NCLAT Bars Section 9 IBC Plea for 10A Defaults; Tribunal Lacks Power to Change Default Dates
- REEDLAW
- Sep 24
- 3 min read
REEDLAW Legal News Network reports: In a significant ruling, the National Company Law Appellate Tribunal, Principal Bench, held that an application under Section 9 of the Insolvency and Bankruptcy Code is not maintainable for defaults that fall within the suspension period prescribed under Section 10A. The Tribunal further clarified that the Adjudicating Authority has no power to modify the applicant’s stated date of default unless the applicant itself seeks a formal amendment.
The National Company Law Appellate Tribunal (NCLAT), Principal Bench, comprising Justice Ashok Bhushan (Chairperson) and Technical Members Mr. Barun Mitra and Mr. Arun Baroka, while adjudicating a Company Appeal, held that a Section 9 IBC application is not maintainable for defaults falling within the Section 10A suspension period. It further ruled that the Adjudicating Authority cannot alter the date of default mentioned in the application unless the applicant files a formal amendment.
The Appellate Tribunal examined an appeal filed under Section 61 of the Insolvency and Bankruptcy Code, 2016, challenging the dismissal of a Section 9 application seeking initiation of the corporate insolvency resolution process against the Corporate Debtor. The Appellant, an Operational Creditor, had claimed outstanding dues of over ₹10 crore arising from multiple work orders executed between 2009 and 2018 and had issued three demand notices under Section 8. The Corporate Debtor disputed the claims on grounds of poor work quality, delays, abandonment of projects, and also contended that the invoices were time-barred.
The Adjudicating Authority had rejected the Section 9 application on the twin grounds of pre-existing disputes and that the alleged defaults occurred during the period covered by Section 10A of the Code, which suspended the initiation of insolvency proceedings for defaults arising on or after 25 March 2020 for a specified period. The Appellant argued that the dates of default mentioned in the application were inadvertently recorded and that the Authority ought to have examined the underlying documents to ascertain the actual date of default.
After reviewing the pleadings, evidence, and the statutory framework, the Tribunal held that the dates of default—03 May 2020, 15 August 2020, and 01 January 2021—clearly fell within the prohibited period stipulated under Section 10A. Relying on the Supreme Court’s ruling in Ramesh Kymal v. Siemens Gamesa Renewable Power Private Limited, REEDLAW 2021 SC 02503, it reaffirmed that no application for initiation of CIRP can be entertained for defaults occurring during the Section 10A suspension period. The Tribunal further observed that it was the Appellant’s responsibility to seek amendment of the dates of default and that the Adjudicating Authority could not suo motu modify the pleadings.
Consequently, the appeal was dismissed, and the order of the Adjudicating Authority was upheld, reiterating that no insolvency proceedings could be initiated for any default committed within the statutory suspension period under Section 10A of the Insolvency and Bankruptcy Code.
Mr. Yashwardhan, Mr. S. Sukumaran, Mr. Anand Sukumar, and Mr. Pranav Das, Advocates, represented the Appellant.
Mr. Amir Arsiwala and Mr. Rahul Gupta, Advocates, appeared for the Respondent.
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