Application u/s 9 Of IBC Cannot Be Admitted For Invoices Covered By Prohibited Period under IBC: NCLAT [Read Order]
It was held that even if, the argument of the Appellant is accepted for the time being that there was running account, the invoices which fall within the 10A period has to be excluded
NCLAT – NCLAT Delhi – National Company Law Appellate Tribunal – IBC 2016 – TAXSCAN
NCLAT – NCLAT Delhi – National Company Law Appellate Tribunal – IBC 2016 – TAXSCAN
The New Delhi bench of the National Company Law Appellate Tribunal ( NCLAT ) has held that application under section 9 of the Insolvency and Bankruptcy code ( IBC ), 2016 cannot be admitted for the invoices covered by prohibited period under section 10A of the code.
Decor Paper Mills Ltd, the appeal was filed against order passed by the Adjudicating Authority by which application under section 9 of the code filed by the Appellant was rejected. The Adjudicating Authority has held that the amount of invoices covered under Section 10A has to be excluded and there is no agreement for interest and the amount which is claimed is reduced to Rs.92,09,732/-, which is less than the threshold limit of Rs.1 Crore and Section 9 application cannot be admitted.
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The appellant submitted that there was running account between the parties and in view of the fact that there was running account and the Corporate Debtor has acknowledgment the payment by the balance confirmation, amount which is to be accepted is that amount which is at the foot of the running account.
It was further submitted that the Operational Creditor was a MSME and under Section 15 of the MSME Act, they were entitled for statutory interest and in event such interest is added, the claim amount will be more than Rs.1 Crore.
The Adjudicating Authority in the impugned order has noticed the details of all invoices in Para 14 of the judgment and has come to conclusion that the invoices of 10A period are to be excluded from the claim amount and if the invoices falling under 10A period are excluded, balance amount will be Rs.92,09,732/-
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The bench of Justice Ashok Bhushan (Judicial Member), Mr. Barun Mitra (Technical Member) and Arun Baroka (Technical Member) observed that even if, the argument of the Appellant is accepted for the time being that there was running account, the invoices which fall within the 10A period has to be excluded.
The acknowledgment of debt for invoices during 10A period cannot permit the Operational Creditor to maintain the application and for invoices which are under 10A period has to be excluded since Section 10A clearly bars recovery of amount for default occurred during 10A period which is statutory scheme for a purpose and object.
It was noted that the statutory scheme which is reflected in Section 10A cannot be allowed to be defeated, even by claim of Appellant that amount claimed being running account or any action of the Corporate Debtor of confirmation of debt.
To Read the full text of the Order CLICK HERE
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