Prafulla Purushottamrao Gadge vs Narayan Mangal & Anr

Prafulla Purushottamrao Gadge ....Appellant Vs. Narayan Mangal & Anr. ...Respondents For Appellant: Mr. Dhruv Gupta, Mr. Dhananjay Dhondarkar, Advocates.

For Respondents: Mr. Pulkit Tare, Mr. Jatin Sehgal, Advocates for R1. PCS Lovkesh Batra, IRP/R2 Mr. Navin Kahndelwal, IRP

ORDER

(Through Virtual Mode)

06.05.2022: Heard Learned Counsel for the Appellant and Learned

Counsel appearing for the Respondent No.1 as well as the Interim Resolution

Professional. With the consent of the parties, we dispose of the Appeal at the

stage of admission.

2. This Appeal has been filed against the order dated 04.04.2022 passed

by the Adjudicating Authority (National Company Law Tribunal), Mumbai

Bench, Court-V, by which the Application filed under Section 7 of the

Insolvency and Bankruptcy Code, 2016 ("Code" for short) has been admitted.

Few background facts need to be noted for deciding this Appeal are:-

2.1. Earlier an Application under Section 7 was filed by the Respondent No.1

on 12.10.2019 claiming a sum of Rs. 63,20,388/- which Application stood 2

withdrawn by order dated 13.12.2019. On the Consent Terms, the order

withdrawing the Application records as follows:-

"Both sides present and submits that the matter is amicably settled between the parties and filed consent terms. Consent terms taken on record.

Accordingly, on the request made by the Petitioner for withdrawal of this Petition, the Petition is disposed of as withdrawn."

2.2. The Respondent No.1 filed again an Application under Section 7 alleging

that there was default in the Consent Terms and on the basis of default

committed by the Corporate Debtor fresh claim is to be considered. The said

Application was filed on 25.06.2021 being CP (IB) No. 725 (MB) 2021. In the

fresh Application filed under Section 7 by the Respondent No.1, the amount

claimed under Part-IV is Rs. 78,65,000/-. The notice was issued in the said

Application and after hearing the parties, the Adjudicating Authority by the

impugned order has admitted the Application. The Suspended Director of the

Corporate Debtor has come up in this Appeal challenging the order.

3. The principal submission which has been raised by the Counsel for the

Appellant is that in view of the Notification dated 24.03.2020 by which

threshold of Rupees One Crore has been provided and minimum amount of

default for the purpose of filing an Application under Part-II of the IBC, the

Application filed on 25.06.2021 having not fulfilling the threshold ought to

have been rejected. It is submitted that the Adjudicating Authority without

considering the said threshold has admitted the Application.

Comp. App. (AT) (Ins.) No. 498 of 2022 3

4. Learned Counsel for the Respondent No.1 refuting the submissions of

the Learned Counsel for the Appellant contends that the present Application

filed under Section 7 filed on 25.06.2021 is in continuation of the earlier

Application which was filed on 12.10.2019 and hence, the threshold which

was introduced on 24.03.2020 shall not be applicable.

5. Learned Counsel for the IRP submits that no payment of fee has been

made to the IRP in the proceedings.

6. We have considered the submissions of the Learned Counsel for the

parties and perused the record.

7. The submission raised by the Counsel for the Appellant that the

Application which has been filed on 25.06.2021 under Section 7 has to fulfill

the requirements of threshold as introduced by Notification dated 24.03.2020

has substance. The Adjudicating Authority has not adverted to the said issue

and has admitted the Application. The submission of the Counsel for the

Respondent that Application dated 25.06.2021 is in continuation of the earlier

Application cannot be accepted. After 13.12.2019, I.A 1128/2020 for

restoration was filed which was dismissed on 02.02.2021 by the Adjudicating

Authority. Thus, the Adjudicating Authority has refused to restore the earlier

Section 7 Application which order has become final. Further, Learned Counsel

for the Appellant has rightly referred to Clause 12 of the Settlement Agreement

which was earlier filed in the earlier proceeding where it was mentioned that

in event, any default is committed in the Settlement Agreement, there shall be

liberty to initiate fresh legal proceedings under Section 7. We, thus, are of the

Comp. App. (AT) (Ins.) No. 498 of 2022 4

view that the Application filed under Section 7 by the Respondent No.1 not

having fulfilling the threshold of Rupees One Crore ought not to have been

entertained and the Adjudicating Authority committed error in admitting the

Application. We, thus, allow the Appeal, set aside the order dated 04.04.2022

impugning this Appeal.

8. Insofar as fees of IRP is concerned, we are of the view that the IRP shall

be paid an amount of Rs. 1,00,000/- (One Lac), Rs.50,000/- each by the

Appellant and Respondent No.1 within one month from today.

9. We, further, observe that the dismissal of Application filed on

25.06.2021 filed by the Respondent No.1 shall not preclude the Respondent

No.1 to take fresh proceeding under Section 7 in event all conditions under

Section 7 are fulfilled in accordance with law. We further make it clear that we

have not entered into the merits of the contentions of the parties and the

Appeal is being allowed only on the ground of not fulfilling the threshold of

Application under Section 7.

10. With these observations, the Appeal is allowed.

[Justice Ashok Bhushan] Chairperson

[Shreesha Merla] Member (Technical)

Anjali/nn

Comp. App. (AT) (Ins.) No. 498 of 2022