Rejection of Application u/s 9 of IBC Against Hindustan Unilever Limited: NCLAT upholds Order [Read Order]

The National Company Law Appellate Tribunal (NCLAT) bench upheld the order rejecting the application under section 9 of the Insolvency and Bankruptcy Code filed against Hindustan Unilever Limited on the ground that the claims were below the threshold limit, time-barred and there was a pre-existing dispute.

Section 9 of the Code was used by the Appellant-Operational Creditor to bring an application against Hindustan Unilever Ltd. By the contested ruling dated 5.09.2024, the Adjudicating Authority denied the application on the basis that there was an existing dispute, the total claim amount was less than Rs. 1 crore, and only a small number of invoices fell within the three-year statute of limitations.

The appellant's attorney argued that the appellant had the right to charge 24% interest and that, if the principal sum of Rs. 59 lakhs is added to the 24% interest amount, the total will exceed Rs. 1 crore. According to the Respondent's counsel, a penalty of 24% should only be applied in accordance with the Credit Terms if the check is deposited and bounces.

The NCLAT panel, consisting of Technical Member Arun Baroka and Chairperson Justice Ashok Bhushan, upheld the contested ruling. It was seen that the invoices that fell inside the three-year statute of limitations were significantly less than the Rs. 1 crore threshold.

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The Tribunal ruled that there was no Purchase Order supporting the Appellant's contention that he was authorized to charge 24% interest. It stated that the Operational Creditor was allowed to impose a 24% penalty under the Creditor Terms in the event that payment to the Operational Creditor was delayed.

The Tribunal rejected the appeal submitted by the assessee, K. Lakshmi Narayana, stating that the legal notification dated 17.01.2019 suggested a pre-existing disagreement.

To Read the full text of the Order CLICK HERE

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