NCLT Bangalore: Interest And Cost Imposed By Commercial Court Post Initiation Of CIRP Not To Be Admitted
Sachika Vij
23 Sep 2023 12:00 PM GMT
The National Company Law Tribunal (“NCLT”), Bangalore Bench comprising of Justice (Retd) T. Krishnavalli (Judicial Member) and Shri. Manoj Kumar Dubey (Technical Member), dismissed an application filed under under Section 60(5)(a) of the Insolvency and Bankruptcy Code, 2016 (“Code”). The application in SourcePro Service vs. Mr. Vinay Mruthyunjaya, Resolution Professional of...
The National Company Law Tribunal (“NCLT”), Bangalore Bench comprising of Justice (Retd) T. Krishnavalli (Judicial Member) and Shri. Manoj Kumar Dubey (Technical Member), dismissed an application filed under under Section 60(5)(a) of the Insolvency and Bankruptcy Code, 2016 (“Code”). The application in SourcePro Service vs. Mr. Vinay Mruthyunjaya, Resolution Professional of Metrik Infraprojects Private Ltd. was for Mr. Vinay Mruthyunjaya, Resolution Professional (“RP”) to admit the entire claim of SourcePro Service, an Operational Creditor (Applicant).
The Tribunal held that the claim against additional cost and interest imposed by the Commercial Court post the commencement of CIRP cannot be admitted by the RP in a CIRP during the moratorium period.
Background Facts:
The Applicant filed a recovery suit in Commercial Court against the Corporate Debtor to recover a sum of Rs. 34.71 Lakhs along with 9% per annum until the entire amount was paid. The Commercial Court in its order dated 22.04.2021 directed the Corporate Debtor to pay interests and additional costs.
However, the RP admitted only an outstanding sum of Rs. 30.42 Lakhs instead of the entire claim and failed to acknowledge the interest and other costs as issued by the Commercial Court.
The RP contended that that the Applicant’s claim was based on the Commercial Court’s order dated 22.04.2021 which was post the commencement of the Corporate Insolvency Resolution Process (CIRP) against the Corporate Debtor.
NCLT Verdict:
The NCLT Bangalore Bench dismissed the application and held that the claim against additional cost and interest imposed by the Commercial Court post the commencement of CIRP cannot be admitted by the RP in a CIRP during the moratorium period.
The Tribunal observed that it is a settled position in law that once a moratorium is imposed under section 14 of the Code, there is a prohibition on the institution of suits or continuation of pending suits or proceedings against the Corporate Debtor including execution of any judgment, decree or order in any court of law, Tribunal, Arbitration panel or other authority.
The NCLT noted that in the present case, the CIRP was initiated on 16.04.2021 with the moratorium imposed. The order dated 22.04.2021 passed by the Commercial Court which directed the Corporate Debtor to pay interest and different costs was post the commencement of CIRP.
Thus, the Tribunal concluded that the interest payment and different costs imposed by the Commercial Court are against the moratorium imposed by the Tribunal and the Resolution Professional was correct in the admission of only Rs. 30.42 Lakhs as the outstanding amount to the date of commencement of the CIRP.
Case Title: SourcePro Service vs. Mr. Vinay Mruthyunjaya, Resolution Professional of Metrik Infraprojects Private Ltd.
Case No.: I.A No.119/BB/2023 in CP (IB) No. 60/BB/2020
Counsel for Applicant: K.J Bojanna, Advocate
Counsel for Resolution Professional: Shri A.S Vishwajith, Advocate
