Transferred Winding-Up Petitions Cannot Proceed u/s 9 IBC without Meeting Enhanced ₹1 Crore Default Threshold: NCLAT [Read Order]

The National Company Law Appellate Tribunal (NCLAT) New Delhi has held that winding-up petitions transferred from the High Court to the National Company Law Tribunal (NCLT) and converted into applications under Section 9 of the Insolvency and Bankruptcy Code, 2016 (IBC) cannot be maintained unless they satisfy the enhanced minimum default threshold of ₹1 crore applicable on the date of consideration by the NCLT.

The appellant had entered into agreements with the respondent companies in 2010 for marketing and selling advertising slots for television channels. Under the agreements, Aidem Ventures was entitled to commission on revenue generated through advertisements. Alleging non-payment of commission amounts aggregating to ₹43.71 lakh, ₹8.69 lakh and ₹23.08 lakh respectively, the appellant initiated winding-up proceedings before the Delhi High Court in 2013 under Sections 433, 434 and 439 of the Companies Act, 1956.

Subsequently, following the enactment of the IBC and transfer of pending winding-up matters to the NCLT the Delhi High Court transferred the proceedings in October 2023. Pursuant to the transfer the appellant filed Form-5 applications under Section 9 of the IBC. The NCLT dismissed the petitions, holding that a pre-existing dispute existed between the parties.

However, the respondents raised a preliminary objection that irrespective of the dispute issue, the petitions were not maintainable because the claimed operational debts did not meet the minimum threshold of ₹1 crore prescribed under Section 4 of the IBC after its amendment in 2020.

The appellant argued that since the winding-up petitions had originally been filed in 2013 when the threshold requirement was significantly lower so the enhanced threshold should not apply. It was contended that the right accrued on the date of filing could not be retrospectively extinguished.

The Bench comprising Justice Mohammad Faiz Alam Khan (Member Judicial) and Naresh Salecha (Member Technical) dismissed three appeals and observed that once a winding-up proceeding is transferred to the NCLT, it must be treated as an application for initiation of Corporate Insolvency Resolution Process (CIRP) under the IBC. Consequently, all statutory requirements applicable on the date of consideration, including the ₹1 crore threshold, must be fulfilled.

Thus, finding that the claims in the present case were far below the statutory threshold, the NCLAT concluded that the petitions were not maintainable and dismissed all three appeals.

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