The National Company Law Appellate Tribunal, Principal Bench, New Delhi comprising of Justice Ashok Bhushan, Justice M Satyanarayana Murthy and Mr. Naresh Salecha held that minimum threshold mentioned under Section 4 of the Insolvency & Bankruptcy Code, 2016 (IBC/Code) can include both the principal amount and the interest.
The Operational Creditor supplied various yarns to the Corporate Debtor namely Bombay Rayons Fashions Ltd. (Bombay Rayons) and raised nine invoices from March, 2017 to January, 2020 for an amount of INR 2.02 Crores. Bombay Rayons paid some invoices and five invoices were remained unpaid to the Operational Creditor by the Bombay Rayons.
Thereafter, the Operational Creditor filed an application under Section 9 of the Code against Bombay Rayons which was admitted by the NCLT, Mumbai and Corporate Insolvency Resolution Process (CIRP) of Bombay Rayons was initiated by NCLT.
Contentions of Appellant
It was contended by Bombay Rayons that after the amendment by the Central Government, the minimum threshold under Section 4 of the Code is INR 1 Crore but the principal debt owed to the Operational Creditor is 97.87 Lakhs which is below the threshold limit and therefore, the petition filed by the Operational Creditor is not maintainable.
Decision/Analysis by NCLAT
The NCLAT noted that originally Section 4 of the Code prescribes a threshold limit of INR One Lakhs however vide notification No. S.O 1205 (E) dated 24.03.2020 issued by the Ministry of Corporate Affairs, the threshold limit under Section 4 of IBC had been increased to INR One Crore.
The Bench further observed that the invoices raised by the Operational creditor clearly mentioned that the interest will be charged @18% after the due date of the bill.
Thereafter, Appellate Tribunal referred to the definition of Debt as defined under Section 3(11) of the Code and definition of Claim as defined under Section 3(6) of the Code and concluded that since the interest on delayed payment was clearly stipulated in invoices and therefore, the The operational creditor will entitle for right to payment which will clearly part of debt under Section 3(11) of the IBC.
Therefore, the bench concluded that the total amount for maintainability of a debt as per Section 4 of the Code will include both the principal debt amount as well as the interest on the delayed payment as it was clearly stipulated in the invoice itself.
Case title: Mr. Prashant Agarwal v. Vikas Parasrampuria