Devika Resources Pvt. Ltd. Vs MAA Manasha Devi Alloys Pvt. Ltd. (NCLAT Delhi)
Conclusion: An appeal filed by the operational creditor was allowed holding that the threshold under section 4 of the Insolvency Bankruptcy Code (IBC), 2016 had to be seen at the time of filing of the application or at the time of admission of the application and the date of application admission was regarded as the insolvency commencement date under Section 5(12) of the IBC
Held: Appellant used to supply iron ore to the respondent through Devika Resources Pvt. Ltd., but the respondent never paid, thus appellant served a demand notice under Section 8 of the IBC for a Rs. 1,16,25,583 default. Appellant then requested the start of the CIRP against the corporate debtor in an application filed under Section 9 of the IBC. After the CIRP application was accepted, the process got underway. Respondent, however, contested the order in front of the appellate tribunal, claiming that it was not given a chance to be heard. As a result, Tribunal was instructed by the appellate authority to rehearse the case and render a decision. Appellant was notified by mail that the respondent had deposited Rs. 20 lakhs into the appellant’s account while the tribunal’s proceedings were still pending. Appellant argued that Rs. 20 lakh had been deposited without its consent and that it would be willing to reimburse the money. However, due to a lack of threshold, Tribunal rejected the Section 9 application. According to appellant, Section 5(11) of the IBC stipulates that the date of application submission by the financial or operational creditor is the date of CIRP initiation, and the date of application admission is regarded as the insolvency commencement date under Section 5(12) of the IBC. Appellant had relied upon the decisions of the Hon’ble Supreme Court in the case of Rajamundry Electric Supply Corporation Limited Vs. A Nageshwara Rao & Ors., (1995) 2 SCR 1066, Manish Kumar Vs. Union of India, (2021) 5 SCC 1 and a decision of this court in the case of Hyline Medoconz Pvt. Ltd. Vs. Anandaloke Medical Centre Pvt. Ltd., CA (AT) (Ins) No. 1036 of 2022 that the threshold had to be considered at the time of filing of the application and not at the time of the admission. Appellant argued that the Section 9 application had exceeded the Rs. 1 Cr. threshold; however, the respondent paid Rs. 20 lakhs to settle the outstanding balance during the application’s pendency, which shouldn’t affect the application because it was submitted after the threshold was crossed. Respondent argued that the threshold ought to be satisfied when the application was admitted rather than when it was filed. It was held that rulings the appellant cited were relevant to the current circumstances and directly address the appellant’s issue. The bench pointed out that by rejecting the application, the adjudicating authority had made a patent error. The bench allowed the appeal by setting aside the impugned order and restored the Section 9 application back to the tribunal to decide the Section 9 application in accordance with the law.
