2018 (2) TMI 1849 - Tri - Insolvency and Bankruptcy

Operational Debt - petition filed by Operational Creditor under I&B Code by invoking the provisions of section 9 - whether on receiving the principal operational debt amount during the pendency of the Petition before NCLT, the Petitioner can press for the admission of the Petition only in respect of the Interest amount alleged to be outstanding, firstly without revising the claim of Outstanding Debt and secondly when the eligibility of Interest claim is challenged by the Operational Debtor? Held that - The charging of Interest on an outstanding Debt ought to be an Actionable Claim so that admissible under the eyes of Law. Claim of Interest is therefore within the ambits of an Actionable Claim which is enforceable under Law - As far as the question of present controversy related to charging of Interest is concerned, the same is enforceable if it is properly documented and agreed upon. It is also necessary that the rate of Interest should also be agreed upon between the Parties. In the present case, these basic requirements appear to be missing. Rather, the Petitioner had not established to the hilt the eligibility of claim of Interest. Merely a filing of a calculation sheet, that too a computer generated statement, is in our humble opinion, a self-serving document and not a cogent evidence admissible under the Law. The absence of a written instrument acknowledging the Liability of Interest payment as also acknowledging the Liability of the rate at which Interest was to be charged, definitely affect adversely the Claim of the Petitioner. When the Principal amount of Debt had admittedly been paid and duly accepted by the Petitioner and the claim of Interest remained unsubstantiated in the absence of cogent evidence, the Operational Debt in question remained unascertainable - Petition dismissed.

Summary

Issues:
1. Eligibility of claim of interest on principal operational debt amount during the pendency of the petition.
2. Validity of documents relied upon by the petitioner.
3. Dispute regarding interest claim challenged by the operational debtor.
4. Examination of evidence and arguments presented by both parties.
5. Interpretation of legal definitions related to claims, debts, and operational debts.
6. Assessment of the enforceability of the interest claim based on evidence provided.
7. Consideration of the absence of necessary documentation to support the claim of interest.

Issue 1: Eligibility of Claim of Interest:
The petitioner filed a petition under the I&B Code claiming operational debt and interest against the operational debtor. The key question was whether the petitioner could press for admission of the petition only for the interest amount after receiving the principal debt during the petition's pendency. The tribunal examined the facts and circumstances, including the payment of the principal debt by the debtor and the disputed interest claim. The petitioner argued for the admission of the petition based on the outstanding interest amount, while the respondent contended that the interest claim lacked proper documentation and agreement on the rate of interest. The tribunal analyzed the legal requirements for an actionable claim and found that the interest claim was not adequately substantiated, leading to the dismissal of the petition.

Issue 2: Validity of Documents:
The respondent challenged the validity of the documents relied upon by the petitioner, specifically a balance confirmation letter. The respondent argued that the petitioner failed to provide all necessary invoices and supporting statements to prove the debt claim. The tribunal considered the objections raised by the respondent regarding the authenticity of the documents and the lack of sufficient evidence to support the claim. Ultimately, the tribunal found that the petitioner's evidence was insufficient to establish the claim of interest and maintain the petition under the I&B Code.

Issue 3: Dispute Regarding Interest Claim:
The respondent disputed the interest claim, emphasizing the lack of agreement on interest payment terms and the absence of conclusive evidence supporting the interest calculation. The respondent contended that the principal debt had been settled in good faith, and raising a demand for interest was unjustified. The tribunal reviewed the arguments presented by both parties and concluded that the interest claim was not adequately substantiated, rendering the operational debt unascertainable and leading to the dismissal of the petition.

Issue 4: Examination of Evidence and Arguments:
The tribunal carefully examined the evidence and arguments presented by both the petitioner and the respondent. The petitioner highlighted the supply of goods and services, issuance of a notice of demand, and non-payment of the outstanding debt. In contrast, the respondent challenged the validity of the documents, lack of invoicing details, and absence of a clear agreement on interest terms. The tribunal considered these arguments in light of the legal definitions of claims, debts, and operational debts to reach a decision on the petition's maintainability.

Issue 5: Interpretation of Legal Definitions:
The tribunal provided a detailed analysis of the legal definitions related to claims, debts, and operational debts under the I&B Code. By examining these definitions, the tribunal emphasized the requirements for an actionable claim, enforceability under the law, and the essential elements to establish a debt claim. The interpretation of these legal definitions guided the tribunal's assessment of the petition and the disputed interest claim.

Issue 6: Assessment of Enforceability of Interest Claim:
The tribunal assessed the enforceability of the interest claim based on the evidence provided by the petitioner. It scrutinized the documentation, including a calculation sheet, to determine the validity of the interest calculation and the agreement on interest terms. The tribunal found that the petitioner failed to substantiate the interest claim with sufficient evidence, such as a written instrument acknowledging the liability of interest payment and the agreed-upon interest rate, leading to the dismissal of the petition.

Issue 7: Absence of Necessary Documentation:
The tribunal considered the absence of necessary documentation, such as a ledger account of the respondent company to demonstrate the accounting of interest amount. The lack of corroborative evidence supporting the interest claim and the failure to establish the interest accrual in the books of accounts weakened the petitioner's case. The tribunal highlighted the importance of providing comprehensive evidence to support claims under the I&B Code, emphasizing the need for clear documentation and agreement on disputed amounts.

In conclusion, the tribunal dismissed the petition under section 9 of the I&B Code due to the unascertainable nature of the operational debt, specifically the unsubstantiated interest claim, and directed the case to be consigned to records.