The National Company Law Tribunal (NCLT), New Delhi bench was recently hearing a case where it was found that the claim amount was the sum of the Principal Amount and the interest thereon. The NCLT Bench held that the “interest can be claimed as the Financial Debt, but neither there is any provision nor there is any scope to include the interest to constitute as the Operational Debt."
During the course of the preliminary hearing, it was observed by the Bench that the Applicant had claimed a total amount of Rs.1,39,84,400/- as Operational Debt, out of which Rs.88,50,886/- only was the Principal amount and the remaining Rs.51,33,514/- was the interest component. Since the principal outstanding claimed by the Operational Creditor was less than Rs. 1 Crore, a query to the Applicant was raised by NCLT Bench as to whether the Principal and Interest amounts could be clubbed together to reach the minimum threshold of Rs. 1 Crore as stipulated under Section 4 of IBC, 2016. That in response, it was submitted by the counsel appearing for the Operational Creditor that the invoices raised in support of debt contained the provision of interest and accordingly, the Applicant had claimed the interest as part of the Operational Debt. To adjudicate this issue, it was imperative to examine the various related provisions of IBC, 2016.
Operational debt means a claim in respect of the provision of goods or services including employment or a debt in respect of the [payment] of dues arising under any law for the time being in force and payable to the Central Government, any State Government or any local authority. Whereas financial debt means a debt along with interest, if any, which is disbursed against the consideration for the time value of money and includes. Thus, it can be inferred that the “interest” can be claimed as the Financial Debt, but neither there is any provision nor there is any scope to include the interest to constitute as the Operational Debt.
That a similar finding was given by the NCLT Chandigarh Bench in the matter of Wanbury Ltd. v. M/s. Panacea Biotech Ltd., REED 2017 NCLT CH 04525, That in the light of the above discussion, the NCLT were of the view that the Interest amount could not be clubbed with the Principal amount of debt to arrive at the minimum threshold of Rs.1 Crore for complying with the provision of Section 4 of IBC, 2016.
That the Counsel appearing for the Applicant had taken another plea in the hearing that since the date of default is of 2019 hence, the limit of 1 Crore shall not be applicable to it. In this context, it was worthwhile to refer to the Judgement of Hon’ble NCLAT in the matter of Jumbo Paper Products v. Hansraj Agrofresh Pvt. Ltd., REED 2021 NCLAT Del 10527, where the Appellate Tribunal held that “…. It is seen that notification dated 24.3.2020 makes it unambiguously clear that the threshold limit to be considered for section 9 application will be Rs. 1 crore. This threshold limit will be applicable for applications filed u/s 7 or 9 on or after 24.3.3020 even if the debt is of a date earlier than 24.3.2020. Since the application under section 9 which is the subject matter of this appeal was filed on 13.9.2020, therefore the threshold limit of Rs. 1 crore of debt will be applicable in the present case.”
In view of the above, the NCLT concluded that since the Principal amount of operational debt claimed by the Applicant was less than Rs.01 Crore and the Application was filed in the year 2021, the Application was not maintainable under Section 4 of IBC, 2016 and was accordingly, dismissed.
Comments