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Ramesh Kymal v. M/s. Siemens Gamesa Renewable Power Private Limited

Civil Appeal · 2021 INSC 71Decided 9 Feb 2021
Civil Appeal No. 4050 of 2020
Dr. Justice D.Y. Chandrachud · Justice M.R. Shah

Background

Ramesh Kymal, a former Chairman and Managing Director, resigned and claimed over Rs. 104 crore owed to him under his employment and incentive agreements, specifying 30 April 2020 as the date of default in his statutory demand notice. He filed an application under Section 9 of the Insolvency and Bankruptcy Code (IBC) on 11 May 2020 as an operational creditor seeking to initiate insolvency proceedings against the company. While the application was pending, an Ordinance dated 5 June 2020 inserted Section 10A into the IBC, barring any insolvency application for a default arising on or after 25 March 2020 (the COVID-19 lockdown period), and both the NCLT and NCLAT held his application was barred by this new provision.

Decision Breakdown

The Supreme Court held that Section 10A's bar is tied to the date of default, not the date an application is filed, since the declared date of default (30 April 2020) fell within the period covered by Section 10A, the bar applied even though the Section 9 application itself had been filed on 11 May 2020, before Section 10A was actually inserted on 5 June 2020. The Court rejected the appellant's attempt to argue for an earlier "actual" date of default (21 January or 23 March 2020), holding he was bound by the date he himself had disclosed in his statutory demand notice. It also distinguished between the "initiation date" (when a creditor files an application) and the "commencement date" (when the tribunal admits it), agreeing with the NCLAT that Section 10A's bar operates retrospectively from 25 March 2020 regardless of when the application happened to be filed. The appeal was dismissed, affirming that no insolvency proceedings could be initiated for this default.

Lesson Learnt

When a law creates a temporary bar tied to a specific trigger event (here, the date of default during the COVID-19 period), courts will look at when that triggering event occurred, not merely when a party happened to file its case, and a creditor is bound by the date of default it itself formally declared in its statutory notice, and cannot later argue for a different, more convenient date.

Official source (sci.gov.in)View Judgment (PDF)

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