Interest Stated In Invoices Not Counted To IBC Threshold Without Debtor's Acceptance : NCLT Delhi

The National Company Law Tribunal (NCLT) at New Delhi recently reiterated that interest mentioned only in invoices cannot be counted for meeting the insolvency threshold unless there is clear evidence that the corporate debtor accepted liability to pay such interest.

A bench of Judicial Member Mahendra Khandelwal and Technical Member Anu Jagmohan Singh observed,

“Merely because the interest is mentioned in the invoices it cannot be operated against the Corporate Debtor if there is no document to show that the Corporate Debtor has accepted the obligation to pay the interest, then especially the interest amount claimed cannot be considered for the purpose of threshold.”

Vishnu Traders, a proprietorship concern of Ajay Goel, filed a Section 9-CIRP application seeking initiation of the corporate insolvency resolution process against Shivam Coal Carriers Pvt. Ltd. Vishnu Traders supplies biochemical products and had been supplying materials to the company since 2021.

Between October 2021 and March 2022, Vishnu Traders raised multiple invoices for the supplies made. The parties kept running accounts, and the corporate debtor made partial payments now and then.

After accounting for those, Vishnu Traders said Rs 80.01 lakh principal was still due as on May 31, 2024, plus Rs 57.69 lakh interest bringing the total to Rs 1.37 crore.

They put forward the full Rs 1.37 crore claim, interest at 18% per annum included. Invoices, ledgers, and bank statements were produced to substantiate the claim.

They also pointed out the corporate debtor never replied to the demand notice. The tribunal noticed that the principal of Rs 80.01 lakh was clear in invoices but nothing showed agreement on interest for delays.

The bench relied on the appellate ruling in SNJ Synthetics Ltd v PepsiCo India Holdings Pvt Ltd, which held that when interest is claimed based on invoices, there must be mutual consent and understanding between the parties.

Since the principal amount alone did not meet the Rs 1 crore threshold under Section 4 of the Insolvency and Bankruptcy Code, the plea to initiate insolvency was dismissed.