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Judgment
ORDER
[Per; Justice Rakesh Kumar Jain (MJ)] (ORAL)
21.07.2023: This Appeal is directed against the Order dated 10.10.2022, by which an Application filed by the Operational Creditor under Section 9 of the Insolvency and Bankruptcy Code, 2016, read with Rule 6 of the Insolvency and Bankruptcy (Application to the Adjudicating Authority), Rules, 2016 (`Rules’), seeking Resolution of an amount of Rs.5,60,088/-which includes the principal amount of Rs.3,58,143/- and MSME interest of Rs.2,01,945/- as 10.01.2020 has been admitted.
Counsel for the Appellant has argued that the Application before the Tribunal was filed by the Operational Creditor on 19.05.2020. It is further submitted that till 24.03.2020, the threshold under Section 4 was Rs.1Lakh/-which came to be amended to Rs.1Crore/- with effect from 24.03.2020.
It is thus argued that the once the threshold was Rs.1Crore with effect from 24.03.2020, the Application under Section 9 having been filed on 19.05.2020 was not maintainable as it had not crossed the threshold limit provided under Section 4 and neither the Applicant/Operational Creditor had the competence to maintain the Application nor the Tribunal has the jurisdiction to entertain the Application and decide the same much less to admit it. Counsel for the Respondent (IRP) has not denied that the Application under Section 9 has been filed on 19.05.2020.
No one has put in appearance on behalf of the Operational Creditor.
Be that as it may, since a pure question of law has been raised on the basis of the facts before us, Counsel for the Appellant has submitted that the present Appeal may be allowed and the Impugned Order may be set aside.
Section 4 of the Code lays down the threshold. Section 4 of the Code before its amendment read as under:
4.(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.”
However, Section 4 got amended on 24.03.2020 and thereafter it read as hereunder:
“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 corporate debtors under Chapter III-A.”
The Application under Section 9 has admittedly been filed on 19.05.2020 that is much after the amendment of Section 4 on 24.03.2020, therefore, the threshold which was earlier Rs.1Lakh/- in the unamended Section 4 came to be increased to Rs.1Crore/-. In such circumstances, the Application which has been filed for the Resolution of an amount of Rs.5,60,088/- was not maintainable after the amendment of Section 4 because the Application could have been maintained only if the amount of default is more than Rs.1Crore/-.
No other point has been raised.
At this stage, Counsel for the RP has submitted that he may be permitted to file an appropriate Application before the Tribunal for claiming the cost incurred by the RP during this proceeding. We order accordingly.
In view of the aforesaid facts and circumstances, the present Appeal is hereby allowed and the Impugned Order is set aside.