought on 24.03.2020 and the amount of default has been increased from

1 lakh to 1 Crore. Admittedly, the application under Section 9 which is on

record at Pg. 59 shows that the amount claimed is Rs. 27,49,090/- which is

far less than Rs. 1 Crore. This Application has been filed on 02.12.2020

much after the amendment was brought in the statute on 24.03.2020. The

only argument raised by Counsel for Respondent No. 1 is that the statutory

notice, for the aforesaid amount was given on 15.01.2020 in terms of

Section 8 of the Code but the fact remains that the application under

Section 9 was not filed before the amendment dated 24.03.2020 rather it

was filed after the amendment came into being and the threshold was

changed by Rs. 1 lakh to 1 Crore. The argument that threshold has to be

seen on the date of issuance of statutory notice may appear attractive but it

is neither have nor there in view of the fact that the amendment was

brought on 24.03.2020 changing the threshold from Rs. 1 Lakh to 1 Crore

and the application under Section 9 was filed much thereafter on

02.12.2020.

11. Thus, in view thereof, we are of the considered opinion that the order

passed by the Adjudicating Authority, without going through this fact, is as

to whether the application was maintainable or not, is patently illegal and

without jurisdiction. No other point has been raised. In these facts and

circumstances, the present appeal is allowed, the order dated 10.12.2021 is

set aside on the ground that the application filed under Section 9 before the

Adjudicating Authority was not maintainable for not meeting the criteria of

threshold, provided in Section 4 of the Code and thus, the Corporate Debtor is released from the rigours of the CIRP much less the moratorium and

status quo ante is ordered to be maintained in respect of the assets of the

Corporate Debtor.

[Justice Rakesh Kumar Jain] Member (Judicial)

[Mr. Kanthi Narahari] Member (Technical)

[Dr. Alok Srivastava] Member (Technical)

Sheetal/RR