Whether Principal and Interest amounts be clubbed together?
Underlying Case with summary of facts
1. Operational creditor, CBRE had initiated Corporate Insolvency Resolution Process under section 9 of the Insolvency and Bankruptcy Code, 2016 against the M/s United Concepts, the Corporate Debtor.
2. Operational Creditor claimed a principal amount of Rs. 88.50 L along with the interest of Rs. 51.34 L segregating to Rs. 139.84 L.
Operational Creditor’s Claim:
Operational Creditor claimed a principal amount
of Rs. 88.50 L and levied interest of Rs. 51.34 L totaling to Rs. 139.84 L
from Corporate Debtor. According to the Operational creditor, the Corporate
Debtor obligated to pay the principal amount along with the interest as per the terms of Fee Letter and also invoice carried the
terms that if amount not paid within 7 days then same is subject to levy of interest
of 2% per month. Since Corporate Debtor did not pay the outstanding interest
was thus charged by the Operational Creditor. Therefore, the total amount (Principal
amount along with the interest) is above the minimum threshold of Rs 1 Crore
for initiating the case under section 9 of IBC, 2016.
NCLT Verdict:
The NCLT examined various provisions of the IB Code
along with the Section 5(21) which defines Operational Debt and Section 5(8)
which defines Financial Debt and came to the conclusion that interest can be
claimed as a financial debt but there is no provision to include interest in
the Operational Debt. They also examined the case law of Chandigarh Bench M/s. Wanbury
Ltd. Vs. M/s. Panacea Biotech Ltd to support their views.
CONCLUSION:
The bench
held that the Application was not maintainable under Section 4 of IBC, 2016 and
was accordingly, dismissed.
DISCLAIMER
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