Plus Corporate Ventures Private ... vs Transnational Growth Fund Ltd
- CitationCompany Appeal (AT) (Insolvency) No. 1270 of 2022
Ratio decidendi
The rule this decision rests on
Under the proviso to Section 10A of the Insolvency and Bankruptcy Code, 2016, no application for initiation of corporate insolvency resolution process may be filed in respect of any default occurring during the suspension period (25th March, 2020 onwards, for the notified period), and the bar applies to each such default individually; a creditor cannot cumulatively aggregate defaults occurring within the suspension period, including those falling after the period's expiry, into a single application under Section 9 in order to avoid the bar. Where the defaults falling within the suspension period are each below the threshold under Section 4 of the Code, a Section 9 application founded on the defaults occurring after the suspension period is not sustainable on the amount of those later defaults alone where that aggregate is below the Section 4 threshold, and the adjudicating authority is correct in rejecting such an application.
Written by Miss Lucy from the judgment below, not taken from a headnote.
Judgment
As delivered
Plus Corporate Ventures Pvt. Ltd. ...Appellant
Versus
Transnational Growth Fund Ltd. ...Respondent
Present:
For Appellant: Mohd Nazim Khan, PCS along with Garmia K Watra. For Respondent:
ORDER
31.10.2022: Heard Ld. PCS appearing for the Appellant.
2. This Appeal has been filed against the Order dated 17th August, 2022
passed by the National Company Law Tribunal, New Delhi, Bench-IV. By
which Order, the Adjudicating Authority has rejected the Application being
Company Petition No. (IB)-297(ND)/2022 under Section 9 filed under the
Insolvency and Bankruptcy Code, 2016 by the Appellant as barred by Section
10-A of the Code.
3. Ld. PCS challenging the impugned Order contends that although in
paragraph 7 of the Judgment, the Adjudicating Authority has noticed the date
on which the repayments were to be received by the Appellant and last
payment was to be received on 30th April, 2021 i.e. subsequent to the period
which was mentioned in Section 10A hence it was open for the Appellant to
file Section 9 Application for the entire amount i.e. Rs. 3,37,50,000/-.
4. We have considered the submissions of Learned PCS and have perused
the record.
-2-
5. In paragraph 7 of the Judgement of the Adjudicating Authority,
following has been stated.
"7. We find that as per the terms and conditions of the Sale Agreement dated 27.08.2020 as relied by both the parties, as per clause 2 of the said Sale Agreement the schedule for payment agreed between the parties is presented overleaf:-
2) Second Party agreed to pay the entire amount to first party as per schedule mentioned hereinafter.
S. Bank Name Date Mode of Amount No. Payment 1. AU Small Finance 16-09- RTGS/NEFT 1,00,00,000/- Bank 2020 2. AU Small Finance 30-09- RTGS/NEFT 1,00,00,000/- Bank 2020 3. AU Small Finance 31-10- RTGS/NEFT 20,00,000/- Bank 2020 4. AU Small Finance 30-11- RTGS/NEFT 20,00,000/- Bank 2020 5. AU Small Finance 31-12- RTGS/NEFT 20,00,000/- Bank 2020 6. AU Small Finance 31-01- RTGS/NEFT 20,00,000/- Bank 2021 7. AU Small Finance 28-02- RTGS/NEFT 20,00,000/- Bank 2021 8. AU Small Finance 31-03- RTGS/NEFT 20,00,000/- Bank 2021 9. AU Small Finance 30-04- RTGS/NEFT 17,50,000/- Bank 2021 Total 3,37,50,000/-
6. Section 10 A of the IBC provides as follows:
"Section 10A: Suspension of initiation of corporate insolvency resolution process.
10A. Notwithstanding anything contained in sections 7, 9 and 10, no application for initiation of corporate insolvency resolution process of a corporate debtor
Company Appeal (AT) (Insolvency) No. 1270/2022 -3-
shall be filed, for any default arising on or after 25th March, 2020 for a period of six months or such further period, not exceeding one year from such date, as may be notified in this behalf:
Provided that no application shall ever be filed for initiation of corporate insolvency resolution process of a corporate debtor for the said default occurring during the said period.
Explanation. - For the removal of doubts, it is hereby clarified that the provisions of this section shall not apply to any default committed under the said sections before 25th March, 2020."
7. When we look into the proviso to Section 10A, the expression is
"provided that no Application shall ever be filed for initiation of CIRP of a
Corporate Debtor for the said default occurring during the said period" thus
default which has been committed from 16.09.2020 to 28.02.2021, no
Application could have ever been filed. The Appellant's submission that
cumulatively application can be filed taking all amounts, cannot be accepted.
The said submission goes contrary to the statutory scheme delineated by
Section 10A proviso as noted above. When Appellant could not have filed the
Application for the default which was committed, the Adjudicating Authority
did not commit any error in rejecting the Application as barred by Section 10A
of the Code. In so far as the last two default on 31st March, 2021 and 30th
April, 2021 is concerned, the Adjudicating Authority has noticed that the total
amount of the aforesaid two defaults is only Rs. 37,50,000/- which is below
the threshold as provided under Section 4 of the Code.
Company Appeal (AT) (Insolvency) No. 1270/2022 -4-
We thus are of the view that no error has been committed in rejecting the
Application filed under Section 9 of the Code. However, it shall always open
for the Appellant to take steps as permissible in law. With these observations,
the Appeal is dismissed.
[Justice Ashok Bhushan] Chairperson
[Mr. Barun Mitra] Member (Technical)
Basant/nn
Company Appeal (AT) (Insolvency) No. 1270/2022
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