2020 (10) TMI 1312 - Tri - Insolvency and Bankruptcy

Seeking direction to IRP to admit the claim of the applicant company towards the interest component - the principal amount was admitted but the interest amount was rejected by IRP - time limitation - HELD THAT - The interest amount has been refused on the ground that it is not reflected in the books of account of the CD. Even if it is presumed that the loan agreement on a plain paper is a valid agreement then we noticed that the amount, which was paid by the petitioner to the CD and by the CD to the petitioner both are on demand. So far the date of default under Section 7 of IBC is concerned, it is the date when the first demand was made. Here in the case in hand the demand was made for the first time as it appears from the documents enclosed by the petitioner on 21.12.2010, therefore, the date of default occurred on 21.12.2010, whereas the CIRP was initiated on 29.09.2020 and thereafter, the principal amount was admitted by the IRP and the petitioner filed this application for the interest, which was rejected by the IRP. In view of the settled principal of law, the petitioner is entitled to get it within three years from the date when the first default occurs. Since for the first time on demand, payment was made by the CD on 21.12.2010, therefore, the claim of the petitioner is liable to be accepted only as per article 137 of the Limitation Act, within three years, when right to apply accrues and here in the case in hand, the default was occurred for the first time on 21.12.2010, therefore, the petitioner was required to submit its claim within three years from 21.12.2010 i.e. on or before 20/12/2013 and in view of the decisions referred above in our considered view limitation cannot be extended on the basis of last payment made by the CD to the petitioner ,i.e from 22/03/2019 in view of Section 19 of the Limitation Act. The claim of interest of the petitioner is barred by limitation and it is liable to be rejected - there are no option but to reject the prayer of the petitioner to direct the RP to admit the claim of the applicant company to the tune of ₹ 5,63,67,620/- towards the interest component alongwith the principal component - application dismissed.

Summary

Issues:
1. Admission of interest component claim under Section 60 (5) of IBC, 2016.
2. Rejection of interest claim by IRP based on absence in CD's books and no TDS deduction.
3. Arguments on entitlement to interest as per loan agreement and rejection of interest claim.
4. Examination of documents and contentions regarding interest and principal amounts.
5. Consideration of limitation period for filing claims.
6. Analysis of legal precedents on limitation in insolvency cases.
7. Decision on rejection of interest claim due to limitation and acceptance of principal amount.
8. Direction for RP to re-examine limitation principles and reconsider principal amount claim.

Analysis:
1. The applicant sought direction under Section 60 (5) of IBC, 2016 to admit a claim of ?5,63,67,620 towards the interest component. The IRP admitted the principal amount but rejected the interest claim, citing absence in CD's books and no TDS deduction.
2. The applicant argued that the interest was entitled as per the loan agreement, emphasizing the 18% interest rate and timely payments made by the CD. The IRP's refusal was deemed contrary to the law by the applicant.
3. The Tribunal examined the loan agreement, noting the absence of interest reflection in CD's accounts. The applicant's ledger account was the sole evidence provided. The Tribunal questioned the validity of the agreement on plain paper.
4. Legal precedents on limitation were referenced, emphasizing the need for claims within three years of the first default. The Tribunal found the interest claim time-barred, rejecting the prayer to admit it but expressing displeasure at the IRP's oversight on limitation.
5. The Tribunal rejected the interest claim due to limitation but did not interfere with the admitted principal amount. The RP was directed to reassess the limitation principles and review the principal amount claim, highlighting the importance of adherence to legal provisions.

This detailed analysis covers the issues of interest claim admission, rejection based on absence in accounts, arguments on entitlement, examination of documents, limitation considerations, legal precedents, and the final decision with a direction for further review by the RP.