2022 (1) TMI 1266 - Tri - Insolvency and Bankruptcy

Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - minimum threshold limit for filing an application - claim is made together of principal amount alongwith interest - the principal amount is less that one crore - existence of debt and dispute or not - 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. The Interest amount cannot 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 - Since the present application has been filed in the year 2021, therefore, there are no force in the arguments of Ld. Counsel of Operational Creditor that the limit of Rs. 01 Crore is not applicable to its case. Since the Principal amount of operational debt claimed by the Applicant is less than Rs.01 Crore and the Application is filed in the year 2021, the Application is not maintainable under Section 4 of IBC, 2016 and is accordingly, dismissed.

Summary

Issues:
- Application under Section 9 of the Insolvency and Bankruptcy Code, 2016 for Corporate Insolvency Resolution Process.
- Determining if interest can be clubbed with the principal amount to meet the minimum threshold for IBC compliance.
- Applicability of the Rs. 1 Crore limit for applications filed post the specified date.

Analysis:

1. The Applicant, M/s. CBRE South Asia Pvt. Ltd., filed an Application under Section 9 of the Insolvency and Bankruptcy Code, 2016, seeking to initiate Corporate Insolvency Resolution Process against M/s. United Concepts and Solutions Pvt. Ltd., a Company incorporated under the Companies Act, 2016.

2. The Applicant claimed a total operational debt of Rs.1,39,84,400, with Rs.88,50,886 being the principal amount and Rs.51,33,514 as interest. The Tribunal raised a query on whether interest can be combined with the principal to meet the Rs. 1 Crore threshold as per Section 4 of IBC, 2016.

3. The Counsel for the Operational Creditor argued that interest was part of the operational debt as per the invoices raised. However, the Tribunal noted that interest can be claimed as financial debt but not as operational debt under the IBC provisions.

4. Referring to a similar case, the Tribunal highlighted that the definition of operational debt does not include interest, unlike financial debt. As per the NCLT Chandigarh Bench's finding, interest cannot be clubbed with the principal amount to meet the Rs. 1 Crore threshold required by IBC.

5. The Applicant's Counsel contended that the Rs. 1 Crore limit should not apply due to the default date being in 2019. However, referencing a judgment by Hon’ble NCLAT, the Tribunal clarified that the threshold limit of Rs. 1 Crore is applicable to applications filed post the specified date, regardless of the debt's origin date.

6. Considering the Principal amount of operational debt being less than Rs. 1 Crore and the application being filed in 2021, the Tribunal concluded that the application was not maintainable under Section 4 of IBC, 2016, and subsequently dismissed it.