India: Joint Petition Under IBC Not Maintainable If The Operational Creditors Do Not Fulfil The Threshold Of Rs. 1 Crore Individually

Introduction

The National Company Law Tribunal, Mumbai (NCLT), in the matter of Mr. Brajesh Mishra and Others vs. M/s Dolphin Offshore Shipping Ltd.¹ held that a joint petition under Section 9 of the Insolvency and Bankruptcy code, 2016 (IBC) filed by more than one individual is not maintainable if they individually do not fulfill the threshold limit of Rs. 1 crore Top of Form

Facts of the case

In the present case, a company petition under Section 9 of the IBC was filed by Mr. Brajesh Mishra and others (Operational Creditors), seeking to initiate Corporate Insolvency Resolution Process (CIRP) against M/s Dolphin Offshore Shipping Ltd. (Corporate Debtor), alleging that the Corporate Debtor committed default in making payment of Rs. 2,86,11,281/- to the Operational Creditors.

The Operational Creditors, who were employees of the Corporate Debtor, including some current employees, claimed that the Corporate Debtors failed to fulfill the legal obligations owed to them in terms of payments of salaries and other dues which collectively amounted to more than Rs. 1 crore. In response, the Corporate Debtor argued that a joint application under Section 9 of the IBC by one or more Operational Creditors was not maintainable as the individual claims of each Operational Creditor were below the minimum threshold limit of Rs. 1 crore.

Decision of the NCLT

The NCLT observed that the Section 9 petition under the IBC was jointly filed by 23 petitioners, with a total claimed amount of Rs. 2,86,11,281/-. Upon perusal of the records, it was evident that none of the individual petitioners had a claim exceeding Rs. 1 crore. Consequently, none of the applicants individually satisfied the Rs. 1 crore threshold requirement as per Section 4 of the IBC. The key issue before the NCLT was whether a joint petition under Section 9 of the IBC filed by more than one individual can be maintained if individually they do not fulfill the threshold limit of Rs. 1 crore. Placing reliance on the Sadashiv Nomaya Nayak and Others vs. Gammon India and Contractors Private Limited², the NCLT concluded that the current petition was not maintainable since the individual claims of each of the joint petitioners did not meet the Rs. 1 crore threshold.

Footnotes

1. Mr. Brajesh Mishra and Others vs. M/s Dolphin Offshore Shipping Ltd. (CP(IB) 206 MB 2021)

2 Sadashiv Nomaya Nayak and Others vs. Gammon India and Contractors Private Limited (Company Appeal (AT) (Insolvency) No. 218 of 2023)

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.