The National Company Law Appellate Tribunal (NCLAT), New Delhi, has set aside an order passed by the National Company Law Tribunal, New Delhi Bench dismissing a Section 9 insolvency application by mechanically applying the COVID-19 bar under Section 10A of the Insolvency and Bankruptcy Code, 2016 (IBC), without examining invoices whose dates of default fell outside the excluded period. The appellate tribunal held that the approach adopted by the NCLT Delhi was flawed, as it failed to consider two invoices relating to the Vanijya Bhawan project whose dates of default were after the Section 10A cut-off. The decision was rendered by a Bench comprising Chairperson Justice Ashok Bhushan and Technical Member Barun Mitra while allowing an appeal filed by M/s Airtech Airconditioning
The appeal arose out of the rejection of a Section 9 application filed by Airtech Airconditioning against Parnika Commercial & Estate Private Limited. Airtech had provided HVAC and firefighting services to Parnika for three separate projects—Vanijya Bhawan, New Delhi; a DRDO facility in Delhi; and IIT Bombay. Separate work orders were issued for each project, and running account invoices were raised independently for all three.
Claiming that an amount of ₹8.23 crore remained unpaid, Airtech issued a demand notice under Section 8 of the IBC. Parnika denied liability and raised issues relating to performance, overbilling, delays and abandonment of work. It also pointed out that arbitration proceedings had been initiated between the parties. Thereafter, the NCLT Delhi dismissed the Section 9 application, holding that the invoices relied upon fell within the period covered by Section 10A of the IBC, during which initiation of insolvency proceedings is barred.
Before the NCLAT, Airtech conceded that the invoices relating to the DRDO and IIT Bombay projects did fall within the Section 10A excluded period. However, it specifically pointed out that two invoices pertaining to the Vanijya Bhawan project had dates of default on April 14, 2022 and July 29, 2022, which were clearly beyond the COVID-19 exclusion period. The amount due under these two invoices alone was ₹2.36 crore, crossing the statutory threshold of ₹1 crore prescribed under Section 4 of the IBC.
The NCLAT examined the pleadings and records, including Part-IV of the Section 9 application, and found that the operational creditor had relied on six invoices in total. Of these, two invoices related to the Vanijya Bhawan project had dates of default well after the Section 10A bar period. However, the NCLT Delhi, while dismissing the application, had considered only three invoices dated November 6, 2020, November 27, 2020 and March 3, 2021, all of which fell squarely within the excluded period.
The appellate tribunal observed that the adjudicating authority had “clearly failed to take note of the two invoices of the Vanijya Bhawan Project, the date of which invoices and their date of defaults unambiguously fell beyond the period covered by Section 10-A of IBC.” It held that once the dates of default of these invoices were outside the Section 10A period, the Section 9 application could not have been dismissed solely on that ground.
The Bench noted that the amount arising from the two Vanijya Bhawan invoices exceeded the minimum threshold under the Code and, therefore, warranted examination on merits. It recorded the statement made by the appellant that it was willing to confine its insolvency claim strictly to these two invoices alone.
While Parnika had raised contentions regarding pre-existing disputes, overbilling and pending arbitration, the NCLAT clarified that it was not expressing any opinion on these aspects at this stage. It held that the NCLT Delhi must first examine the maintainability of the insolvency application with reference to the two post-COVID invoices, which had been completely ignored earlier.
Accordingly, the NCLAT allowed the appeal, set aside the impugned order of the NCLT Delhi, and restored the Section 9 application. The matter was remanded to the adjudicating authority for fresh consideration in accordance with law, with a specific direction that the insolvency claim shall remain confined only to the two invoices relating to the Vanijya Bhawan project dated March 29, 2022 and July 13, 2022. No order as to costs was passed.
Appearance
For Appellant: Advocates Vipul Ganda, Avnika Mishra, Nitu Barik and Gyanesh Tiwary
For Respondents : Mr. Bhupesh Narula
Cause Title: Airtech Airconditioning v. Parnika Commercial and Estate Private Limited
Case Number: Company Appeal (AT) (Ins) No.502/2024
Coram: Chairperson Justice Ashok Bhushan and Technical Member Barun Mitra
