A group of financial creditors can converge and join hands to touch the financial limit of Rs. 1 crore stipulated under Section 7 of IBC so as to initiate a CIRP under the IBC – Vishnu Oil Mill Pvt. Ltd. Vs. Union of India – High Court of Rajasthan High Court
Hon’ble High Court held that on a plain reading of Section 7, it becomes clear that there is no ambiguity in the provision which requires any interpretation other than what is conveyed in its literary sense. The section clearly stipulates that the application for triggering CIRP may be initiated by a financial creditor either individually or jointly with other financial creditors. Previously the threshold default limit for filing the CIRP application was only Rs.1 lakh and it has been drastically increased to Rs.1 crore vide Gazette Notification dated 24.03.2020. It can easily be envisaged that in cases of MSMEs, there may not exist financial creditors whose individual debt is Rs.1 crore or above. If the threshold limit was to be fixed at Rs.1 crore qua each individual financial creditor, then there was no reason whatsoever for allowing joint applications by financial creditors.