Recent important judgments on “Suspension of initiation of CIRP”

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Recent important judgments on suspension of initiation of CIRP as per Section 10A of IBC

Asset Reconstruction Company (India) Ltd. Vs. Manyata Developers Pvt. Ltd. (2023) ibclaw.in 769 NCLT: Date of Default cannot be shifted if a notice for payment is again issued because that would enable the Creditor to shift the Date of Default in every case by simply issuing a legal notice subsequent to the exclusion period having ended and the provisions of Section 10A of the IBC would become redundant and meaningless.

Redpro Construction Pvt. Ltd. Vs. Skyline Infratech Pvt. Ltd. (2023) ibclaw.in 722 NCLT: Since the Demand notice issued in terms of Section 8(1) of I&B Code as well as the present Application filed under Section 9 of Code is based on the invoice pertaining to the suspended period for initiation of CIRP, in other words, which was raised during the period excluded under Section 10A, the present petition is liable to be dismissed.

Beetel Teletech Ltd. Vs. Arcelia IT Services Pvt. Ltd. (2023) ibclaw.in 583 NCLAT: If default was committed prior to Section 10A period, the liability of interest which accrued during Section 10A period should not be excluded for the calculation of threshold limit | The right of appropriation lies with Creditor if Debtor does not indicate in what manner the debt is to be discharged.

Narayan Mangal Vs. Vatsalya Builders & Developers Pvt. Ltd. (2023) ibclaw.in 548 NCLAT: In the Judgment of this Tribunal delivered in Raghavendra Joshi Vs. Axis Bank Ltd. (2023) ibclaw.in 540 NCLAT we have already held that if default was committed prior to Section 10 A period, Section 10 A shall not be applicable. If the default is committed prior to Section 10A period and default continues there is no prohibition in initiating proceedings under Section 7 and we are not persuaded to accept the submission of the counsel for the respondent that the liability of interest which accrued during Section 10A period should be ignored or should not be computed in the amount while finding the threshold. Liability to pay interest which default committed prior to Section 10A period continues and is not obliviated by Section 10A.

LBF Publications Pvt. Ltd. Vs. A & A Business Consulting Pvt. Ltd. (2023) ibclaw.in 517 NCLT: If the date of post-dated cheque is considered to be promise on the part of Corporate Debtor to pay back the amount of advance, no petition could have been filed u/s 10A of the Code in relation to default arising from dishonour of those cheques, as all the three cheques are dated 25.03.2020 to 29.03.2020 and the other three cheques are dated 22.12.2020 to 08.01.2021.

Raghavendra Joshi Vs. Axis Bank Ltd. (2023) ibclaw.in 540 NCLAT: Corporate Debtor cannot avail benefit of Section 10A of IBC where the date of default prior to 25.03.2020 and OTS proposal was withdrawn during CIRP suspension period.

Carissa Investments LLC Vs. Indu Techzone Pvt. Ltd. (2023) ibclaw.in 502 NCLAT: The Explanation to Section 10A of IBC removes any doubt by clarifying that the provisions of the Section shall not apply in respect of any default committed prior to 25.03.2020.

Nitin Chandrakant Desai Vs. Edelweiss Asset Reconstruction Ltd. & Anr. (2023) ibclaw.in 486 NCLAT: Any default committed during the Section 10A period cannot be held to bar CIRP application which is filed on the basis of default prior to Section 10A and subsequent to Section 10A period. 

OM Industries Vs. Birla Precision Technologies Ltd. (2023) ibclaw.in 397 NCLT: In absence of the due date in invoice, the due date of each invoice can be treated as immediate and in case of due date of invoices are accessed separately, the invoices which fall within the period of 10A of IBC will be excluded for calculation of the threshold limit u/s 4 of IBC.

Mudhit Madanlal Gupta Vs. Supreme Constructions and Developers Pvt. Ltd. (2023) ibclaw.in 473 NCLAT: When the Financial Creditor has invoked the corporate guarantee of the corporate guarantor by the notice dated 16.10.2020 and asked the corporate guarantor to make the payment within seven days from the receipt of the notice, the default has occurred during the 10A period and the default dated 02.07.2019 which is default alleged against the Principal Borrower can not be put to a default for corporate guarantor.

J.C. Flowers Asset Reconstruction Pvt. Vs. Deserve Exim Pvt. Ltd. (2023) ibclaw.in 378 NCLAT: The date of default by the Guarantor shall arise only when demand is issued by the Bank to the Corporate Guarantor. The fact that the Corporate Guarantor has given indemnity to the Bank also shall operate only after default is committed by the Guarantor. Indemnity can be enforced against the Corporate Guarantor but it cannot itself change the date of default on part of the Guarantor. When the invocation of the bank guarantee is admittedly within the period of 10A, the Application which is based on invocation of guarantee is clearly barred by 10A.

 

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