2022 (7) TMI 835 - AT - 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 - threshold amount involved in the application - time limitation - case of appellant is that cause of action arose as early in 2017 but the petition was filed on 16 December, 2020 hence time barred by Limitation Act, 1963 - HELD THAT - It has been held by the Adjudicating Authority that last date of invoice was 01.02.2020 and date of filing of Application before NCLT, Mumbai was 31.12.2020 and therefore Section 9 Application was made well within the limitation - there are no inconsistency in order of Adjudicating Authority on this issue and therefore issue of limitation as raised by Learned Counsel for the Appellant cannot be agreed to. Monetary amount involved in the application - HELD THAT - It is clear from the facts that the total amount for maintainability of claim will include both principal debt amount as well as interest on delayed payment which was clearly stipulated in the invoice itself. It is noted that the total principal debt amount of Rs. 97,87,220/- along with interest the total debt makes total outstanding as Rs. 1,60,87,838/-. Thus, the total debt outstanding of OC is above Rs. 1 crore as per requirement of Section 4 IBC read with notification No. S.O 1205 (E) dated 24.3.2020, and meets the criteria of Rs. 1 crore as per Section 4 of IBC and Application is therefore maintainable in present case. Appeal dismissed.

Summary

Issues involved:
1. Limitation of the application under the Insolvency & Bankruptcy Code, 2016.
2. Maintainability of the application based on the principal operational debt amount.

Analysis:

Issue of limitation:
The Appellate Tribunal examined the timeline of events and found that the Section 9 application was filed within the limitation period. The Adjudicating Authority's decision regarding the timing of the application was upheld, concluding that the application was not time-barred as per the Limitation Act, 1963.

Issue of maintainability:
Regarding the principal operational debt amount, the Appellant argued that the debt amount was below the prescribed threshold of Rs. 1 crore, making the application not maintainable. The Tribunal referred to Section 4 of the IBC and a notification issued by the Ministry of Corporate Affairs, which increased the threshold limit to Rs. 1 crore. The Appellant cited various case laws to support the appeal, including judgments from the Supreme Court and NCLAT.

The Tribunal analyzed the terms of the invoices issued by the Operational Creditor (OC) to the Corporate Debtor (CD) and noted that interest on delayed payment was clearly mentioned in all nine invoices. This led to a discussion on the definition of debt and claim under the IBC. The Tribunal emphasized that interest on delayed payment constituted a right to payment and, therefore, formed part of the debt as defined in the IBC.

The Tribunal also referenced a judgment from NCLAT regarding interest on delayed payments being considered as part of the total debt for calculating the minimum threshold limit under Section 4 of the IBC. By including the interest amount, the total debt exceeded Rs. 1 crore, meeting the criteria for maintainability under the IBC. The Tribunal concurred with the Adjudicating Authority's decision on this issue and dismissed the appeal, finding no merit in the arguments presented by the Appellant.