2020 (2) TMI 1550 - Tri - Insolvency and Bankruptcy

Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors of Financial creditors - liability to pay interest when principal amount already paid - existence of debt and dispute or not - HELD THAT - If we shall read the definition of debt, claim, Financial Debt Operational Debt together then we are of the considered view that while filing an application under Section 9, the Operational Creditor is required to claim the debt which comes under the definition of Operational Debt because the debt is defined under Section 3(11) of the Code includes both Financial Debt and Operational Debt and two different remedies are available under the Code and one is under Section 7 and other under Section 9 of the Code, which an applicant can exercise to recover the debt is referred under Section 3(11) of the Code. In the present applications, as we find that the principal amount has already been paid and as per the agreement no interest is payable, the applications under Section 9 on the basis of claims for entitlement of interest, are not maintainable. If for delayed payment applicant(s) claim any interest, it will be open to them to move before a court of competent jurisdiction for recovery of interest, but initiation of Corporate Insolvency Resolution Process is not the answer - when we shall consider the claim of all the Petitioners then we find that the Petitioners filed an application under Section 9 of the Code and claimed themselves as the employees of the Corporate Debtor and in that capacity, they claimed salary and other dues and in course of hearing of the applications, the Corporate Debtor raised the facts that the some of the claims of the Petitioner is barred by limitation and claim which is not barred by limitation in respect of that claim the Corporate Debtor has already deposited the cheques. Therefore, it can be said that the admitted principal amount which the Petitioners claimed have already been paid by the Corporate Debtor. Since the admitted principal amount has already been paid by the Corporate Debtor, therefore there is no occurrence of default and no debt is due. Hence, all the present applications are not liable to be accepted - all the Operational Creditors/Petitioners are permitted to get the cheques of admitted principal amount from the office of Registrar, NCLT, New Delhi where Corporate Debtor has deposited the same - applications dismissed.

Summary

Issues Involved:

1. Initiation of Corporate Insolvency Resolution Process under Section 9 of the Insolvency and Bankruptcy Code, 2016.
2. Non-payment of salary and financial hardship faced by Operational Creditor.
3. Claim for interest on overdue salary.
4. Definition and scope of "Operational Debt" under the Insolvency and Bankruptcy Code, 2016.
5. Limitation and maintainability of claims under Section 9 of the Code.

Detailed Analysis:

1. Initiation of Corporate Insolvency Resolution Process under Section 9 of the Insolvency and Bankruptcy Code, 2016:
The petition was filed under Section 9 of the Insolvency and Bankruptcy Code, 2016, along with Rule 6 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016, by the Operational Creditor for initiation of Corporate Insolvency Resolution Process against the Corporate Debtor.

2. Non-payment of salary and financial hardship faced by Operational Creditor:
The Operational Creditor (OC) was employed as Executive-Design and faced delays and withholding of salary from May 2014 to September 2014 and again from April 2017 to September 2017. This led to extreme financial hardship, resulting in the OC resigning on 22.10.2017. The total outstanding overdue salary was ?3,24,540/- plus interest.

3. Claim for interest on overdue salary:
The OC claimed interest at the rate of 18% per annum from 14.02.2019 till the realization of the outstanding amount, amounting to ?1,87,711/-. The Corporate Debtor (CD) argued that the interest claimed does not come under the definition of Operational Debt and that the principal amount had already been deposited with the Registrar, NCLT, New Delhi.

4. Definition and scope of "Operational Debt" under the Insolvency and Bankruptcy Code, 2016:
The Tribunal referred to the definitions of "Debt," "Claim," "Financial Debt," and "Operational Debt" under Sections 3(11), 3(6), 5(8), and 5(21) of the Code. It was noted that Operational Debt includes claims for the provision of goods or services, including employment, but does not explicitly mention interest. Financial Debt, on the other hand, includes interest.

5. Limitation and maintainability of claims under Section 9 of the Code:
The Tribunal observed that while filing an application under Section 9, the Operational Creditor is required to claim the debt which comes under the definition of Operational Debt. The Tribunal referred to the decision in "Krishna Enterprises Vs. Gammon India Pvt." which held that interest is included in debt only if agreed upon. In the present case, there was no document or agreement showing an agreed rate of interest between the parties.

Conclusion:
The Tribunal concluded that since the admitted principal amount had already been deposited by the Corporate Debtor, there was no occurrence of default, and no debt was due. The applications under Section 9 based on claims for interest were not maintainable. The Tribunal dismissed all the applications (IB-702/ND/2019, IB-706/ND/2019, IB-703/ND/2019, IB-743/ND/2019, and IB-705/ND/2019) but permitted the Operational Creditors to collect the cheques of the admitted principal amount from the office of the Registrar, NCLT, New Delhi.