For determining the minimum threshold of Rs. 1 crore under Section 4 of IBC, the date when the CIRP initiation application is filed is relevant, not the date of giving Demand Notice under Section 8 of IBC – Ralco Extrusion Pvt. Ltd. Vs. Centech Engineers Pvt. Ltd. – NCLT Mumbai Bench
Hon’ble NCLT Mumbai Bench held that:
(i) It is now settled that the threshold limit of Rs.1 crore will be applicable for applications filed under Sections 7, 9 and 10 on or after 24.03.2020, even if the debt in default is on a date earlier than 24.03.2020. Moreover, the threshold of Rs.1 crore has to be fulfilled by an applicant under Section 7 or Section 9 on the date of filing of the application.
(ii) The fact that default was committed prior to 24.03.2020 and the statutory notice under Section 8 was issued and served prior to 24.03.2020 are not determinative or material, although these are conditions precedent for filing an application under Section 9 of the Code. What is relevant for determining the minimum threshold is not the date of giving notice under Section 8 but the date when the application is filed. Thus, Part II of the Code becomes applicable and an operational creditor can initiate CIRP against the corporate debtor w.e.f. 24.03.2020 only when the amount of default is Rs.1 crore or more. No application can be initiated after 24.03.2020 irrespective of the date of default if the minimum threshold of Rs.1 crore is not met.