Interest alone cannot be construed as Operational Debt: NCLAT [Read Order]

The National Company Law Appellate Tribunal (NCLAT), New Delhi has held that claim amount towards Interest on loan alone, cannot be termed as an ‘Operational Debt.’

The appeal came out from the order requested by the appellant M/s Steel India to initiate Corporate Insolvency Resolution Process (CIRP) against the corporate debtor M/s Theme Developers Pvt. Ltd. The appellant contended that the „Corporate Debtor‟ committed default in making payment to the extent of Rs.22,64,054/-, which is inclusive of interest calculated @ 2% on the delayed payments against goods sold and delivered by the ‘Operational Creditor’ to the ‘Corporate Debtor’. The Applicant states that it supplied the steel bars to the ‘Corporate Debtor’ for their construction activity, at their project sites and against these supplies various invoices were raised.

It was further that as per the terms and conditions between the parties that in case the payment is delayed beyond sixty days, 2% interest per month will be charged. The Appellant further contended that amount due towards the ‘Corporate Debtor’ is of interest amounting to Rs.22,64,054/-., for delayed payment against the goods sold and delivered.

The tribunal consisting of judicial member Justice Venugopal M. and technical members Mr. Kanthi Narahari and Mr. V P Singh while dismissing the petition ruled, “ It is also pertinent to allege that the outstanding amount is towards interest on the delayed payments, for which there was a pre-existing dispute, before issuance of demand notice. The alleged claim amount, towards interest on loan alone, cannot be termed as an „Operational Debt‟. For the reasons aforesaid, we are not inclined to interfere with the order passed by the Learned Adjudicating Authority.”