15/07/2022

It is not the object of the IBC that CIRP should be initiated to penalize solvent companies for non-payment of disputed dues claimed by an operational creditor – M/s S.S. Engineers Vs. Hindustan Petroleum Corporation Ltd. (HPCL) & Ors. – Supreme Court

Hon’ble Supreme Court held that the NCLT, exercising powers under Section 7 or Section 9 of IBC, is not a debt collection forum. The IBC tackles and/or deals with insolvency and bankruptcy. It is not the object of the IBC that CIRP should be initiated to penalize solvent companies for non-payment of disputed dues claimed by an operational creditor. There are noticeable differences in the IBC between the procedure of initiation of CIRP by a financial creditor and initiation of CIRP by an operational creditor. On a reading of Sections 8 and 9 of the IBC, it is patently clear that an Operational Creditor can only trigger the CIRP process, when there is an undisputed debt and a default in payment thereof. If the claim of an operational creditor is undisputed and the operational debt remains unpaid, CIRP must commence, for IBC does not countenance dishonesty or deliberate failure to repay the dues of an Operational Creditor. However, if the debt is disputed, the application of the Operational Creditor for initiation of CIRP must be dismissed.

It is not the object of the IBC that CIRP should be initiated to penalize solvent companies for non-payment of disputed dues claimed by an operational creditor – M/s S.S. Engineers Vs. Hindustan Petroleum Corporation Ltd. (HPCL) & Ors. – Supreme Court Read Post »

For application u/s 9 of IBC, Interest component can be included with the principal debt to arrive at the minimum pecuniary threshold of Rs. 1 Crore if delayed payment is stipulated in Invoice or agreement – Mr. Prashat Agarwal, Member of Suspended Board of Bombay Rayon Fashions Ltd. Vs. Vikash Parasrampuria – NCLAT New delhi

NCLAT held that incidentally, we have noted that divergent views have been taken by various NCLT with respect to treatment of interest on delayed payment to treat such component of interest as operational debt. Since, interest on delayed payment was clearly stipulated in invoice and therefore, this will entitle for “right to payment” (Section 3(6) IBC) and therefore will form part of “debt” (Section 3(11) IBC). All 9 invoices clearly stipulated provision of Interest on delayed payment. It is also observed that payments of three invoices has been made in full and for one invoice in part against said invoices by CD and no dispute on this clause was ever raised as noted from record available before us.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.

For application u/s 9 of IBC, Interest component can be included with the principal debt to arrive at the minimum pecuniary threshold of Rs. 1 Crore if delayed payment is stipulated in Invoice or agreement – Mr. Prashat Agarwal, Member of Suspended Board of Bombay Rayon Fashions Ltd. Vs. Vikash Parasrampuria – NCLAT New delhi Read Post »

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