2022 (1) TMI 567 - Tri - Insolvency and Bankruptcy

Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - existence of debt and dispute or not - HELD THAT - In the instant case there is no dispute that the Corporate Debtor had initially made part-payment of ₹ 6,79,680/- towards the goods purchased. The Corporate Debtor could not pay the remainder amount of ₹ 24,42,203/-. However, the said outstanding amount of ₹ 24,42,203/- has been paid by the Corporate Debtor, the details of which were furnished by the Corporate Debtor in its Memo dated 08.11.2021. Such payment has been confirmed by the Operational Creditor. The Corporate Debtor could not substantiate its claim of interest with any documentary proof, it is satidfying that before admission of an application under Section 9 of the I B Code, 2016, the Corporate Debtor paid the total debt - application dismissed.

Summary

Issues:
1. Petition filed by Operational Creditor under section 9 of Insolvency and Bankruptcy Code, 2016 for unpaid amount.
2. Dispute over payment between Operational Creditor and Corporate Debtor.
3. Claim of interest by Operational Creditor after payment made by Corporate Debtor.

Analysis:
1. The petition was filed by the Operational Creditor, claiming an amount due of ?24,42,203 plus interest, under section 9 of the Insolvency and Bankruptcy Code, 2016. The Operational Creditor is engaged in supplying electrical goods, while the Corporate Debtor was selected for rural electrification works by another entity.
2. The Operational Creditor supplied material worth ?31,21,883 to the Corporate Debtor, who made a partial payment of ?6,79,680 but failed to pay the remaining amount. The Corporate Debtor contended that the demand notice issued was premature as the credit period had not expired. However, the Corporate Debtor eventually paid the entire outstanding debt through RTGS and cheques.
3. The Operational Creditor claimed interest on the outstanding amount, even after confirmation of payment by both parties. The Corporate Debtor argued that there was no clause regarding interest in the purchase order or invoice. The Tribunal found that the invoices did not contain any clause levying interest, and the purchase order did not specify the rate of interest.
4. Referring to previous judgments, the Tribunal observed that in cases where the total debt has been paid before admission of the application under the Insolvency and Bankruptcy Code, pursuing the application solely for interest is against the principles of the Code. As the Corporate Debtor paid the outstanding amount and could not substantiate the claim of interest with documentary proof, the application was dismissed.

Conclusion:
The Tribunal dismissed the application, as the Corporate Debtor had paid the total debt before admission of the application under the Insolvency and Bankruptcy Code, and the claim for interest was not substantiated with documentary proof.