Introduction
Many unanswered questions have persisted since the implementation of the Insolvency and Bankruptcy Code of 2016 (“the IBC/Code”), and few concrete solutions have been laid down by the judiciary which have further been affirmed and introduced under the Code as amendment by the legislature. However, there are very peculiar issues still subsisting in the Code, as it is fairly new Code having prolonged teething problems, of which one of the major issues that is usually encountered while filing an application under Section 9 of the IBC, is determining the date of default. It is a common knowledge that the date of default and the amount of debt are vital conditions for the initiating the insolvency process. The Hon’ble National Company Law Appellate Tribunal (“NCLAT”) Delhi Bench in the matter of Kodeboyina Srinivas Krishna vs PVM Innvensys Pvt. Ltd. & Anr. (2020) ibclaw.in 92 NCLAT on 25.09.2020 held that “the Demand Notice in Form 3 also requires the date of default to be explicitly mentioned in the notice so that on the basis of documents the debt amount and the date of default could be ascertained”. Henceforth, it is imperative that the precise date of default be explicitly delineated within the application for the IBC.
Importance of mentioning the Date of Default in Application
In certain matters, the Adjudicating Authority has allowed the application even in cases where the specific date of default has not been mentioned. For instance, the National Company Law Tribunal (“NCLT”) Delhi Bench on 27.07.2023 stated that “Hence, we observe that the non-mentioning of the Date of Default does not affect the merits of the present case” in the case of M/s. Geocon Infra Pvt. Ltd. vs. M/s. Brij Gopal Construction Company Pvt. Ltd. (2023) ibclaw.in 392 NCLT. The Adjudicating Authority in the said case held that, although the particular date of default was not explicitly stated in either the Demand Notice or Part-IV of the application, it inferred the date of default to be 30 days from the last invoice upon perusal of invoices. Consequently, the Adjudicating Authority admitted the application.
However, there are several matters wherein the Adjudicating Authority, even when the debt was established, has rejected the application only on the pretext that the date of default is not mentioned. In the matter of M/s LBF Publication Pvt. Ltd. vs. A & A Business Consulting Pvt. Ltd. (2023) ibclaw.in 517 NCLT, the Hon’ble NCLT Mumbai Bench on 10.08.2023 came to the conclusion that, “Though there exists debt in the absence of due date the date of default could not been ascertained hence, this petition does not satisfy the conditions u/s 8 of the Code i.e., occurrence of default. In view of the above, we find that the present case is fit for dismissal”.
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