JSA was successful in getting an application filed by Ezeego Tours and Travel Private Limited under Section 9 of the Insolvency and Bankruptcy Code, 2016 (“Code”) seeking initiation of insolvency resolution proceedings against Yatra Online Limited dismissed.
Yatra had filed an application before the National Company Law Tribunal, Mumbai (“NCLT”) The NCLT dismissed the application filed by Yatra by undertaking a fact-finding exercise to ascertain another date as a date of default which was beyond the Section 10A suspension period, when the Ezeego had already specified a date of default in the Demand Notice and Company Petition which fell squarely within the Section 10A suspension period.
In the appeal filed by Yatra, the National Company Law Appellate Tribunal, Delhi (“NCLAT”) set aside the order of NCLT, Mumbai.
- The NCLAT while setting aside the order of the NCLT held as follows:
- The date of default as set out in the demand notice and the Section 9 Application are the same.
- The demand notice is a sine qua non before an application under Section 9 is filed. It is a very important document by which the operational creditor would bring the fact of debt and default to the notice of the corporate debtor.
- Having taken the same date in the demand notice and the Section 9 Application, Ezeego cannot conveniently change the date to an earlier date.
- The situation is squarely covered by the law laid down by the Supreme Court in Ramesh Kymal v. Siemens Gamesa (2021) 3 SCC 224 where it was categorically held that any attempt to set back the date of default is plainly untenable since it is contrary to the disclosure made in the demand notice under Section 8(1) and Section 9.
- Ezeego never attempted to amend the Section 9 Application to change the date of default, despite having an opportunity to do so. Even otherwise, the judgments permitting applicants to amend their application to change the date of default, were all given in the context of Section 7 wherein there is no requirement of issuing a demand notice.
- The resolution professional who was appointed in March 2021, is supposed to be familiar with the proceedings of the court and cannot claim lack of knowledge.
As a consequence of setting aside the order of the NCLT, the NCLAT dismissed the Section 9 Application on the ground that it is not maintainable.
While the judgment in Ramesh Kymal (supra) holds that the date of default in the demand notice is sacrosanct, this is the first judgement of the NCLAT which: (a) unequivocally holds that the date of default cannot be changed subsequently from the date mentioned in the demand notice under Section 8 and the application under Section 9; and (b) clarifies that the judgments rendered in the context of Section 7 permitting amendment of pleadings to change the date of default do not apply in case of applications under Section 9.
Our Dispute Team Comprised Lead Partner – Dheeraj Nair, Principal Associate – Anjali Anchayil, Senior Associate – Vishrutyi Sahni and, Junior Associate – Ridhima Sharma.