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CS Professional · Insolvency and Bankruptcy - Law and Practice · Corporate Insolvency Resolution Process

Vihaan Traders Pvt Ltd failed to pay a debt due on 10 January 2020. Another default by it occurred on 15 June 2020, within the period of suspension notified under section 10A. Which statement is correct?

An application can still be filed for the January 2020 default because section 10A does not apply to defaults committed before 25 March 2020. No application can ever be filed for the June 2020 default, since it occurred during the suspension period.

  1. AAn application may be filed for the January 2020 default, but never for the June 2020 default occurring in the suspension periodCorrect
  2. BApplications may be filed for neither default
  3. CAn application may be filed for both defaults after the suspension ends
  4. DAn application may be filed for the June 2020 default after the suspension ends

Explanation

Section 10A bars applications for defaults arising on or after 25 March 2020 during the suspension period, and its proviso says no application shall ever be filed for such a default. The Explanation clarifies it does not apply to defaults before 25 March 2020, so the January default remains actionable.

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