Sec. 10A Bars Operational Creditor’s Plea u/s 9 for Defaults Post 25-3-2020, NCLAT’s Order was to be Upheld | SC

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  • Last Updated on 22 February, 2024

Sec. 10A

Case Details: AL Sadiq Sweets v. B. Sreekala - [2024] 159 taxmann.com 530 (SC)

Judiciary and Counsel Details

  • S. Abdul Nazeer & Vikram Nath, JJ.
  • Maninder SinghVikram KalraAkshat Agarwal, Advs. & Viresh B. Saharya, AOR for the Appellant.

Facts of the Case

In the instant case, the appellant (i.e. operational creditor) entered into an agreement with the corporate debtor for the export of cashew kernels. The corporate debtor raised a pro forma invoice to the respondent and was paid Rs. 1 lakh. The appellant issued a demand notice under section 8 of the IBC demanding the amount paid to the corporate debtor.

The appellant filed an application dated 16.09.2020 under section 9 of the IBC for the initiation of the CIRP against the corporate debtor. The Adjudicating Authority (NCLT) by the impugned order admitted the said application holding that the corporate debtor was in default of debt due and payable.

The Respondent, (i.e. director of the corporate debtor) challenged the NCLT’s order on the ground that when the date of default was after 25.03.2020, an application filed under section 9 on 16.09.2020 would be barred by section 10A of the IBC.

The National Company Law Appellate Tribunal (NCLAT) vide the impugned order set aside the NCLT’s order on the ground that the amount was due and payable on 25.04.2020, as per the provision of section 10A of the IBC.

Thus, an application filed by the appellant under section 9 was not maintainable as no application for initiation of the CIRP of the corporate debtor would be filed for any default arising on or after 25-3-2020 for a period of six months or such further period not exceeding one year from such date as may be notified in this behalf etc.

Thereafter, the appellant filed an instant appeal before the Supreme Court.

Supreme Court Held

The Supreme Court held that in view of the facts, there was no cogent reason to entertain the appellant’s appeal, therefore, the impugned order did not warrant any interference.

List of Cases Reviewed

  • B. Sreekala v. Al Sadiq Sweets [2022] 139 taxmann.com 501 (NCLAT – Chennai) (para 1) affirmed

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