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The NCLT was hearing a Section 9 application filed by an operational creditor to commence CIRP against the corporate debtor
The National Company Law Tribunal (NCLT) in Mumbai has imposed a cost of Rs. 25,000 on a company that attempted to initiate the Corporate Insolvency Resolution Process (CIRP) against a corporate debtor by trying to evade the exclusionary period specified under Section 10A of the Insolvency and Bankruptcy Code 2016.
The NCLT Mumbai bench, consisting of Judicial Member Laxmi Gurung and Technical Member Charanjeet Singh Gulati, was hearing a Section 9 application filed by an operational creditor to commence CIRP against the corporate debtor.
The operational creditor had supplied manganese ore to the corporate debtor between 2020 and 2021. Upon examining the purchase orders, the court noted that these purchase orders were dated 08.09.2020, 02.10.2020, 12.10.2020, and 19.10.2020.
Section 10A of the Insolvency and Bankruptcy Code stipulates that no application seeking the initiation of the Corporate Insolvency Resolution Process (CIRP) for a default occurring during the period between 25 March 2020 and 24 March 2021 can be filed.
When the bench inquired why the application, which fell within the period covered by Section 10A, should be entertained, the counsel representing the operational creditor responded that the material was supplied during the Section 10A period.
Additionally, the payment also became due within this period, and the default occurred within it. However, the operational creditor did not file the application during this Section 10A period but rather filed it after the period had concluded, in compliance with the proviso of Section 10A.
The counsel also attempted to draw attention to debit notes issued outside the Section 10A period, but these amounted to only Rs. 14,652.
The NCLT while imposing a cost of Rs. 25000 on the operational creditor said that,
“The attempt of the Operational Creditor in mentioning such incorrect facts is nothing but an attempt to take undue advantage of the present proceedings,” the order reads.
Advocates Christople D’souza and Malika Shirzade appeared for the operational creditor.
Case title: Oswal Minerals Limited vs Vidhi Minerals & Alloys Private
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