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TMI Blog2022 (5) TMI 1476X X X X Extracts X X X X X X X X Extracts X X X X ..... ing the principal amount, can CIR Process be initiated only on the defaulted amount of interest? 2. Ld. Counsel for the Applicant, in the course of his argument, fairly admits this fact that the present petition is filed for the interest amount, which is due and payable, on the basis of debenture certificate issued by the Corporate Debtor and the date of redemption of the debenture certificate is on 31.03.2026. 3. He further submitted that as per the terms and conditions of the Debenture Certificate, the Petitioner is entitled to get the interest @ 6% per annum payable on face value plus security premium on quarterly rests. 4. He further submitted that since the interest and the security premium, due and payable on 01.07.2021, 01.10.2021 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the issuer. Debentures can also be redeemed at the request of the Debenture holder, after the expiry of one year, but before 31.03.2026 (i.e. the Maturity Date). Admittedly, the present Debenture Certificate is issued on 13.04.2021, therefore, as per the terms and conditions No. 1, it can be redeemed after the expiry of one year i.e. from 13.04.2022. 10. We further observed that as per the terms and conditions No. 2, debenture shall carry a coupon rate of 6% per annum payable on face value plus securities premium on quarterly rests and as per terms and conditions No. 3, debenture shall be redeemed at face value plus securities premium and accrued interest till the date of redemption. On conjoint reading of these two clauses, we are of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... liability in respect of any lease or hire purchase contract which is deemed as a finance or capital lease under the Indian Accounting Standards or such other accounting standards as may be prescribed; (e) receivables sold or discounted other than any receivables sold on non- recourse basis; f) Any amount raised under any other transaction, including any forward sale or purchase agreement, having the commercial effect of a borrowing; 1 [ExplanatIon. -For the purposes of this sub-clause, - (i) Any amount raised from an allottee under a real estate project shall be deemed to be an amount having the commercial effect of a borrowing; and (ii) The expressions, "allottee" and "real estate project" shall have the meanings respectively assigned ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... we consider the submissions of the petitioner and we are of the considered view, in order to initiate a CIR Process u/s 7 of the IBC, the prime consideration is that there must be existence of debt and only thereafter interest shall be added in the principal debt amount. As we observed that the principal amount has not become due and payable as yet, therefore, there is no debt which is due and payable. Accordingly, there is no default in making the payment of the amount. Therefore, the only interest amount claimed by the applicant, in our considered view does not come under the definition of financial debt. 16. Since the present application is filed only on the interest accrued on principal amount which is not due and payable as yet, the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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