Vyom Mines and Minerals Private Limited. Vs. Kamper Concast Limited - In the matter of Jumbo Paper Products vs. Hansraj Agrofresh Pvt. Ltd. (Company Appeal (AT) (Ins) No.813 of 2021) dated 25.08.2021 NCLAT held that the threshold limit would be applicable on the date of filing of Application, and not on the date on which the default has occurred.

 NCLT Kolkata (2025.06.18) in Vyom Mines and Minerals Private Limited. Vs. Kamper Concast Limited [(2025) ibclaw.in 741 NCLT, CP (IB) No.246/KB/2023] held that;

• In this regard, the Hon’ble NCLAT in case of Metal’s & Metal Electric Pvt. Ltd. vs. Goms Electricals Pvt. Ltd. (Company Appeal (AT) (CH) (INS) No.243 of 2021), has held that, a mere running of the eye of the ingredients of Section 9 of the Code makes it lucidly clear that the date of initiation of CIRP shall be on the date on which an application is made.

• In the matter of Jumbo Paper Products vs. Hansraj Agrofresh Pvt. Ltd. (Company Appeal (AT) (Ins) No.813 of 2021) dated 25.08.2021 NCLAT held that the threshold limit would be applicable on the date of filing of Application, and not on the date on which the default has occurred.

• There being no legally enforceable right to claim interest, therefore, the interest to be calculated @ 18% per annum shall not be included in the total amount of debt for computing the threshold limit as provided in Section 4 of I & B Code, 2016 for the purpose of admitting the application Under Section 9.

Excerpts of the order;

# 1. The Company Petition is filed under section 9 of the Insolvency and Bankruptcy Code, 2016 (IBC) by Vyom Mines and Minerals Private Limited (Herein after referred to as Operational Creditor/ Applicant) seeking to initiate Corporate Insolvency Resolution Process (CIRP) against Kamper Concast Limited (Herein after referred to as the Corporate Debtor/ Respondent). The Applicant’s CIN-U74999WB2018PTC225108, having Registered Office at 10/A, K.K Roy Chowdhury Road, Sakherbazar, kolkata-700008. The Applicant is being represented by director of the Operational Creditor MR. AVISHEK AGGARWAL.

# 2. The Respondent is a Company incorporated on 07/04/1995 under the Companies act, 1956. Its CIN is L27107BR1995PLC006446. The Registered Office of the company is at N.P Centre, dukbunglow Road, District Patna, Bihar 800001. Therefore, this bench has jurisdiction to entertain and decide the Petition.

# 3. The total amount claimed to be in default is Rs 1,26,48,396/- alongwith Rs 19,33,894/- as interest at 18% p.a. Thereafter, the Corporate Debtor made payment of Rs. 8,50,000/- resulting to total dues of Rs 1,17,98,396.35/- (Rs. One Crore Seventeen Lakh Ninety Eight Thousand Three Hundred Ninety Six and Thirty Five Paisa only).

# 4. The date of default occurred on 24/01/2023 by Corporate Debtor. Submission of the Applicant

# 5. The Corporate Debtor from time to time placed various order for supply of iron fines and pig chips to the Operational Creditor. The Corporate Debtor utilized the goods without raising any demur or objection.

# 6. Upon supply of goods the applicant from time to time raised invoices upon the Corporate Debtor. The Corporate Debtor made payment initially but later it defaulted in making payment.

# 7. The Corporate Debtor accepted such goods, and no objection as to the quality or quantity were ever raised at any point of time immediately after delivery.

# 8. As on 31st July 2022, A total sum of Rs. 1,27,17,502/- Was due and payable by the Corporate Debtor. Pursuant to follow ups by the Operational Creditor, the Corporate Debtor expressed inability to pay the entire dues at one go and an arrangement was entered into by and between the parties where in the Corporate Debtor agreed to pay the entire dues in five installments. However, the arrangement did not fully fructified. Thereafter, another attempt made towards to settle the matter wherein the Corporate debtor handed over various cheques For consolidated amount of Rs. 1,07,14,502/-. However, out of these said cheques, cheques bearing number 004876 and 004877 dated 30.06.2023 and dated 31.07.2023 respectively, for Rs. 25,00,000 each, were returned with the endorsement “fund insufficient”. The Corporate Debtor also issued balance confirmation Acknowledging the amount due to operational creditor for Rs. 1,07,14,502/- as on 18.03.2023.

# 9. Thereafter, the applicant issued Notice under section 8 of IBC, 2016 on 17.08.2023, claiming interest over and above the principal sum due. In the reply Given by Corporate Debtor, they accepted to make payment along with interest at the bank rate. Submission by Respondent

# 10. The Applicant served Notice in Form-3, under Rule-5 of the insolvency and bankruptcy (Adjudicating Authority) rules, 2016 on 17/08/2023 claiming amount of default Rs. 1,07,14,502.35 and interest Rs 19,33,984/- totaling to Rs 1,26,48,396.35.

# 11. The Corporate Debtor made payments of Rs 8,50,000/- on 29-09-2023, thus the total amount of default comes to 98,64,502.35 on the date of filing this application. Thus, the present application is not maintainable since the amount of default is Rs 98,64,504.35/- which is below the threshold limit of Rs 1 crore under section 4 of the IBC, 2016. 

# 12. The applicant has not attached GSTR-1 and GSTR-3B, which is necessary under Regulation 2B of the Insolvency and Bankruptcy Board of India (insolvency Resolution process Corporate Persons).Therefore, this application is not maintainable.

# 13. The Respondent is not liable for payment of interest i.e. Rs 19,33,894/-.

ANALYSIS AND FINDING

# 14. We have heard the learned counsel and perused the record. From the submission of the learned counsel and material on record the following issue arise for consideration:

• I. Whether the Petition is non maintainable under section 4 of IBC, 2016?

# 15. The undisputed fact is that the present application was filed on 12.12.2023. However, the notice under section 8 was issued on 17.08.2023. When the notice under section 8 was issued on 17.08.2023, the total Principal amount payable was Rs.1,07,14,502.35/-, however, after issuance of notice U/s 8, the Corporate Debtor made payment of Rs.8,50,000/-. Hence, the principal amount payable by Corporate Debtor comes to Rs 98,64,502.35/-.

# 16. However, the Applicant in Part -IV of the Application has claimed the amount of Rs. 1,17,98,396.35/ as a total debt including interest of 18% p.a, whereas in the Demand Notice the Applicant has claimed an amount of 1,07,14,502.35 as a Principal debt and Rs 19,33,894/- as interest at 18% p.a. Thus, the total amount payable as per Demand Notice is Rs 1,26,48,396.35.

# 17. Now the issue to be decided is whether the threshold limit should be taken from the date on which the default has occurred i.e. on issuance of Section 8 notice, or on the date of filing of Application under section 9. In this regard, the Hon’ble NCLAT in case of Metal’s & Metal Electric Pvt. Ltd. vs. Goms Electricals Pvt. Ltd. (Company Appeal (AT) (CH) (INS) No.243 of 2021), has held that, a mere running of the eye of the ingredients of Section 9 of the Code makes it lucidly clear that the date of initiation of CIRP shall be on the date on which an application is made. To put it precisely, the date of default is not to come into operative play and the same ought not to be taken into account for anything but computing the period of limitation.

# 18. In the matter of Jumbo Paper Products vs. Hansraj Agrofresh Pvt. Ltd. (Company Appeal (AT) (Ins) No.813 of 2021) dated 25.08.2021 NCLAT held that the threshold limit would be applicable on the date of filing of Application, and not on the date on which the default has occurred. 

# 19. Many co-ordinate Bench of NCLT have also given similar decisions including one by Hon’ble NCLT, Delhi Bench in the case of Udit Jain vs. Apace Builders and Contractors Pvt. Ltd. (IB-894/ (ND) / 2020) dated 14.09.2022; holding as under :-

• "Since the instant application filed under section 9 of the Code, which is the subject matter of our consideration was filed on 11.06.2020, even though the statutory demand notice U/s 8 was sent on 17.02.2020, only the date of filing needs to be considered and not the date of sending the Demand Notice. Therefore, the threshold limit of Rs. 1 crore of debt will be applicable in the present case. Hence for the above-mentioned reasons the present Application is not maintainable".

# 20. In the above decision also, it has been clearly held that only the date of filing of Application needs to be considered and not the date of sending the demand notice. The above decision is fully supporting the contention raised by the Corporate Debtor that the threshold limit should be taken on the date of filing of the application, and not the date of sending the demand notice. As the amount of operational debt on the date of filing of application i.e. 12.12.2023 is only Rs.98,64,502.35/- below the threshold limit of Rs.1 Crore as provided U/s 4 of the Code.

# 21. In its application, while mentioning the operational debt in Part IV, the Operational Creditor has included interest @ 18% per annum, though the amount of interest has not been calculated. We have also considered, whether the interest to be calculated by the Operational Creditor would be includable while calculating the operational debt to meet the requirement of threshold or not. In this regard, we find that there is no express agreement between the Operational Creditor and Corporate Debtor for computing interest. In this regard, the Operational Creditor could also not produce any documentary evidence justifying charging of interest except stating that the Corporate Debtor has agreed to pay interest in the reply of Demand Notice issued by the Operational Creditor under section 8 of IBC, 2016. The reply of the Section 8, Demand Notice is Annexed as Annexure “I”.

# 22. This issue has been settled by the Hon’ble NCLAT in Prashant Agarwal Vs. Vikas Parasrampuria (Company Appeal (AT) (Ins) No.690 of 2022) dated 15.07.2022 holding that both, the principal debt and interest on delayed payment will be considered to assess maintainability in case the interest was stipulated in invoice. In a recent judgment, in case of North West Carrying Company, LLP Vs. Metro Cash and Carry India Pvt. Ltd. (CP (IB) No.133/BB/2022) dated 25.05.2023 after relying on the judgment in case of Prashant Agarwal (Supra), it has been again held that in order to club other charges with the principal amount express stipulation has to be incorporated specifically in the agreement, the purchase order or the invoice and in absence of the same, neither interest nor any other charges can be clubbed with the principal amount. 

# 23. In the present case, there is no agreement between the Operational Creditor and Corporate Debtor for payment of interest on delay of refunding of advance money if any paid. In the attached invoice  on page 59-172 also, no such condition has been stipulated. Therefore, Operational Creditor has not been found justified for including interest @ 18% per annum till the date of payment in the total amount of debt as mentioned in Part IV of the Application. There being no legally enforceable right to claim interest, therefore, the interest to be calculated @ 18% per annum shall not be included in the total amount of debt for computing the threshold limit as provided in Section 4 of I & B Code, 2016 for the purpose of admitting the application Under Section 9. 

# 24. After deciding the issue relating to the threshold to be applied in the case of present application as being the date of filing of application and interest, if any, being charged by the Operational Creditor on delay in payment of dues has not to be included in the amount of operational debt for the purpose of deciding the threshold for the application to be admitted U/s 9, as discussed above, we hold that the present application is not maintainable as being below the threshold limit as mandated U/s 4 of I & B Code, 2016. Further, it is a settled proposition that the National Company Law Tribunal is not a recovery forum. The parties are at liberty to approach the appropriate Forum for their dues. Therefore, the present application filed by the Operational Creditor is liable to be dismissed on the issue of being below the threshold limit, hence, the same is hereby dismissed.

# 25. As the present application has not been found maintainable being below the threshold limit, we do not find it necessary to adjudicate on other issues like existence of pre-existing dispute etc nor the Corporate Debtor raised any point on pre-existing dispute.

# 26. In view of the above, the CP (IB) No. 246/KB/2023 is rejected as being non-maintainable.

# 27. Urgent certified copy of this order, if applied for with the Registry, be supplied to the parties, subject to compliance with all requisite formalities.

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CRC Infratech & Services LLP Vs.Fourth Generation Information Systems Ltd. - It is settled law that the existence of an acceleration clause gives the lender the discretion to declare the entire outstanding loan amount as immediately due upon default of any obligation. However, the presence of such a clause does not imply that the entire amount becomes automatically due upon a single default.

NCLY Hyd. (2025.04.24) in CRC Infratech & Services LLP Vs.Fourth Generation Information Systems Ltd. [(2025) ibclaw.in 525 NCLT, Company Petition (IB)/102/7/HDB/2024] held that-   

• It is settled law that the existence of an acceleration clause gives the lender the discretion to declare the entire outstanding loan amount as immediately due upon default of any obligation. However, the presence of such a clause does not imply that the entire amount becomes automatically due upon a single default.

• Therefore, in the absence of a proper and proven invocation of the acceleration clause, only the defaulted instalment(s) can be treated as a 'default' under Section 3(12) of the IBC for the purposes of satisfying the threshold under Section 4.

• Therefore, in the absence of a proper and proven invocation of the acceleration clause, only the defaulted instalment(s) can be treated as a 'default' under Section 3(12) of the IBC for the purposes of satisfying the threshold under Section 4.

• Accordingly, the validity of the Petitioner’s claim to treat the entire outstanding loan amount as defaulted hinges on whether the acceleration clause was duly and effectively invoked in accordance with the terms of the Agreement. Such invocation must be supported by clear, cogent evidence of communication to the Corporate Debtor.

Excerpts of the Order;

I. The instant Petition has been filed by M/s. CRC Infratech & Services LLP, the Financial Creditor (FC) under Section 7 of the Insolvency and Bankruptcy Code (IBC) r/w Rule 4 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016, to initiate the Corporate Insolvency Resolution Process (CIRP) against M/s. Fourth Generation Information Systems Limited, the Corporate Debtor (CD).

II. Petition

1. The FC was incorporated on 22.11.2022 and is in the business of Storage and Warehousing. The CD was incorporated on 21.08.1998 and operates in the fields of Hardware & Software Product Development, publishing, consultancy, technology services and supply.

2. The CD availed financial assistance of Rs.1,00,00,000/- from the FC pursuant to a Loan Agreement dated 23.05.2023. The loan was agreed to be repaid at an annual interest rate of 15% over a period of 40 months, commencing from 31.07.2023.

3. The CD has defaulted on its obligations under the Loan Agreement, failing to make payments from 31.07.2023 to 31.03.2024, i.e. for a period of 9 months. The total due as on 31.03.2024 is Rs.1,32,67,534/- while the total unpaid loan amount along with 9 monthly instalments is Rs.1,22,50,000/- and interest due is Rs.10,17,534/-.

4. The Record of Default (RoD) was filed by the FC on 21.03.2024, and the Information Utility, M/s.National E-Governance Services Limited (NeSL) authenticated a total outstanding amount of Rs.1,25,67,295/- and a default amount of Rs.25,67,295/- as on 04.04.2024.

5. It is submitted that the FC issued a Demand Notice to the CD on 14.02.2024, demanding a sum of Rs.25,67,295/- alongwith the Principal Amount of Rs.1,00,00,000/-. Despite the demand notice, the CD failed to remit the required payment. Consequently, the FC filed the present Petition on 29.04.2024.

III.Counter

1. The present Petition is filed with the intent to recover the dues, however, it is devoid of merit due to pre-existing disputes between the FC and the CD.

2. The FC is a Limited Liability Partnership (LLP) involved in storage and warehousing activities. The loan, however, was provided in contravention of the objects clause of the FC, rendering it void ab initio.

3. The Demand Notice issued by the FC was not received by the CD, and the FC has failed to provide postal receipts or acknowledgments to support service of the Notice.

4. The FC also failed to submit the necessary bank statements, which are required for filing a Section 7 Petition under the Insolvency and Bankruptcy Code (IBC), 2016, to substantiate the debt. The CD relies on the judgment of the Hon’ble Supreme Court in Vidarbha Industries Power Ltd. v. Axis Bank Ltd. [(2022) 8 SCC 352] to argue that this Adjudicating Authority has the discretion to reject the Petition as incomplete.

5. The CD started its business by availing credit facilities from various sources. Revenue generation by the CD is evident from its profit and loss account for the financial year 2023-24.

6. Therefore, the present Petition is liable to be dismissed with exemplary costs imposed.

IV. Written Submissions by the Petitioner/FC

1. The FC reiterated the averments made in the Petition and relied upon the judgment of the Hon’ble Supreme Court in Innoventive Industries vs. ICICI Bank Limited to emphasize that the Adjudicating Authority's role is to ascertain whether a debt exists and whether a default has occurred.

2. The FC also placed reliance on the Order of this Tribunal in M/s. Aventine Software Private Ltd. vs. Baron Infotech Ltd. [C.P (IB) No. 164 of 2023], asserting that similar facts were present in that case.

V. Written Submissions by the Respondent/CD

The CD reiterated its contentions from the counter-affidavit and relied on the Order of the Hon’ble NCLAT in D.S Kulkarni And Company vs. Mr. Manoj Kumar Agarwal & Ors. (2024), asserting that MOU and ledger extracts alone are insufficient to substantiate a financial debt claim.

VI. Findings

1. It is an admitted position that the FC and the CD entered into a Loan Agreement dated 23.05.2023 for a sum of Rs. 1,00,00,000/- repayable over a period of 40 months at the agreed rate of interest.

2. The loan amount of Rs.1,00,00,000/-, being repayable with interest in 40 instalments, constitutes a financial debt within the meaning of Section 5(8) of the IBC. The records show that the money was borrowed against the payment of interest, thereby fulfilling the element of consideration for time value of money. However, for initiating proceedings under Section 7 of the Code, the amount of default must exceed the minimum threshold specified under Section 4.

3. As per the case of the Petitioner, the CD defaulted on the first instalment due on 31.07.2023, which is claimed as the date of default. As per the Financial Creditor’s own admission in the Petition, the total amount in default as on 31.03.2024 is Rs.1,32,67,534/-, comprising principal of Rs.1,22,50,000/- and accrued interest of Rs.10,17,534/-.

4. However, the authenticated RoD filed with the NeSL on 21.03.2024 reflects the defaulted amount as Rs.25,67,295/- and the total outstanding as Rs.1,25,67,295/- as on 31.07.2023. This reveals a material discrepancy between the default amount recorded in the NeSL filing and the amount claimed in the Section 7 Petition.

5. Under Section 7(3)(a) of the IBC, a Financial Creditor is required to furnish a Record of Default from the Information Utility. In Swiss Ribbons Pvt. Ltd. & Anr. vs. Union of India & Ors. [(2019) 4 SCC 17], the Hon’ble Supreme Court held that such record is only prima facie evidence of default, albeit rebuttable. Therefore, it was incumbent upon the Applicant to reconcile this inconsistency and substantiate the actual amount in default through cogent and corroborative evidence.

6. If the record of NeSL is to be taken as the basis for determining the default, the defaulted amount of Rs.25,67,295/- is significantly below the threshold limit of Rs.1,00,00,000/- as mandated under Section 4 of the IBC.

7. The Petitioner seeks to overcome this discrepancy by relying on Clause 6 of the Loan Agreement (Annexure-1), which contains an acceleration clause. The relevant clause reads:

Default “6. Notwithstanding anything to the contrary in this Agreement, if the Borrower defaults in the performance of any obligation under this Agreement, then the Lender may declare the principal amount owing and interest due under this Agreement at that time to be immediately due and payable.”

8. In Koncentric Investments Limited & Anr. vs. Standard Chartered Bank & Anr., Company Appeal (AT) (Insolvency) No. 911 of 2021, decided on 27.01.2022, the Hon’ble NCLAT held that although a Financial Creditor is entitled to file a Petition under Section 7 upon default, it is neither mandatory nor necessary to do so on the first instance of default. The statutory requirement is that the default must have occurred within three years prior to the filing of the Petition.

9. It is settled law that the existence of an acceleration clause gives the lender the discretion to declare the entire outstanding loan amount as immediately due upon default of any obligation. However, the presence of such a clause does not imply that the entire amount becomes automatically due upon a single default. The language used in Clause 6—specifically the word "may declare"—indicates that the clause requires affirmative action on the part of the lender to invoke it.

10. Therefore, in the absence of a proper and proven invocation of the acceleration clause, only the defaulted instalment(s) can be treated as a 'default' under Section 3(12) of the IBC for the purposes of satisfying the threshold under Section 4.

11. Accordingly, the validity of the Petitioner’s claim to treat the entire outstanding loan amount as defaulted hinges on whether the acceleration clause was duly and effectively invoked in accordance with the terms of the Agreement. Such invocation must be supported by clear, cogent evidence of communication to the Corporate Debtor.

12. The notice dated 14.02.2024 (Annexure-4), purportedly issued under the acceleration clause, states that due to non-payment of seven instalments of Rs.2,50,000/- each along with accrued interest of Rs.8,17,295/- (aggregating to Rs.25,67,295/- as of 31.01.2024), the entire loan amount along with interest would become due and payable. However, the Corporate Debtor has denied receipt of the said notice. The burden of proving the invocation of the acceleration clause—by way of evidence demonstrating that the demand notice was duly communicated—lies on the Applicant. In the absence of such proof, it cannot be held that the entire loan amount became due and payable. Consequently, the default, for the purposes of Section 7, remains confined to the instalments actually unpaid and duly established as defaulted.

13. Given the discrepancies in the default amount and the lack of proof regarding service of the notice (Annexure-4), we are of the view that the present Petition appears to be filed primarily for the purpose of recovery, rather than for triggering Insolvency Resolution under the Code.

14. Therefore, based on the above observations, this petition is hereby dismissed. 

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Devika Resources Pvt. Ltd. Vs. MAA Manasha Devi Alloys Pvt. Ltd. - It has been held in the aforesaid cases that the threshold has to be seen at the time of filing of the application and not at the time of the admission of the application.

 NCLAT (2025.05.14) in Devika Resources Pvt. Ltd. Vs. MAA Manasha Devi Alloys Pvt. Ltd. [(2025) ibclaw.in 354 NCLAT, Comp. App. (AT) (Ins) No.938 of 2024 & I.A. No. 3418, 3419 of 2024] held that.

• The validity of a petition must be judged on the facts as they were at the time of its presentation, and a petition which was valid when presented cannot, in the absence of a provision to that effect in the statute, cease to be maintainable by reason of events subsequent to its  presentation.

• In the matter of presentation of an application under Section 7, if the threshold requirement, under the impugned provisos, stands fulfilled, the requirement of the law must be treated as fulfilled.

• The contention, relating to the ambiguity and consequent unworkability and the resultant arbitrariness, is clearly untenable and does not appeal to us. If an allottee is able to, in other words, satisfy the requirements, as on the date of the presentation, the requirement of the impugned law is fulfilled.

• It has been held in the aforesaid cases that the threshold has to be seen at the time of filing of the application and not at the time of the admission of the application.

Excerpts of the Order;

This appeal is directed against the order dated 06.03.2024 by which the Tribunal has dismissed the application filed under Section 9 of the Insolvency and Bankruptcy Code, 2016 (in short ‘Code’) by the Appellant on the ground of lack of threshold.

# 2. The case set up by the appellant is that the Respondent used to purchase Iron Ore from it but failed to make due payment, therefore, the Appellant served a demand notice dated 04.04.2022 under Section 8 of the Code for payment of operational debt of Rs. 1,16,25,583/- which included principal operational debt of Rs. 1,10,81,333/- and interest of Rs. 4,61,229.

# 3. Notice was replied by the Respondent. Thereafter, the Appellant filed the application under Section 9 of the Code on 20.05.2022 in respect of the defaulted amount of Rs. 1,16,25,583/-.

# 4. The application was admitted on 31.10.2022 and CIRP proceedings were commenced. However, the Respondent challenged the order dated 31.10.2022 by way of CA (AT) (Ins) No. 209 of 2023 before the Appellate Tribunal which was allowed on 19.10.2023 solely on the ground that the Tribunal did not grant opportunity of being heard to the Respondent.

# 5. Apropos, the application filed under Section 9 of the Code was remanded back to the Tribunal with a direction to hear the matter afresh and to decide the same.

# 6. During the pendency of the proceedings before the Tribunal but after the completion of the pleadings, the Appellant received an email from the Respondent by which the Appellant was informed that the Respondent had deposited Rs. 20 Lakhs sou moto in the account of the Appellant by way of cheque towards part payment of the outstanding operational dues.

# 7. It is the case of the Appellant that the amount of Rs. 20 Lakh was deposited by the Respondent without its permission and the Appellant was ready and willing to return the same, however, the Tribunal while concluding that there is debt and default on the part of the Respondent in payment of the dues of the Appellant, rejected the application filed under Section 9 on the ground that since the amount of Rs. 20 lakh was paid during the pendency of the application before the Tribunal, effecting reduction of the total defaulted amount below the threshold limit of Rs. 1 Cr. provided under Section 4 of the Code, the application was found to no more maintainable and could not have been admitted.

# 8. Aggrieved against the dismissal of the application by the impugned order, the present appeal has been filed in which the only issue involved is as to whether the threshold has to be seen at the time of filing of the application or at the time of admission of the application?

# 9. Counsel for the Appellant has submitted that the date of initiation of CIRP as per Section 5(11) of the Code is the date on which the application is made by the Operational Creditor or the Financial Creditor as the case may be and insolvency commencement date is the date of admission of the application for initiation of CIRP as provided under Section 5(12) of the Code.

# 10. Counsel for the Appellant has relied upon the decisions of the Hon’ble Supreme Court in the case of Rajamundry Electric Supply Corporation Limited Vs. A Nageshwara Rao & Ors., (1995) 2 SCR 1066, Manish Kumar Vs. Union of India, (2021) 5 SCC 1 and a decision of this court in the case of Hyline Medoconz Pvt. Ltd. Vs. Anandaloke Medical Centre Pvt. Ltd., CA (AT) (Ins) No. 1036 of 2022 decided on 20.09.2022 in support of his contention that the threshold has to be considered at the time of filing of the application and not at the time of the admission. It is submitted that when the application under Section 9 was filed, the Appellant had crossed the threshold of Rs. 1 Cr. as provided under Section 4 of the code, however, during the pendency of the application, the Respondent, against the wishes of the Appellant, deposited Rs. 20 lakh, thereby reducing the amount from 1 Cr. which do not has any impact on the application which was filed after crossing the threshold.

# 11. On the other hand, Counsel for the Respondent, while narrating the aforesaid facts, which are not in dispute about the filing of the petition and order of remand and that deposit of Rs. 20 Lakh in the account of the Appellant which was reduced the amount from the threshold of Rs. 1 Cr., has submitted that the threshold has to be seen at the time of the admission of the application and not at the time of filing of the application. It is submitted that judgments relied by the Appellant in the cases of Rajamundry Electric Supply Corporation Ltd. (Supra), Manish Kumar (Supra) and Hyline Mediconz Pvt. Ltd. (Supra) are not applicable to the facts of this case. It is also submitted that the proceedings under the Code cannot be substituted to a recovery forum, the object of the Code is to effect resolution of the CD and to bring the company out of distress.

# 12. We have heard Counsel for the parties and perused the record.

# 13. Section 4 of the Code provides the threshold of Rs. 1 Cr. for the purpose of maintaining an application under Section 9 of the Code. Before amendment brought by S.O 1205(E) dated 24.03.2020, the threshold was Rs. 1 lakh but with the amendment it has been raised to Rs. 1 Cr. In this regard, Section 4 needs to be referred to which is reproduced as under:-

• “Section 4: Application of this Part.

• *4. (1) This Part shall apply to matters relating to the insolvency and liquidation of corporate debtors where the minimum amount of the default is one lakh rupees:

• Provided that the Central Government may, by notification1, specify the minimum amount of default of higher value which shall not be more than one crore rupees.

• 2[Provided further that the Central Government may, by notification3, specify such minimum amount of default of higher value, which shall not be more than one crore rupees, for matters relating to the pre-packaged insolvency resolution process of corporate debtors under Chapter III-A.]”

# 14. There is no dispute that when the application under Section 9 was filed by the Appellant it had crossed the threshold of Rs. 1 Cr. because the amount at that time was Rs. 1,16,25,583/- as principal but during the pendency of the application, the Respondent deposited Rs. 20 lakh towards the outstanding dues because of which it reduced to less than Rs. 1 Cr.

# 15. In the case of Rajamundry Electric Supply Corporation Ltd. (Supra) the Hon’ble Supreme Court has categorically held that the threshold has to be seen at the time of filing of the application and in this regard made the following observations:-

• “Excluding the names of the 13 persons who are stated to be not members and the two who are stated to have signed twice, the number of members who had given consent to the institution of the application was 65. The number of members of the Company is stated to be 603. If, therefore, 65 members consented to the application in writing, that would be sufficient to satisfy the condition laid down in section 153-C, subclause (3)(a) (i). But it is argued that as 13 of the members who had consented to the filing of the application bad, subsequent to its presentation, withdrawn their consent, it thereafter ceased to satisfy the requirements of the statute, and was no longer maintainable. We have no hesitation in rejecting this contention. The validity of a petition must be judged on the facts as they were at the time of its presentation, and a petition which was valid when presented cannot, in the absence of a provision to that effect in the statute, cease to be maintainable by reason of events subsequent to its  presentation. In our opinion, the withdrawal of consent by 13 of the members, even if true, cannot affect either the right of the applicant to proceed with the application or the jurisdiction of the court to dispose of it on its own merits.”

# 16. In the case of Manish Kumar (Supra) the Hon’ble Supreme Court has observed as under:-

• “THE POINT OF TIME TO COMPLY WITH THE THRESHHOLD REQUIREMENTS

• 178. The question, then arises, as to the alleged lack of clarity about the point of time, at which the requirements of the impugned provisos, are to be met. Is it sufficient, if the required number of allottees join together and file an application under Section 7 and fulfil the requirements, at the time of presentation? Or, is it necessary that the application must conform the numerical strength, under the new proviso, even after filing of the application, and till the date, the application is admitted under Section 7(5)? There can be no doubt that the requirement of a threshold under the impugned proviso, in Section 7(1), must be fulfilled as on the date of the filing of the application. In this regard, we find support from an early judgment of this Court, which was rendered under Section 153- C of the Companies Act, 1913. Section 153-C is the predecessor to Sections 397 and 398 read with Section 399 of the Companies Act, 1956. Its most recent avatar is contained in Sections 241 and 242 of the Companies Act, 2013 read with Section 244. In fact, Section 399 (3) of the Companies Act, 1956, read as follows:

• “399(3) Where any members of a company are entitled to make an application in virtue of sub-section (1), any one or more of  them having obtained the consent in writing of the rest, may make the application on behalf and for the benefit of all of them.”

• 179. In the decision of this Court in Rajahmundry Electric Supply Corporation Ltd. v. A. Nageshwara Rao and others 51, the provision in question, viz., Section 153-C of Companies Act, 1913 dealt with the power of the Court to Act, when the Company acts in a prejudicial manner or oppresses any part of its members. It, inter alia, provided that no application could be made by any member, in the case of a company having a share capital unless the member has obtained consent, in writing, of not less than one hundred in number of the members 51 AIR 1956 SC 213 of the company or not less than one-tenth in number of the members, whichever is less. There was also an alternate requirement, to which, resort could be made in regard to company, not having share capital. There was another mode of fulfilling the threshold requirement. In the facts of the said case, the number of the members of the company were 603. Sixty-five members consented to the application. The problem, however, arose as it was contended that 13 of the members who had consented, had, subsequent to the presentation of the application, withdrawn their consent.

• 181. In the matter of presentation of an application under Section 7, if the threshold requirement, under the impugned provisos, stands fulfilled, the requirement of the law must be treated as fulfilled.

• The contention, relating to the ambiguity and consequent unworkability and the resultant arbitrariness, is clearly untenable and does not appeal to us. If an allottee is able to, in other words, satisfy the requirements, as on the date of the presentation, the requirement of the impugned law is fulfilled.”

# 17. In the case of Hyline Mediconz Pvt. Ltd. this Tribunal has held that :-

• “11. The initiation date is thus the date on which financial creditor, corporate applicant or operational creditor makes an application to the Adjudicating Authority. Part II of the Code is applicable only when minimum amount of default of Rupees One Crore is fulfilled after 24.03.2020. Thus, right to initiate the CIRP after 24.03.2020 is only on the condition that minimum default is of Rupees One Crore. There is no right to initiate CIRP after 24.03.2020 when minimum default is not Rupees One Crore.

• 13. When we look into the scheme of the Code, provision of Section 4, 6, 7, 8, 9 and 10 indicate that the provisions which provides for initiation of Corporate Insolvency Resolution Process and Part II of the Code applied to matters relating to insolvency Resolution Process for Corporate Debtor, where minimum default is Rupees One Crore (as on 24.03.2020). Thus, Part II of the Code is applicable only when default is of Rupees One Crore or more. There is no right to initiate an application under Section 9 on 24.03.2020 or thereafter if the minimum default of Rupees One Crore is not fulfilled. Thus, crucial date to find out applicability of the threshold is the date when application to initiate CIRP is made. If we accept the submission of learned counsel for the Appellant that date of default or date of demand notice under Section 8 is to be taken and if default is less than Rupees One Crore which occurred prior to 24.032020 right should be given to the applicant to initiate the CIRP after 24.03.2020, it will be clearly contrary to the scheme of the Code as delineated by Section 4, 6, 7, 9 and 10. When the legislative scheme indicate that application for CIRP can be filed only after fulfilling the minimum threshold limit applicable w.e.f. 24.03.2020, no other interpretation of Section 4 can be given. When Section 4 empowers the Central Government to specify the minimum amount or higher value upto Rupees One Crore and power under Section 4 proviso has been exercised vide  Notification dated 24.03.2020, the legislative intent is clear that threshold of Rupees One Lakh shall not apply henceforth i.e. 24.03.2020 and if initiation be made for an default, it should fulfil the minimum threshold of Rupees One Crore.

• 24. The Hon’ble Supreme Court further held that requirement of compliance with the threshold as introduced by second proviso to Section 7 has to be fulfilled as on the date of the filing of the application. In Para 178 following has been held:-

• “178. The question, then arises, as to the alleged lack of clarity about the point of time, at which the requirements of the impugned provisos, are to be met. Is it sufficient, if the required number of allottees join together and file an application under Section 7 and fulfil the requirements, at the time of presentation? Or, is it necessary that the application must conform the numerical strength, under the new proviso, even after filing of the application, and till the date, the application is admitted under Section 7(5)? There can be no doubt that the requirement of a threshold under the impugned proviso, in Section 7(1), must be fulfilled as on the date of the filing of the application.”

• 25. The law laid down by the Hon’ble Supreme Court in the above case lend support to our conclusion that threshold of Rupees One Crore has to be fulfilled by an applicant under Section 9 on the date of filing of the application. The fact that default was committed prior to 24.03.2020 and notice under Section 8 was issued and served prior to 24.03.2020 are not determinative or material although they are condition precedent for initiating an application under Section 9. We have noticed the provision of Section 6 which provides that where any Corporate Debtor commits a default, a Financial Creditor, an Operational Creditor or the Corporate Debtor itself may initiate Corporate Insolvency  Resolution Process in respect of such Corporate Debtor in the manner as provided under this Chapter. Thus, a default is a condition precedent. Part II of the Code becomes applicable only when default is Rupees One Crore or more w.e.f. 24.03.2020 and an Operational Creditor can initiate Corporate Insolvency Resolution Process against the Corporate Debtor after 24.03.2020 when default is more than Rupees One Crore. No application can be initiated after 24.03.2020 irrespective of the date of default if the threshold of Rupees One Crore is not fulfilled.”

# 18. It has been held in the aforesaid cases that the threshold has to be seen at the time of filing of the application and not at the time of the admission of the application.

# 19. On the other hand, Counsel for the Respondent has not referred to any judgment to the contrary except for arguing that the aforesaid judgments relied upon by the Appellant are not applicable.

# 20. However, in our considered opinion, the ratio laid down in the aforesaid decisions relied by the Appellant squarely covers the case of the Appellant. Consequently, there is no hitch on our part to hold that the Tribunal has committed a patent error in dismissing the application.

# 21. As a result of the aforesaid discussion, the present appeal is allowed and the impugned order is hereby set aside. CP (IB) No. 31/CB/2022 is hereby restored. The matter is remanded back to the Tribunal to decide the application filed under Section 9 of the Code by the Appellant in accordance with law. The parties are directed to appear before the Tribunal on 28th May, 2025

# 22. It is made clear to the parties as well as the Tribunal that while deciding the aforesaid issue of law we have not made any observation on the merit of the case.

I.As, if any, pending are hereby closed.

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