Lawstreet Journal

IBC Ordinance Promulgated by Centre on June 5 Will Have Retrospective Effect: NCLT [READ ORDER]

Lawstreet Journal 14 Jul 2020 6:32pm

Image courtesy: Lawstreet Journal Judiciary IBC Ordinance Promulgated by Centre on June 5 Will Have Retrospective Effect: NCLT [READ ORDER]

The Chennai branch of the National Company Law Tribunal (NCLT) has held that Section 10A of the Insolvency and Bankruptcy Code, 2016 (IBC) will apply to all the pending applications relating to defaults arising on or after 25 March 2020. Section 10A of the IBC, 2016 bars the initiation of insolvency proceedings against a defaulter.

It is also ‘untenable’ to rule that Section 10A would apply only to those cases that were filed after 5 June 2020 i.e. after the promulgation of the said ordinance, as it would be in contravention to the legislative intent and objective expressed therein, while promulgating the Code, by the Centre.

The tribunal held, “The date of filing cannot determine the rights of the parties in view of the prevalent extraordinary situation will wholly defeat the object of the promulgation of the Ordinance in protecting the interest of the corporate persons.”

The ruling was made in a case where insolvency proceedings under Section 9 of Insolvency and Bankruptcy Code, 2016 were pending against a Corporate Debtor as on 5 June 2020. On the said date, the Centre promulgated the Insolvency and Bankruptcy Code (Amendment) Ordinance, 2020 that suspended Section 7, Section 9 and Section 10 of the Code. Also, considering the difficulties caused to companies during the lockdown, Section 10A was inserted in order to alleviate the same.

Subsequently, taking note of this, the Corporate Debtor filed a case in NCLT and sought that the proceedings against them should be disposed of, the date of their alleged default being 30… Continue Reading...

Tagged: National Company Law Tribunal   NCLT  
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