If Corporate Guarantee was invoked during CIRP suspension period, CIRP cannot be initiated for default in repayment as the default arises in the period excluded by provisions of Section 10A of IBC, 2016 – Vikram Kumar, Proprietor Vs. Aranca (Mumbai) Pvt. Ltd. – NCLAT New Delhi
Hon’ble NCLAT held that:
(i) Since the Corporate Guarantee was invoked on 25.08.2020, the debt became due for payment thereafter. As per the provisions of Section 10A of IBC, 2016, CIRP cannot be initiated for defaults arising in 12 months period beginning 25.03.2020.
(ii) Since the Deed of Guarantee was invoked on 25.08.2020, CIRP cannot be initiated for default in repayment as the default arises in the period excluded by provisions of Section 10A of IBC, 2016. The AA has rightly held that the default falls within the specified period in Section 10-A of the IBC, 2016 and the Application U/s 7 of IBC, 2016 is non maintainable.
