Kerala HC quashes NCLT Order accepting IBA Application for want of Jurisdiction post-amendment to Sec 4 [Read Judgment]

The Kerala High Court has quashed the NCLT Order accepting IBA Application for want of Jurisdiction post-amendment to Section 4.

The petitioner, M/S. Tharakan Web Innovations Pvt. Ltd. is a Private Limited Company engaged in the activities of developing software and promoting advancement in the field of Information Technology. 

The prayer in this writ petition is for a declaration that the notification whereby the minimum amount of default was specified as Rs.1 Crore is prospective and would apply only to cases where the default occurred on or after 24.3.2020. There is also a prayer for a declaration that the notification will not apply to cases where a mandatory notice under Section 8 of the IBC has been issued by the operational creditor and the stipulated 10 days' period had elapsed prior to the date of notification.

The single bench of Justice T.R.Ravi has held that order of the NCLT is set aside and it is declared that Ext.P1 application cannot be entertained by the respondent in the light of the amendment to Section 4. The writ petition is dismissed since the declaration sought for cannot be granted in view of the finding that the litmus test on the anvil is whether there exists a default as defined under Section 4 of the IBC, which if answered in the affirmative alone will give rise to a petition under Sections 7, 8, 9 and 10 of the IBC.

The court noted that as such, from the date of the amendment, Part II of the IBC can apply only to matters relating to insolvency and liquidation of corporate debtors, where the minimum amount of default is Rs.1 Crore.

“The writ petition under Article 226 is maintainable and there is no necessity or purpose for relegating the petitioner to the alternate remedy. Nor is it necessary to decide on the question whether an appeal is maintainable under the IBC against the order of the Tribunal on a preliminary issue regarding jurisdiction,” the court said.

To Read the full text of the Judgment CLICK HERE

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