Case Law Details
Tharakan Web Innovations Pvt. Ltd. Vs National Company Law Tribunal (Kerala High Court)
Conclusion: NCLT Order accepting IBA Application for want of Jurisdiction post-amendment to Section 4 was quashed in the light of amendment to section 4 wherein Part II of the IBC could apply only to matters relating to insolvency and liquidation of corporate debtors, where the minimum amount of default was Rs.1 Crore.
Held: In the instant case, the prayer in this writ petition was for a declaration that the notification dated 24.03.2020 whereby the minimum amount of default was specified as Rs.1 Crore was prospective and would apply only to cases where the default occurred on or after 24.3.2020. There was also a prayer for a declaration that the notification would not apply to cases where mandatory notice under Section 8 of the IBC had been issued by the operational creditor and the stipulated 10 days’ period had elapsed prior to the date of notification. It was held that section 4, after amendment on 24.3.2020 clearly said that Part II of the IBC shall apply to matters relating to the insolvency and liquidation of corporate debtors where the minimum amount of default is Rs.1 Crore. What was to be noted was that Corporate debtors who are in default of less than Rs.1 lakh prior to the amendment and Rs.1 Crore after the amendment, also are defaulters. However, whether a proceeding for insolvency or liquidation of such corporate debtor should be initiated would depend on the amount in default. It was only if the Corporate debtor has incurred a default of at least the minimum amount stated in Section 4 that a proceeding under the provisions of the IBC under Part II can be initiated. The minimum amount of default was statutorily fixed, with power available to the Government to refix, upto a sum of Rs.1 Crore. Once the Government had exercised the said power by issuance of a notification fixing the minimum amount of default as Rs.1 Crore, the Section would have to be read by replacing the words “one lakh rupees” by “rupees one crore”. As such, from the date of amendment, Part II of the IBC can apply only to matters relating to insolvency and liquidation of corporate debtors, where the minimum amount of default is Rs.1 Crore. (emphasis supplied). Once that was the position, the application of Part II itself was taken away with effect from 24.03.2020 as far as defaults less than Rs.1 Crore were concerned and hence no application could be filed after 24.03.2020 regarding an amount where the default was less than Rs.1 Crore. By application of Section 10A, even in cases where the default was more than Rs.1 Crore, an application could not be filed for a period of six months from 24.3.2020. There could be no other understanding of the statutory provisions, as there was no ambiguity in the language. It was well settled that the grammatical and ordinary sense of the words of the Statute should be adhered to, unless that would lead to absurdity, or some repugnance or inconsistency with the rest of the provisions of the statute. In the light of the view taken above regarding the jurisdiction of the Tribunal, the writ petition under Article 226 was maintainable and there was no necessity or purpose for relegating assessee to the alternate remedy. The order of the NCLT was set aside and it was declared that application could not be entertained by the respondent in the light amendment to Section 4.
FULL TEXT OF THE JUDGMENT/ORDER OF KERALA HIGH COURT
The issues involved in these writ petitions are intrinsically connected and the parties are also same. The writ petitions are hence heard and disposed of together. The reference to the parties and exhibits is, as they appear in W.P.(C)No.27636 of 2020.
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