If interest is not agreed upon by the parties, it cannot form a part of Operational Debt within the meaning of Section 5(21) of IBC, even if Operational Creditor is registered as an MSME | Interest under Section 16 of MSME Act can be claimed before the MSME Facilitation Council (MSEFC) and the correct forum for such claims shall be the MSEFC and not NCLT – KBC Infrastructures Pvt. Ltd. Vs. Shapoorji Pallonji and Company Pvt. Ltd. – NCLT Mumbai Bench
November 8, 2024
Hon’ble NCLT Mumbai Bench held that: (i) The statutory scheme under Sections 8 and 9 of the Code does not indicate that in case reply to Demand Notice is not given within the specified time, the Corporate Debtor is precluded from bringing relevant materials before the Adjudicating Authority in reply to Section 9 Application so as to establish that there are pre-existing disputes which may lead to rejection of Section 9 Application. (ii) If interest is not agreed upon between the parties, it cannot form a part of ‘operational debt’ within the meaning of Section 5(21) of the Code and that no such interest can be claimed in an application under Section 9 of the Code. Interest under Section 16 of MSME Act can be claimed before the MSME Facilitation Council (MSEFC) in terms of Section 18 of the MSME Act. Thus, the correct forum for such claims shall be the MSEFC and not this Tribunal. (iii) It is well-established that the Code cannot be used as a recovery mechanism or as a substitute for debt enforcement procedures. In this connection, it is now recognised that NCLT is not a debt collection forum and that it is not the object of the Code that CIRP should be initiated to penalise solvent companies for non-payment of disputed dues claimed by an Operational Creditor.