CIRP Petition Not Barred u/s 10A For Defaults arising Post-COVID Period: NCLAT Revives ₹2.36 Crore Operational Debt Claim [Read Order]

The Principal Bench of the National Company Law Appellate Tribunal (NCLAT), New Delhi, has held that a Section 9 petition cannot be rejected under Section 10A of the Insolvency and Bankruptcy Code, 2016 (IBC) if the date of default is beyond the COVID-19 moratorium period. The Appellate Tribunal allowed an operational debt of ₹2.36 crores and set aside the NCLT’s opposite decision.

The appeal was preferred against the order of the NCLT, New Delhi Bench-III, which had rejected a Section 9 petition filed by Operational Creditor - M/s Airtech Airconditioners against the Corporate Debtor - Parnika Commercial & Estate Pvt. Ltd. The Operational Creditor had claimed a total outstanding of ₹8.23 crores based on three projects Vanijya Bhawan (Delhi), DRDO (Delhi), and IIT Bombay.

The NCLT had rejected the petition on the ground that the invoices were barred under Section 10A, which prohibits the filing of CIRP for defaults occurring between 25.03.2020 and 24.03.2021.

The Operational Creditor alleged that although some invoices regarding DRDO and IIT Bombay were within the Section 10A period, two invoices regarding the Vanijya Bhawan Project were dated 29.03.2022 and 13.07.2022, with defaults on 14.04.2022 and 29.07.2022, which were long after the suspended period.

The amount due in respect of these two invoices alone was ₹2.36 crore, which exceeded the ₹1 crore limit under Section 4 of the IBC. The Corporate Debtor claimed that there were pre-existing disputes and that arbitration proceedings had already been invoked.

Allowing the appeal, the NCLAT held that the Adjudicating Authority was wrong in not taking into account the two invoices regarding Vanijya Bhawan whose dates of default were well outside the Section 10A period.

The Tribunal held that it was not justified to reject the Section 9 application merely on the basis of invoices within the excluded period.

The Bench consisting of Justice Ashok Bhushan (Chairperson) and Barun Mitra (Technical Member) set aside the impugned order and remitted the case to the NCLT for fresh consideration limiting the claim to the two invoices post-COVID. The Tribunal made it clear that it had not formed any opinion on the issue of pre existing dispute.

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