NCLAT Delhi Rules Section Ten A Does Not Block Petitions for Post COVID Defaults

The National Company Law Appellate Tribunal (NCLAT) in Delhi has held that Section 10A of the Insolvency and Bankruptcy Code (IBC) does not bar insolvency petitions filed for defaults occurring after the expiration of the COVID-19 suspension window. The appellate authority emphasized that the legislative immunity granted during the pandemic was strictly time-bound and cannot be extended to shield corporate debtors from liabilities arising subsequent to the designated cutoff date. Creditors retain their legal right to initiate corporate insolvency resolution processes for defaults that fall outside the protected statutory period.

Section 10A was introduced to prevent businesses from being pushed into insolvency due to economic disruptions caused directly by the pandemic, creating a temporary shield for defaults occurring within that specific window. Once that protected timeframe elapsed, the normal provisions of the IBC resumed application, meaning any subsequent failure to service debt is fully actionable. This distinction prevents the misuse of pandemic-era protections for ongoing, current financial defaults, maintaining the balance between debtor rehabilitation and creditor rights. Insolvency professionals and financial creditors should verify the exact dates of default before filing petitions under Section 7 or Section 9 of the IBC to ensure compliance with the post-suspension legal framework.

Legal teams must compile clear transactional trails demonstrating that the unpaid dues arose outside the Section 10A immunity window. Bottom line: defaults occurring after the pandemic suspension period remain fully open to IBC action, safeguarding creditor recovery mechanisms.