The National Company Law Appellate Tribunal (“NCLAT”), Principal Bench, comprising of Justice Ashok Bhushan (Chairperson) and Shri Kanthi Narahari (Technical Member), while adjudicating an appeal filed in Royal Manpower Services v Faridabad Autocomp System Pvt. Ltd., has held the revised minimum threshold of Rs. 1 Crore is applicable from the date of filing of petition and not from the...
The National Company Law Appellate Tribunal (“NCLAT”), Principal Bench, comprising of Justice Ashok Bhushan (Chairperson) and Shri Kanthi Narahari (Technical Member), while adjudicating an appeal filed in Royal Manpower Services v Faridabad Autocomp System Pvt. Ltd., has held the revised minimum threshold of Rs. 1 Crore is applicable from the date of filing of petition and not from the date of registration. The Bench revived a petition under Section 9 of IBC having a default lesser than Rs. 1 Crore, which was filed in 2019 but got registered in 2021. It has been observed that the subsequent registration of the petition will not change the date of filing.
BACKGROUND FACTS
In 2019, Royal Manpower Services (“Operational Creditor”) filed a petition under Section 9 of Insolvency and Bankruptcy Code, 2016 (“IBC”), seeking to initiate Corporate Insolvency Resolution Process (“CIRP”) against Faridabad Autocomp System Pvt. Ltd (“Corporate Debtor”).
At the time of filing, the minimum default amount required under IBC was Rs. 1 Lakh and the petition came to be registered on 20.07.2021. In the meanwhile, Section 4 of IBC was amended and from 24.03.2020 onwards the minimum default threshold to file a petition under IBC was increased from Rs. 1 Lakh to Rs. 1 Crore.
On 06.01.2023 the NCLT rejected the Section 9 petition on the ground that the default amount is less than Rs. 1 Crore and the petition does not fulfil the revised minimum threshold requirement under IBC.
The Operational Creditor filed an appeal before the NCLAT.
NCLAT VERDICT
The Bench observed that the revised threshold limit of Rs. 1 Crore was not applicable to the Operational Creditor’s petition since the same was filed in 2019 and subsequent registration of application will not change the date of filing. Hence, on the date of filing of the application, the threshold which was to be fulfilled by the Operational Creditor was Rupees One Lakh only. The Bench set aside the order of dismissal dated 06.01.2023 and revived the petition under Section 9 of IBC, to be heard and decided in accordance with law by the NCLT.
Case Title: Royal Manpower Services v Faridabad Autocomp System Pvt. Ltd.
Case No.: Company Appeal (AT) (Insolvency) No. 370 of 2023
Counsel For Appellant: Mr. Krishnendu Datta, Sr. Advocate with Mr. Karan Gandhi, Ms. Varsha Himatsingka, Mr. Shivam Gautam, Advocates.
Counsel For Respondent: Mr. Manan Shishodia, Mr. Abhinav Aggarwal, Mr. Krishanagopal Abhay, Ms. Rimjhim Garg, Advocates.
