The New Delhi bench of National Company Law Appellate Tribunal has set asides the order admitting application filed under Section 7 without fulfilling the threshold of 1Cr
The respondent Narayan Mangal & Anr filed an application under section 7 alleging that there was default in the consent terms by the Corporate Debtor. The notice was issued and after hearing the parties, the Adjudicating Authority has admitted the Application. Challenging the order suspended director of the Corporate Debtor, Prafulla Purushottamrao Gadge, has filed appeal.
Mr. Dhruv Gupta counsel for the appellant submitted that the application which is filed under Section 7 has to fulfill the requirements of threshold of Rupees One Crore and minimum amount of default for the purpose of filing an Application under Part-II of the IBC. Application filed by the respondent having not fulfilling the threshold ought to have been rejected.
Mr. Mr. Pulkit Tare, counsel for the respondent contends that the present Application filed under Section 7 filed on 2021 is in continuation of the earlier Application which was filed on 2019 and hence, the threshold which was introduced on 2020 shall not be applicable.
The Tribunal observed that Clause 12 of the Settlement Agreement which was earlier filed in the earlier proceeding where, it was mentioned that in event, any default is committed in the Settlement Agreement, there shall be liberty to initiate fresh legal proceedings under Section 7. Thus, the Application filed under Section 7 by the Respondent not having fulfilling the threshold of Rupees One Crore ought not to have been entertained and the Adjudicating Authority committed error in admitting the Application.
The Coram of Mr. Justice Ashok Bhushan and Ms. Shreesha Merla has allow the Appeal and set aside the order impugning in the Appeal.
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