Interest Mentioned In Unsigned Invoice Cannot Be Included In Calculation Of Threshold Limit U/S 4 Of IBC: NCLAT New Delhi

The National Company Law Appellate Tribunal (NCLAT), Principal Bench, New Delhi, consisting of Justice Rakesh Kumar Jain, Member (Judicial), Mr. Naresh Salecha, Member (Technical) and Mr. Indevar Pandey, Member (Technical), dismissed an appeal arising from an order by the NCLT Chandigarh. The tribunal held that the interest specified in an unsigned invoice cannot be included in the calculation of the debt for the purpose of meeting the threshold limit under Section 4 of the IBC. Background The operational creditor supplied the polyster staple fibre to the Respondent between January and February 2018. The appellant claimed an amount of Rs. 1.41 Cr which included the principal amount of Rs. 74,97,097 and an interest of 18% per annum. The adjudicating authority dismissed the application filed by the appellant under Section 9 of the IBC on the ground that it was time barred and did not meet the threshold limit under Section 4 of the IBC. Contention of the Parties The appellant contended that the claim met the threshold limit prescribed under Section 4 of the IBC. The appellant argued that the interest was mentioned in the terms and conditions of the invoices issued to the respondent. As per those conditions, in case of delayed payment the interest of 12% per annum will be charged. Since the respondent delayed the payment, the appellant is entitled to claim the interest. The appellant also cited the Hon'ble Supreme Court's ruling, which extended the period of limitation due to COVID-19 pandemic and argued that the limitation should be calculated from March 2022. Observations of NCLAT The tribunal observed that the appellant has failed to show that the invoice has been signed by the corporate debtor. Thus, the question arises whether the interest mentioned in the invoice which is not signed by the CD is a unilateral document and cannot be recovered. To answer this the Tribunal referred its judgments in the cases of S.S Polymers v. Kanodia Technoplast Ltd.; Rohit Motawat v. Madhu Sharma; and Karnataka High Court's judgment in the case of Jyothi Limited v. Boving Fouress Ltd. and held that the invoice having not been signed by the both parties is an unilateral document and interest cannot be claimed. Hence, the tribunal held that the component of interest cannot be added to the principal amount as it was not signed by the corporate debtor. The appellant is only entitled to the principal amount which is less than Rs. 1 Cr, which does not meet the threshold limit of Rs. 1 Cr for the maintainability of the application under Section 9. The tribunal lastly observed that since the threshold limit is not met, it need not to go into the issue of limitation and dismissed the appeal. Case Title: Jai Narain Fabtech Pvt. Ltd. v. Cheema Spintex Ltd. Case Number: Company Appeal (AT) (Insolvency) No. 1515 of 2023 & I.A. No. 5453 of 2023 Tribunal: National Company Law Appellate Tribunal, Principal Bench, New Delhi For Appellant: Mr. Sumit Shukla & Mr. Sanjeev Panda, Advocates For Respondent: Already ex-parte. Date of Judgment: 04.04.2025 Click Here To Read/Download The Order

Interest Mentioned In Unsigned Invoice Cannot Be Included In Calculation Of Threshold Limit U/S 4 Of IBC: NCLAT New Delhi

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Interest Mentioned In Unsigned Invoice Cannot Be Included In Calculation Of Threshold Limit U/S 4 Of IBC: NCLAT New Delhi

Mohd.Rehan Ali

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