2018 (7) TMI 1963 - AT - Insolvency and Bankruptcy

Initiation of Corporate Insolvency Resolution Process - Section 9 of the Insolvency and Bankruptcy Code, 2016 - HELD THAT -- In the present appeals, as the principle amount has already been paid and as per agreement no interest was payable, the applications under Section 9 on the basis of claims for entitlement of interest, were not maintainable. If for delayed payment Appellant(s) claim any interest, it will be open to them to move before a court of competent jurisdiction, but initiation of Corporate Insolvency Resolution Process is not the answer. Appeal dismissed.

Summary

Issues:
- Application under Section 9 of the Insolvency and Bankruptcy Code, 2016 for initiation of Corporate Insolvency Resolution Process
- Dismissal of applications by the Adjudicating Authority
- Interpretation of the term 'debt' and 'claim' under the I&B Code
- Consideration of interest in the definition of 'debt'
- Applicability of interest claims in the initiation of Corporate Insolvency Resolution Process

Analysis:
The Appellate Tribunal dealt with applications filed by Operational Creditors under Section 9 of the Insolvency and Bankruptcy Code, 2016 for the initiation of Corporate Insolvency Resolution Process against a Corporate Debtor. The Adjudicating Authority dismissed the applications upon finding that the principle amount of debt, which was the only amount due, had been paid to the Appellants.

The Appellant contended that the Adjudicating Authority failed to dispose of the matter within the stipulated 14 days under Section 9 of the I&B Code. However, the Tribunal clarified that the 14-day period is not mandatory, as previously held by the Appellate Tribunal in similar cases.

The interpretation of the terms 'claim' and 'debt' under the I&B Code was crucial in this judgment. The Appellant argued that 'claim' encompasses various rights of payment, while 'debt' includes liabilities or obligations due from any person, incorporating financial and operational debts. The Tribunal noted that while interest may be included in debt if payable under an agreement, the principle amount is the primary debt owed by the Corporate Debtor.

In this case, since the principle amount had been settled, and no interest was payable based on the agreement, the Tribunal found the applications for claiming interest and initiating Corporate Insolvency Resolution Process to be unsustainable. The Tribunal emphasized that if interest is sought for delayed payments, the Appellants should seek recourse in a competent court rather than through insolvency proceedings.

Ultimately, the Tribunal dismissed the appeals, finding no merit in the claims and ruled that the initiation of Corporate Insolvency Resolution Process was not warranted in the absence of outstanding principle amounts.