Rajendra Singh Rathore vs Chetanya Buildcon Pvt. Ltd

[Arising out of the Impugned Order dated 07.11.2025 passed by the Adjudicating Authority, National Company Law Tribunal, New Delhi Bench in C.P. (IB) No. 234 of 2025] In the matter of: MR. RAJENDRA SINGH RATHORE Resident of : B-1, Second Floor, Geetanjali Enclave, New Delhi - 110017 Email: rajendrarathore@yahoo.com .... Appellant Versus

CHETANYA BUILDERS PVT. LTD. Registered office at: 3, Munirka Marg, Vasant Vihar, New Delhi - 110057 Email: suyashsarogi@gmail.com .... Respondent Present:

For Appellant : Mr. Rohan S. Nandy, Advocate.

For Respondent : Mr. Abhijeet Sinha, Sr. Advocate with Mr. Ayush, Mr. Mohit Nandwani, Mr. Abhishek Goswami, Advocates.

JUDGMENT

(Hybrid Mode)

Per: Barun Mitra, Member (Technical)

The present appeal filed under Section 61 of the Insolvency and

Bankruptcy Code, 2016 ('IBC' in short) by the Appellant arises out of the Order

dated 07.11.2025 (hereinafter referred to as 'Impugned Order') passed by the

Adjudicating Authority (National Company Law Tribunal, New Delhi Bench) in

C.P.(IB) No.234/2025. By the impugned order, the Adjudicating Authority has

dismissed the Section 7 application filed by the Appellant for initiation of Corporate Insolvency Resolution Process ('CIRP' in short) against the Corporate

Debtor-Chetanya Buildcon Pvt. Ltd. on the ground that the outstanding amount

fell below the threshold prescribed under Section 4 of IBC. Aggrieved by the

impugned order, the present appeal has been preferred by the ex-Director of the

Corporate Debtor.

2. Coming to the sequence of events facts of the present case, the Appellant

had entered into an Agreement to Sell ('ATS' in short) dated 16.02.2017 with

Saluja Construction Company Limited which went through several iterations

until a fresh ATS dated 27.12.2018 was entered into with the Respondent-

Corporate Debtor in respect of a property situated at Friends Colony, New Delhi.

Thereafter the ATS was cancelled through a Cancellation Agreement dated

30.01.2020, under which the Respondent undertook to refund a sum of Rs. 2.65

Cr which was payable in 3 tranches viz Rs 65 lakhs in March 2020 and Rs 1 Cr

each in March and April 2020. It was also agreed that applicable interest of 9 %

p.a would be payable on the outstanding amount from 01.10.2019 onwards.

However, as the Respondent failed to discharge the said obligation within the

stipulated time, the Appellant filed a Section 7 petition on 23.05.2024, being CP

IB No. 359 of 2024 for a principal amount of debt due and payable of Rs.

2,65,00,000/- alongwith interest of Rs. 1,03,35,000/- for the period 01.10.2019

to 31.01.2024. The Respondent had raised a specific objection that since the

default had occurred during March to May 2020, it was hit by the statutory bar

under Section 10A of IBC. The Adjudicating Authority granted time to the

Appellant to file an affidavit on maintainability which opportunity not having

been availed, the Section 7 petition was dismissed on 04.09.2024. Thereafter,

Page 2 of 14 Company Appeal (AT) (Insolvency) No. 2049 of 2025 the Appellant had filed a Restoration Application No. 107 of 2024, which was

dismissed on 18.10.2024 followed by dismissal of clarification application vide

No IA No. 5833 of 2024. The Appellant thereafter preferred an appeal before this

Tribunal being CA(AT)(Ins) No. 186 of 2025 which was disposed of on 28.02.2025

by this Tribunal giving liberty to the Appellant to file a fresh Section 7 application

excluding the period of default covered under Section 10A. Pursuant to the

liberty granted by this Tribunal, the Appellant filed a fresh Section 7 application

being CP (IB) No. 234 of 2025 in which they claimed the same principal amount

of Rs. 2.65 Cr which had fallen due during the Section 10A period by asserting

that the default was continuing in nature. The interest amount claimed was,

however, Rs 93.41 lakh after excluding the Section 10A period. The Adjudicating

Authority dismissed CP (IB) No. 234 of 2025 by holding that the principal

amount had to be excluded as the default occurred during the Section 10A

period while the interest amount was below the minimum threshold of Rs 1 Cr

and therefore the Section 7 petition was not maintainable.

3. Making submissions on behalf of the Appellant, Ld. Counsel for the

Appellant submitted that the Cancellation Agreement dated 30.01.2020

constituted a clear and unequivocal acknowledgment of liability by the Corporate

Debtor to repay a sum of Rs 2.65 crore alongwith interest @ 9% p.a. with effect

from 01.10.2019. Submission was pressed that by virtue of this Cancellation

Agreement, the debt liability stood crystallised which liability was squarely

covered by the definition of "financial debt" under Section 5(8) of the IBC.

Acknowledging that a Section 7 application cannot be filed on the basis of default

which arose during the Section 10A period, it was submitted that in the filing of

Page 3 of 14 Company Appeal (AT) (Insolvency) No. 2049 of 2025 the second Section 7 petition by them, basis liberty given by this Tribunal,

adequate care was taken to exclude the debt liability which became due and

payable during the Section 10A period. Accordingly, the second Section 7

petition was filed with an amount of default of Rs 2.65 Cr. as principal amount

alongwith interest liability of Rs 93.41 lakhs for the period 01.04.2021 to

01.03.2025 which was beyond the Section 10A period. It was asserted that the

interest liability for the period 25.03.2020 to 25.03.2021 which fell during the

Section 10A period was consciously excluded to ensure that the second Section

7 petition was not hit by Section 10A. However, the Adjudicating Authority by

erroneously held that the second Section 7 petition could have only included the

interest amount of Rs 93.41 lakh and not the principal amount of Rs 2.65 Cr.

because the latter amount fell in default during the excluded period under

Section 10A though it was a continuing default. The Adjudicating Authority had

thus wrongly held the Section 7 petition to be non-maintainable on the ground

that the default amount fell below the threshold limit.

4. It was further contended that when the definition of the words "debt" and

"default" in Section 3(11) and 3(12) respectively of IBC is read together, the

default of the Corporate Debtor would commence when there is non-payment of

any liability which has become and due and payable. However, this default

cannot be anchored to any particular date and a Section 7 application can be

triggered any time from the date of commencement of the default until the date

till when the debt remains unpaid. As regards the applicability of the provisions

of Section 10A of the IBC is concerned, it was asserted that this provision merely

suspends initiation of CIRP for defaults occurring during the specified period

Page 4 of 14 Company Appeal (AT) (Insolvency) No. 2049 of 2025 between 25.03.2020 to 25.03.2021 but does not extinguish the underlying debt.

It was contended that Section 10A cannot be interpreted to mean that if the debt

liability which arises between 25.03.2020 to 25.03.2021 and continues to

remain outstanding even beyond the Section 10A period, even then the

Corporate Debtor would not be considered to be in default on any date beyond

the Section 10A period. The Appellant contended that they had rightly factored

in the principal amount of Rs 2.65 Cr. in the second Section 7 petition as this

amount continued to be a default even after 25.03.2021. However, the interest

liability which arose during Section 10A period been duly excluded.

5. Refuting the contentions made by the Appellant, the Ld. Counsel for

Respondent-Corporate Debtor submitted that this Tribunal while considering

the appeal filed by the Appellant challenging the dismissal of the first Section 7

petition had given the Appellant the liberty to refile the Section 7 application

after excluding the default amount which fell due in the Section 10A period. By

the Appellant's own pleadings, the principal amount of Rs. 2.65 Cr. was payable

in three instalments in March 2020, April 2020, and May 2020 which dates

clearly fell in the Section 10A period and therefore could not have been claimed

as debt liability for triggering the Section 7 petition. Once the principal amount

of Rs 2.65 Cr. is excluded, only the interest amount could become the subject

matter of the Section 7 petition and this amount being only Rs 94.31 lakhs, it

fell below the IBC threshold limit and hence not maintainable. It was asserted

that it is settled law that a completed breach does not amount to a continuing

wrong and in the present factual matrix, the non-payment of the principal

Page 5 of 14 Company Appeal (AT) (Insolvency) No. 2049 of 2025 amount on the respective due dates constituted a completed default and this is

not a case of continuing default.

6. We have duly considered the arguments advanced by the Learned Counsel

for the parties and perused the records carefully.

7. The short question before us for our consideration is whether the Section

7 application filed by the Appellant was not maintainable since it was predicated

on a default which had arisen during the prohibited period of Section 10A and

that whether on exclusion of the portion of debt and default which arose during

the Section 10A embargo, the default amount boils down to a figure below the

threshold limit prescribed by Section 4 of IBC.

8. To answer the above issue outlined by us, it would be appropriate for us

to take notice of Section 10A of the IBC which reads as under:

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 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.

9. Having noticed the statutory construct of Section 10A of IBC, we next

proceed to look at Part-IV of both the first and second Section 7 petitions which

has been filed by the Appellant.

Page 6 of 14 Company Appeal (AT) (Insolvency) No. 2049 of 2025

10. The relevant portion of Part-IV of the Section 7 application filed vide CP

No. 359 of 2024 is as extracted below:

Part IV

PARTICULARS OF FINANCIAL DEBT

2. TOTAL AMOUNT CLAIMED Rs. 2,65,00,000/- (Rupees Two Crore TO BE IN DEFAULT AND Sixty-five Lakhs Only) along with THE DATE ON WHICH interest of Rs. 1,03,35,000/- (Rupees DEFAULT OCCURRED One Crore Three Lakhs and Thirty-Five (ATTACH THE WORKING Thousand Only) (computed as per the FOR COMPUTATION OF agreed terms) for the period between AMOUNT AND DATES OF 01 October 2019 to 31 January 2024 is DEFAULT IN TABULAR the amount claimed to be in default.

FORM) The Financial Creditor reserves its right to modify the claim for interest as per actual interest due in terms of the Cancellation Agreement till actual date of payment.

The debt was to be paid by Chetanya Buildcon in three (3) tranches falling due in March 2020, April 2020 and the third tranche in May 2020 along with interest @ 9% per annum from 1 October 2019. The default occurred on all the aforesaid months.

When we look at the Part-IV above, it is clear that the principal amount of the

debt claimed is Rs 2.65 Cr. and the said debt was to be paid in three tranches

falling due in the months of March, April and May 2020. The Part-IV also

provided for interest amount of Rs 1.03 Cr. for the period 01.10.2019 to

31.01.2024. From the above particulars it is clear that the Part-IV clearly

mentions that the default in respect of the principal amount arose in March,

April and May 2020 which indisputably falls in the Section 10A period. Further,

even part of the interest computation pertained to the Section 10A period as it

Page 7 of 14 Company Appeal (AT) (Insolvency) No. 2049 of 2025 covered the interest amount which accrued from 01.10.2019 onwards till the

actual date of payment.

11. This brings us to the relevant portion of Part-IV of the Section 7 application

filed vide CP No. 234 of 2025 which is as extracted below:

Part IV

PARTICULARS OF FINANCIAL DEBT

2. TOTAL AMOUNT CLAIMED Rs. 2,65,00,000/- (Rupees Two TO BE IN DEFAULT AND Crore Sixty-five Lakhs Only) along THE DATE ON WHICH with interest of Rs.93,41,250 DEFAULT OCCURRED (Rupees Ninety-three lacs forty-one (ATTACH THE WORKING thousand and two hundred fifty FOR COMPUTATION OF Only) (computed as per the agreed AMOUNT AND DATES OF terms) for the period from 01 April DEFAULT IN TABULAR 2021 to 01 March 2025, excluding FORM) the period exempt under S.10A of the IBC.

The date of default in the present case would be 01 April 2021.

When we look at the Part-IV above of the second Section 7 petition which is

under consideration, it is clear that the principal amount of the debt claimed is

again Rs 2.65 Cr. which is the same amount as the one claimed in the first

Section 7 petition. Needless to add, the principal amount having remained the

same, it can be safely concluded that the default had arisen in March, April and

May 2020, as was outlined in the initial Section 7 petition, which squarely falls

within the Section 10A period. The Part-IV also provided for interest amount of

Rs 93.41 lakhs for the period 01.04.2021 to 01.03.2025 which interest

computation period, however, clearly falls outside the Section 10A period.

Page 8 of 14 Company Appeal (AT) (Insolvency) No. 2049 of 2025

12. It is however the case of the Appellant that the second Section 7 petition

was clearly maintainable as the Part-IV did not include any liability which was

covered by Section 10A of IBC. To buttress their argument, it was asserted that

the interest amount was reworked to Rs 93.41 lakhs as against Rs 1.03 Cr. which

was reflected in Part-IV of the first Section 7 petition. This revision in the interest

computation was on account of the fact that in the second Section 7 petition

only the interest amount which accrued after the Section 10A period was

factored in unlike the first Section 7 petition where the interest liability was

computed with effect from 01.10.2019 onwards which had also included the

prohibited Section 10A period. However, the principal amount of Rs 2.65 Cr.

claimed in Part-IV of both the first and second Section 7 petitions remains

unchanged since the default in respect of the principal amount continued to

remain a default even after the Section 10A period had come to an end. In

support of their contention that default is a continuing cause of action, reliance

was placed on the judgment of the Hon'ble Supreme Court in Laxmi Pat Surana

Vs Union Bank of India, (2021) 8 SCC 481 wherein the Hon'ble Supreme Court

held that a default continues until the debt is paid. Further reliance has been

placed on the judgment of the Hon'ble Supreme Court in Ramesh Kymal Vs

Siemens Gamesa Renewable Power (P) Ltd., (2021) 3 SCC 224 to contend

that Section 10A is only a temporary suspension of remedy and does not wipe

out the liability qua the creditor. It was contended that in view of the continuing

default in respect of the principal amount, the existence of financial debt

amounting Rs. 3,58,41,250/- inclusive of accrued interest clearly met the

Page 9 of 14 Company Appeal (AT) (Insolvency) No. 2049 of 2025 threshold requirements, hence, warranting the admission of the present Section

7 application.

13. Per contra, it is contended by the Respondent that the plea of continuing

default adopted by the Appellant is misconceived. It was emphatically asserted

that the alleged default of Rs 2.65 Cr. occurred during March, April and May

2020 which fell during the Section 10A protected period and therefore the

Appellant stood squarely barred from including this amount in the second

Section 7 petition. The Appellant having themselves pleaded in Part-IV of the

first Section 7 application that the default occurred in March, April, and May

2020, the subsequent plea of continuing default is an impermissible

afterthought aimed at circumventing Section 10A of the IBC. In support of their

contention, reliance has been placed on the judgment of the Hon'ble Supreme

Court in Ramesh Kymal judgment supra which categorically held that no CIRP

application shall ever be filed for a default occurring during the Section 10A

period. Reliance was also placed on the judgment of this Tribunal in Manish

Mukim v. Ms. Rakhi & Anr. in CA(AT)(Ins.) No. 617 of 2023 which held that

defaults cropping up during the Section 10A period enjoy complete immunity

and must be excluded while computing debt and default. However while

asserting that the principal amount of Rs 2.65 could not be added, on the

interest amount claimed by the Appellant, it was conceded that the calculation

was in order since this revised amount excluded the liability which arose in the

Section 10A period. It was further pointed out that the interest amount being

only Rs 93.41 lakhs, the said amount fell below the threshold limit and hence

Page 10 of 14 Company Appeal (AT) (Insolvency) No. 2049 of 2025 there was no infirmity in the order of the Adjudicating Authority rejecting the

Section 7 petition.

14. The law of Section 10A is well settled and we are guided by the judgment

of the Hon'ble Supreme Court in Ramesh Kymal v. Siemens Gamesa

Renewable Power, Civil Appeal No. 4050/ 2020 wherein the following has

been laid down:

"8. The issue which falls for determination in this appeal is whether the provisions of Section 10A stand attracted to an application under Section 9 which was filed before 5 June 2020 (the date on which the provision came into force) in respect of a default which has occurred after 25 March 2020. Before proceeding to discuss the rival submissions, it is necessary to preface the discussion with reference to three significant dates which have a bearing on the present proceedings:

 30 April 2020 - date of default as set up in Form 3;  11 May 2020 - date of institution of the application under Section 9; and  5 June 2020 - date on which Section 10A was inserted in the IBC.

9. The date of default is crystalized as 30 April 2020 in the demand notice issued by the appellant in Form 3, which is prescribed under Rule 5 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016. The has been made by the appellant statutory form provides for a disclosure of the particulars of the operational debt. The disclosure which includes the amount claimed in default and the date of default, as tabulated below:

2. AMOUNT CLAIMED TO BE INR 104,28, 76,479/- (Indian IN DEFAULT AND THE Rupees One Hundred and Four DATE ON WHICH THE Crores Twenty Eight Lakhs Seventy DEFAULT OCCURRED Six Thousand Four Hundred and [ATTACH THE WORKINGS Seventy Nine only) as on 30.04.2020 FOR COMPUTATION OF - along with interest @ 18% (eighteen *DEFAULT IN TABULAR percent) p.a. till the date of FORM] realisation of entire payment.

10. .......Under Section 9(1), the operational creditor may file an application before the Adjudicating Authority for initiating the Corporate Insolvency Page 11 of 14 Company Appeal (AT) (Insolvency) No. 2049 of 2025 Resolution Process ("CIRP"), after the expiry of a period of ten days from the date of delivery of the notice (or invoice demanding payment) under sub-Section (1) of Section 8, if the operational creditor does not receive payment from the corporate debtor or a notice of the dispute under sub-

Section (2) of Section 8. The appellant having specified 30 April 2020 as the date of default, this appeal must proceed on that basis. It is necessary to make this clear at the outset because an attempt has been made during the course of the submissions by Mr Neeraj Kishan Kaul, learned Senior Counsel appearing on behalf of the appellant, to submit that though the demand notice mentions the date of default as 30 April 2020, the "actual first date of default" was 21 January 2020 when the letter of resignation was tendered and that the "second date of default' was 23 March 2020 when the sixty days' notice period from the letter of resignation submitted by the appellant concluded. This attempt to set back the date of default to either 21 January 2020 or 23 March 2020 is plainly untenable for the reason that it is contrary to the disclosure made by the appellant in the demand notice which has been issued in pursuance of the provisions of Section 8(1) and Section 9 of the IBC. The demand notice triggers further actions which are adopted towards the initiation of the insolvency resolution process..."

15. It becomes clear from the above judgement that no application for

initiation of CIRP can be initiated for default which is committed during the

Section 10A period. Any Corporate Debtor who suffered default on account of

Covid-19 should be protected from the filing of any insolvency application in

respect of default committed by them during this prohibited period. Thus, any

default committed which fell within the Section 10A period enjoyed complete

immunity from initiation of CIRP proceedings. The legislative intent of

introducing Section 10A into the scheme of IBC was to protect the Corporate

Debtor from being pushed into insolvency due to the Covid-19 pandemic fallout.

It also held that once the date of default is specified and as long as this date of

default falls within the Section 10A period, the application must proceed on that

basis and attempt to tinker with the date of default would defeat the very

Page 12 of 14 Company Appeal (AT) (Insolvency) No. 2049 of 2025 purpose and objective behind the insertion of Section 10A as it would

tantamount to denial of the protection envisaged by the legislative fiat.

16. Hence in the present case when the Appellant had clearly pleaded the date

of default in the first Section 7 petition, as structured in three instalments,

falling due in March, April and May 2020 without any assertion of a continuing

default and further this Tribunal had given the liberty to the Appellant to file the

second Section 7 petition afresh only after excluding the period of default covered

under Section 10A, the attempt of the Appellant to circumvent the Section 10A

statutory immunity to the default liability by changing the date of default to

01.04.2021 is plainly untenable. The reliance placed by the Appellant on the

judgment of the Hon'ble Apex Court in Laxmi Pat Surana supra to contend

that default cannot be anchored to a single date for it continues until the debt

is not paid has no direct bearing on the facts of the present case since in that

matter the Hon'ble Supreme Court was deciding on the issue of limitation and

in that context had held that the date of NPA is not necessarily the date of

default. The Appellant has also unsuccessfully sought the aid of the ratio of the

judgment of Madras High Court in Dharamshi K. Patel & Anr. Vs Indian Bank

& Anr. in W.P No. 712 of 2024 as in the present case, the principal default

which arose during the Section 10A period was a one-time default and hence

under a permanent embargo unlike the interest liability which by its nature

being a recurring obligation, the same could be considered even after the end of

Section 10A prohibited period.

17. We are of the considered view that any attempt to negate, nullify,

invalidate or erode the protection offered by Section 10A cannot be accepted as

Page 13 of 14 Company Appeal (AT) (Insolvency) No. 2049 of 2025 it would go contrary to the legislative intent behind insertion of Section 10A.

That being so we find that the Adjudicating Authority has not committed any

error in holding that the portion of the debt liability arising out of the principal

amount having coming into default during the Section 10A needs to be ignored

and on consideration of the remaining portion falling short of the threshold limit

of Rs 1 Cr, the Section 7 petition was rendered non-maintainable and therefore

legally impermissible.

18. We are satisfied that the Adjudicating Authority did not commit any error

in rejecting the Section 7 application. We find no good grounds to interfere with

the impugned order. The Appeal is devoid of merit and is dismissed. No costs.

[Justice Ashok Bhushan] Chairperson

[Barun Mitra] Member (Technical)

Place: New Delhi Date: 10.02.2026 Abdul

Page 14 of 14 Company Appeal (AT) (Insolvency) No. 2049 of 2025