Rajesh Sabharwal vs Desein Pvt. Ltd

Heard Shri Kunal Anand, Learned Counsel appearing for the Appellant and Shri Ankit Shah, Learned Counsel appearing for the Respondent.

This appeal has been filed against the order and judgement of the Adjudicating Authority dated 27.04.2021 by which order Adjudicating Authority has dismissed Section 9 application filed by the Appellant.

Appellant gave a notice on 31.01.2020 u/s 8 claiming an amount of Rs. 41,81,024/-. The notice was also replied by the Corporate Debtor on 17.03.2020.

The Ministry of Corporate Affairs exercising its powers has issued a notification dated 24.03.2020 by which the minimum threshold amount to trigger the insolvency was enhanced from Rs. One lakh to Rs. One crore. The application being CP(IB)36/PB/2021 was filed by the Appellant on 04.08.2021.

The Adjudicating Authority heard the application and on the ground that it does not fulfil the threshold has rejected the application.

Learned Counsel, Shri Anand challenging the order contends that since the Demand Notice was issued on 31.03.2020 prior to notification dated 24.03.2020, the threshold of the case ought to have Rs. One lakh only and the notification dated 24.03.2020 is not applicable in the facts of the present case. He further submits that the Supreme Court is already considering the issue in Civil Appeal No. 7032/2021, the Jumbo Paper Products Vs. Hansraj Agrofresh Pvt. Ltd.

Learned Counsel for Respondent refuting the submission submits that the relevant date for examining the threshold is the date when the application was filed. He submits that the issue has been considered and decided by this Tribunal in Hyline Mediconz Pvt. Ltd.Vs. Anandaloke Medical Centre Pvt. Ltd. in Comp. App.(AT) Ins. No. 1036/2022 and several other judgements of this Tribunal. He submits that date of giving notice u/s 8 is not relevant for determining the threshold.

We have considered the submission of the Learned Counsel for the parties and peruse the records.

There is no dispute between the parties regarding the relevant dates i.e. the date of issue of Demand Notice i.e. 31.01.2020 and the date on which the application was filed i.e. 04.08.2020. The application u/s 9 has been filed on 04.08.2020 which is undisputed fact. The similar issue came for consideration in Comp. App. (AT)(Ins.) No. 1036/2022 where Demand Notice was issued on 05.03.2020 and section 8 application was filed subsequently on 18.01.2021. Arguments was addressed that since the Operational Creditor has served the Demand Notice, the application filed on 18.01.2021 was maintainable on the threshold of Rs. One lakh.

This Tribunal elaborately considered the submission of the Learned Counsel for the parties and laid down the following in paragraph 8 and 9:-

“8. Section 4(1) provides that “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”. Part II of the Code deals with ‘Insolvency Resolution and Liquidation for Corporate Persons’. The applicability of the Part II is dependent on minimum amount of default as prescribed in Section 4(1). Minimum amount to default was Rupees One Lakh which has been subsequently amended to Rupees One Crore by Notification dated 24.03.2020. The applicability of Part II is dependent on minimum amount of default thus.

Section 6 of the Code provides for persons who may initiate Corporate Insolvency Resolution Process (CIRP). Section 6 is as follows:-

“6. Persons who may initiate corporate insolvency resolution process. – Where any corporate debtor commits a default, a financial creditor, an operational creditor or the corporate debtor itself may initiate corporate insolvency resolution process in respect of such corporate debtor in the manner as provided under this Chapter.”

The above judgement fully covers the issues raised in this appeal.  The application of the Appellant having been filed on 04.08.2020 i.e. subsequent to 24.03.2020 should fulfil the threshold of Rs. One crore and the Adjudicating Authority did not commit any error in rejecting Section 9 application.

We do not find any merit  in the Appeal, the Appeal is dismissed.

We, however, observe that dismissal of Section 9 application shall not preclude the Appellant to take such remedy as available in law.