• Foseco India Ltd (Foseco) filed an Application under Section 9 against Corporate Debtor before NCLT, Kolkata Bench for an alleged default of INR 90,00,919.10
  • Corporate Debtor contended that amendment to IBC introducing a proviso to Section 4 which provides that Central Government may, by notification, specify minimum amount of default of higher value which shall not be more than INR 1 crore is retrospective in operation and therefore the Application is not maintainable after amendment for want of pecuniary jurisdiction as amount involved in matter is less than INR 1 crore.
  • NCLT observed that it is well settled law that a statute is presumed to be prospective unless it is held to be retrospective, either expressly or by necessary implication. Therefore, amendment in question would be considered as prospective and not retrospective.
  • In view of above, since Foseco was able to make a case for admission of Application under Section 9, NCLT admitted the Application and ordered for commencement of CIRP against Corporate Debtor.

Our viewpoint: The judgment brings much needed clarity regarding prospective application of increased threshold of INR 1 crore, for purpose of initiating CIRP under IBC.

Originally published 29 June, 2020

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Mr Abhirup Dasgupta
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