Case Note & Summary
The appeal was filed against an order of the National Company Law Tribunal (NCLT) dismissing the appellant's application for the release of interest payments due during the Corporate Insolvency Resolution Process (CIRP) of the Corporate Debtor. The Corporate Debtor, engaged in manufacturing fabric and textile goods, was admitted into CIRP on 29.09.2017. The appellant, an operational creditor, supplied cotton to the Corporate Debtor and had a claim of Rs.3,01,90,402/- admitted by the Resolution Professional (RP). The appellant continued supplying cotton during the CIRP period until 08.08.2018, when the liquidation process commenced. The appellant claimed that the Corporate Debtor owed additional amounts for supplies made during the CIRP and liquidation periods, including interest. The NCLT had previously directed that the appellant's dues be treated as CIRP costs, but the appellant's claim for interest was dismissed as infructuous. The appellant argued that the delay in payment entitled them to interest, citing various case laws and a circular from the Indian Cotton Association. The liquidator contended that the appellant had accepted the auditor's report and the payment made was in full satisfaction of dues, thus rendering the interest claim invalid. The NCLAT upheld the NCLT's decision, stating that interest is not included in CIRP costs under the Code and that the appellant's claims lacked sufficient legal basis. The appeal was dismissed, and no costs were awarded.
Headnote
A) Insolvency Law - Interest on Delayed Payment - Claim for Interest - Insolvency and Bankruptcy Code, 2016, Section 5(13) - The appellant claimed interest on delayed payments for supplies made during the CIRP and liquidation period. The court held that interest is not included in CIRP costs as per the Code and dismissed the claim for interest (Paras 25-26).
Issue of Consideration
Whether the appellant is entitled to interest on delayed payments during the Corporate Insolvency Resolution Process and liquidation period.
Final Decision
The appeal was dismissed as the appellant failed to establish grounds for claiming interest on delayed payments during the CIRP and liquidation period. The court upheld the NCLT's finding that interest is not included in CIRP costs under the Insolvency and Bankruptcy Code, 2016.
Law Points
- Insolvency and Bankruptcy
- Corporate Insolvency Resolution Process
- Interest on Delayed Payment
- Operational Creditor Rights
- Liquidation Process Regulations
