Default During Section 10A Period Cannot Be Clubbed To Meet Threshold Requirement Under Insolvency And Bankruptcy Code, 2016: NCLAT New Delhi

The Operational Creditor filed a petition under Section 9 of the Code for a default of Rs. 3.37 crores wherein default for an amount of Rs. 3 crores occurred during the period precluded under Section 10A of the Code. The NCLT dismissed the petition on the ground that the same is barred by Section 10A of the Code.

It was contended by the Operational Creditor that a cumulative application taking all the default amounts can be filed and same will not be barred Section 10A. NCLAT negated the contention of Operational Creditor and held that;

"The said submission goes contrary to the statutory scheme delineated by Section 10A proviso as noted above. When Appellant could not have filed the Application for the default which was committed, the Adjudicating Authority did not commit any error in rejecting the Application as barred by Section 10A of the Code."

NCLAT also noted that there are two events of default which are outside the Section 10A period but their amount is less than one crore and thus, the application under Section 9 will not be maintainable and accordingly, dismissed the appeal filed by the Appellant.

Case Details: Plus Corporate Ventures Pvt. Ltd v. Transnational Growth Fund Ltd.

Counsel for Appellant: Mohd. Nazim Khan with Ms. Garima K Watra.

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