Default Debt includes Principal and Interest on delayed payment: NCLAT [Read Order]

Default debt - interest - payment - NCLAT - taxscan

The Principal Bench of the National Company Law Appellate Tribunal (NCLAT) comprising of Justice Ashok Bhushan, Justice M. Satyanarayana Murthy, Member (Judicial), and Naresh Salecha, Member (Technical), held the total amount for maintainability of the claim will include both principal debt amount as well as interest on delayed payment.

The appellant, Mr Prashat Agarwal challenged the Impugned Order dated 07.06.2022 passed in CP (IB) No. 1443/MB-IV/2020 by the Adjudicating Authority/National Company Law Tribunal, Mumbai Bench.

Vikash Parasrampuria- Sole Proprietor of ‘Chiranjilal Yarns Trading’ the Operational Creditor (OC), supplied goods to Bombay Rayons Fashions Ltd. who is the Corporate Debtor (CD). Chiranjilal supplied goods to Bombay Rayons for Rs 2,02,26,017 under nine invoices. Bombay Rayons paid three invoices with delay, partly paid for one, and didn’t pay for the rest. The Adjudicating Authority admitted the Section 9 application and approved the initiation of CIRP along with the appointment of IRP.

It was argued that Section 4 of the Insolvency and Bankruptcy Code states that the insolvency process application would only be maintainable if the minimum amount of debt must be Rs 1 crore where the principal amount of debt was only Rs. 97,87,220/- which was below the prescribed threshold limit.

It was observed that as per a notification issued by the Ministry of Corporate Affairs on March 24, 2020, the threshold limit of Rs 1 crore will be applicable for any application filed under Section 7 or 9 of IBC. Further observed by the Tribunal that the principal debt amount of Rs 97,87,220 along with interest makes the total outstanding payment as Rs. 1,60,87,838 and thus meets the requirement of code.

The Tribunal held that the interest on delayed payment was stipulated in the invoice and the lender is entitled to the ‘right to payment’ and dismissed the appeal.

The appellant was represented by Mr Abhijeet Sinha, Mr Sunil Vyas, Mr Nausher Kohli, Mr Palzer Moktan, Ms Dipti Das, Mr Deep Morabia & Mr Aditya Shukla and the respondent was represented by Mr Saurabh Pandya, Mr Viraj Parikh, Mr Mahur Mahajan.

Subscribe Taxscan Premium to view the Judgment

Support our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates

Related Stories