Threshold is Rs. 1 Crore only even if demand notice sent prior to the MCA notification, opines NCLAT, Read Order

The NCLAT, New Delhi Bench in the case wherein notice was given by Appellant on 31.01.2020 claiming an amount of Rs. 41,81,024 and the reply by Corporate Debtor was sent on 17.03.2020, upheld the order of NCLT dismissing Section 9 Application under the Insolvency and Bankruptcy Code, 2016 (hereinafter referred to as “IBC”) on the ground that the application was filed pursuant to the notification, hence, the threshold would be Rs. 1 crore only. 

Brief Facts:

The present appeal has been filed against the order of the NCLT vide which Section 9 application under the IBC was dismissed. 

Brief Background:

The notice was given by Appellant on 31.01.2020 claiming an amount of Rs. 41,81,024 and the reply by Corporate Debtor was sent on 17.03.2020.

However, the Ministry of Corporate Affairs issued a notification dated 24.03.2020 vide which the minimum threshold amount to trigger insolvency was increased to Rs. 1 crore and hence, application was dismissed. 

Contentions of the Applicant: 

It was argued that the demand notice was issued prior to the issuance of the notification and hence, the threshold should have been taken as Rs. 1 lakh only. 

Observations of the Tribunal:

It was expounded that since the application was filed pursuant to the notification, the threshold would be Rs. 1 crore only and hence, Section 9 application was rightly dismissed. 

The decision of the Tribunal:

Based on aforementioned reasons, the order of the NCLT was upheld. 

Case Title: Rajesh Sabharwal v. Desein Pvt. Ltd. 

Case No.: Company Appeal (AT) (Insolvency) No. 773 of 2021 

Coram: Justice Ashok Bhushan, Barun Mitra 

Advocates for Appellant: Advs. Mr. Kunal Anand, Mr. Prakhar Dixit, Ms. Tusharika Sharma

Advocates for Respondent: Advs. Mr. Ankit Shah, Mr. Varun Gupta, Ms. Lakshita Arora, Ms. Simran Wason 

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