Detention Charges are Operational Debts under IBC: NCLT

The Mumbai Bench of the National Company Law Tribunal ( NCLT ) observed that the detention charges is operational debt under the Insolvency and Bankruptcy Code, 2016 (IBC). The Company Petition was filed by ABC India Ltd. (“the Petitioner/Operational Creditor”) seeking to initiate Corporate Insolvency Resolution Process (“CIRP”) against Prabhakar Engineers Pvt. Ltd. (“Corporate Debtor”) by invoking the provisions of Section 9 of the Insolvency and Bankruptcy Code, 2016 (IBC) read with Rule 6 of Insolvency & Bankruptcy (Application to Adjudicating Authority) Rules, 2016 for committing default in payment of an Operational Debt of Rs. 19,03,500/- (Rs. 12,69,000 /- due as on the date 30.11.2016 as per the Demand Notice and contractual interest of Rs. 6,34,500/- @ 24% p.a.) along with further interest till the date of realisation. It is the case of the Operational Creditor that one category of cargo, namely, Hydraulic Axle, was reported for loading on 21.09.2016 but its movement started only on 01.10.2016 and it reached the unloading point on 26.10.2016, permitted entry at the Indian Oil Corporation on 05.11.2016 and finally released only on 26.11.2016. Similarly, another category of cargo, namely, Mechanical Trailer was reported for loading on 21.09.2016 but its movement started only on 04.10.2016. it reached the unloading point on 11.10.2016, was stranded till 09.11.2016 for unloading and finally released only on 26.11.2016. The operational creditor submitted that as no payments were forthcoming in relation to the undisputed invoices, the Operational Creditor sent a Demand Notice dated 16.01.2019 in Form 3 under Section 8 read with Rule 5 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016. The Operational Creditor further submits that the date of default as per Demand Notice was 30.11.2016 and the Amount of Default was Rs. 19,03,500/-. However, the Corporate Debtor had neither replied to the afore stated Demand Notice nor made any satisfactory payment within the statutory period of 10 days from the date of the Demand Notice and hence this Petition. The corporate debtor submitted that it is an admitted position and is also clearly evident in the order of this Tribunal dated 06.02.2020 that charges payable in respect of the transportation services have been paid in full. The bank statement of the Operational Creditor clearly reflects a receipt of the sum of Rs. 6,50,000/- on 21.10.2016 and a further sum of Rs. 2,88,000/- on 02.11.2016 by the Operational Creditor from the Corporate Debtor. These receipts cumulatively add up to Rs. 9,38,000/- which coincides with the overall amount stipulated in the order for transportation. Thus, the Corporate Debtor had duly paid towards the services availed and no operational debt remains outstanding. A Two-Member Bench comprising Madhu Sinha, Technical Member and Reeta Kohli, Judicial Member observed that “There is a clear establishment of “Debt” and corresponding “Default” along with satisfaction of pecuniary, subject matter and territorial jurisdiction which makes it a fit case for admission of the Corporate Debtor to CIRP under Section 9 of the IBC.” “Since there is no proposal for the name of Interim Resolution Professional by the Operational Creditor, Mr. Shekhar Kumar Agarwal is appointed as the Interim Resolution Professional from this Tribunal’s Panel. The Operational Creditor shall deposit an amount of Rs. One Lakh towards the initial CIRP costs by way of a Demand Draft drawn in favour of the Interim Resolution Professional appointed herein, immediately upon communication of this Order” the Tribunal noted. Support our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates