NCLT Mumbai: Threshold Limit For A Valid Petition Under Section 9 Of IBC For Each Operational Creditor Should Be Rs. 1 Crore

The Tribunal held that the threshold limit for a valid petition under Section 9 of IBC for each operational creditor is required to be Rs. 1 Crore.

Background Facts:

The Company Petition was filed by 29 Operational Creditors including Mr Atanu Kumar Chatterjee and Others under section 9 of the Insolvency and Bankruptcy Code, 2016 (‘IBC’) via the authorised representative, Mr Vinay Krishna Chaudhari for initiation of CIRP against Corporate Debtor for default in repaying an amount of Rs. 3.50 Crores as on 15.09.2021.

The Operational Creditors are the former employees of the Corporate debtor and have served the Corporate Debtor in different capacities and for different periods.

NCLT Verdict:

The NCLT Mumbai dismissed the Petition as non-maintainable and held that none of the individuals meet or satisfy the pecuniary limit of Rs. 1 crore individually essential for maintaining an action under Section 9 of the IBC.

The Tribunal as per Suresh Narayan Singh vs. Tayo Rolls Ltd. and JK Jute Mill Mazdoor Morcha vs. Juggilal Kamlapat Jute Mills Company Ltd. & Ors. held that it is a settled law that workmen/employees (Operational Creditors) may file an application to initiate CIRP in an individual capacity or as a joint capacity by the authorized person. However, none of the above judgements state in the favour of Operational Creditors that they can jointly file the Application crossing the financial limit of Rs. 1 crore to file the Petition under Section 9 of the IBC.

The Tribunal also observed that the Rajasthan High Court decision relied upon by the Operational Creditor in Vishnu Oil Mill Pvt. Ltd. vs. Union of India & Ors. does not apply to this case since the provision of Section 9 is differently worded. The phrase in Section 7 is “itself or jointly”, whereas the word jointly or any synonym of it does not find a place in Section 9.

The NCLT emphasized that the issue has attained finality and as per the findings of the NCLAT in Suresh Narayan Singh vs. Tayo Rolls Ltd. and the revised notification dated 24.03.2020, increasing the threshold limit from Rs. 1 Lakh to Rs. 1 Crore, for a valid petition under Section 9 of IBC, threshold limit for each individual is required to be Rs. 1 Crore.

In conclusion, the Petition is not maintainable as the claim of each Operational Creditor is below the threshold limit of Rs. 1 Crore.

Case Title: Mr Atanu Kumar Chatterjee vs. Rolta Defence Technology Systems Pvt. Ltd.

Case No.: C.P.(IB)-554(MB)/2022

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