Section 10A IBC bars CIRP initiation for defaults during COVID-19 period permanently; principal defaults therein excluded, even if continuing, rendering petition non-maintainable if below threshold.

JUDGMENT

(Hybrid Mode)

Per: Barun Mitra, Member (Technical)

The present appeal filed under Section 61 of the Insolvency and Bankruptcy Code, 2016 (‘IBC’ in short) by the Appellant arises out of the Order dated 07.11.2025 (hereinafter referred to as ‘Impugned Order’) passed by the Adjudicating Authority (National Company Law Tribunal, New Delhi Bench) in C.P.(IB) No.234/2025. By the impugned order, the Adjudicating Authority has dismissed the Section 7 application filed by the Appellant for initiation of Corporate Insolvency Resolution Process (‘CIRP’ in short) against the Corporate Debtor-Chetanya Buildcon Pvt. Ltd. on the ground that the outstanding amount fell below the threshold prescribed under Section 4 of IBC. Aggrieved by the impugned order, the present appeal has been preferred by the ex-Director of the Corporate Debtor.

2. Coming to the sequence of events facts of the present case, the Appellant had entered into an Agreement to Sell (‘ATS’ in short) dated 16.02.2017 with Saluja Construction Company Limited which went through several iterations until a fresh ATS dated 27.12.2018 was entered into with the Respondent- Corporate Debtor in respect of a property situated at Friends Colony, New Delhi. Thereafter the ATS was cancelled through a Cancellation Agreement dated 30.01.2020, under which the Respondent undertook to refund a sum of Rs. 2.65 Cr which was payable in 3 tranches viz Rs 65 lakhs in March 2020 and Rs 1 Cr each in March and April 2020. It was also agreed that applicable interest of 9 % p.a would be payable on the outstanding amount from 01.10.2019 onwards. However, as the Respondent failed to discharge the said obligation within the stipulated time, the Appellant filed a Section 7 petition on 23.05.2024, being CP IB No. 359 of 2024 for a principal amount of debt due and payable of Rs. 2,65,00,000/- alongwith interest of Rs. 1,03,35,000/- for the period 01.10.2019 to 31.01.2024. The Respondent had raised a specific objection that since the default had occurred during March to May 2020, it was hit by the statutory bar under Section 10A of IBC. The Adjudicating Authority granted time to the Appellant to file an affidavit on maintainability which opportunity not having been availed, the Section 7 petition was dismissed on 04.09.2024. Thereafter, the Appellant had filed a Restoration Application No. 107 of 2024, which was dismissed on 18.10.2024 followed by dismissal of clarification application vide No IA No. 5833 of 2024. The Appellant thereafter preferred an appeal before this Tribunal being CA(AT)(Ins) No. 186 of 2025 which was disposed of on 28.02.2025 by this Tribunal giving liberty to the Appellant to file a fresh Section 7 application excluding the period of default covered under Section 10A. Pursuant to the liberty granted by this Tribunal, the Appellant filed a fresh Section 7 application being CP (IB) No. 234 of 2025 in which they claimed the same principal amount of Rs. 2.65 Cr which had fallen due during the Section 10A period by asserting that the default was continuing in nature. The interest amount claimed was, however, Rs 93.41 lakh after excluding the Section 10A period. The Adjudicating Authority dismissed CP (IB) No. 234 of 2025 by holding that the principal amount had to be excluded as the default occurred during the Section 10A period while the interest amount was below the minimum threshold of Rs 1 Cr and therefore the Section 7 petition was not maintainable.

3. Making submissions on behalf of the Appellant, Ld. Counsel for the Appellant submitted that t