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The Chennai Bench of National Company Law Tribunal (NCLT) during the proceedings under Section 9 of Insolvency and Bankruptcy Code, 2016 (IBC) in the case of M/s. Siemens Gamesa Renewable Power Pvt. Ltd v. Ramesh Kymal ruled that Section 10A inserted by the promulgation of an Ordinance on the 5thof June which has temporarily suspended initiation of insolvency proceedings against a Corporate debtor (defaulter) arising on or after March 25.
NCLT opined that the legislative intent and object of the ordinance would be lost to assume that Section 10A would only be applicable to cases filed after the 5thof June. The ordinance would apply retrospectively to all pending application filed on or after the 25thof March.
The Bench comprising of R Varadhraraj (Judicial Memebr) and Anil Kumar B (Technical Member) held that “The date of filing cannot determine the rights of the parties in view of the prevalent extraordinary situation which will wholly defeat the object of the promulgation of the Ordinance in protecting the interest of the corporate persons”.
The Operational Creditor in the case urged that when no financial distress has been caused due to COVID-19, protection under 10A could not be claimed. The Tribunal further observed that one of the manifest from the objects of the ordinance was the concern about the availability of proper insolvency resolution professionals if Corporate persons would go into insolvency. Also the process is time bound and has to achieve maximization of asset value which in the prevailing uncertain situation. Thus the section would be applicable to all defaults and date of filings arising on and after the 25thof March.
In the present case, since the default arose on the 30thof April, the proceedings comes under the ambit of Section 10A. The application was allowed but the proceeding was disposed of.
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