Principal And Interest Amount Cannot Be Clubbed To Reach The Minimum Threshold Of Rs. 1 Crore U/S 4, IBC; NCLT Delhi

The Bench dismissed the Application filed by the Applicant, M/s. CBRE South Asia Pvt. Ltd. who is the Operational Creditor of the Respondent/Corporate Debtor, M/s. United Concepts and Solutions Pvt. Ltd. to initiate CIRP against the Corporate Debtor, under Section 9 IBC read with Rule 6 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016.

During the preliminary hearing, the Tribunal observed that the Applicant is an Operational Creditor of the Corporate Debtor and the claimed amount is Rs. 1,39,84,400, out of which Rs.88,50,886/- only is the principal amount and the remaining Rs.51,33,514/- is the interest component.

It raised a query as to whether the Principal and Interest amounts can be clubbed together to reach the minimum threshold of Rs. 1 Crore as stipulated under Section 4 of IBC, 2016.

The Bench analysed the definitions of 'default' under Section 3(12), 'debt' under Section 3(11), 'claim' under Section 3(6) and also 'Operational Debt' and 'Financial Debt' under Section 5(21) and 5(8) of the IBC, respectively.

'Operational debt' is defined as "a claim in respect of the provision of goods or services including employment or a debt in respect of the payment of dues arising under any law for the time being in force and payable to the Central Government, any State Government or any local authority."

'Financial debt' is defined as a "debt alongwith interest, if any, which is disbursed against the consideration for the time value of money and includes…."

Thus, there is a difference between the definition of 'Operational Debt' and 'Financial Debt', as a Financial Debt would include a debt along with interest, whereas in Operational Debt, the word interest has not been mentioned. The same has been observed by the NCLT Chandigarh Bench in M/s. Wanbury Ltd. Vs. M/s. Panacea Biotech Ltd.

The Tribunal dismissed the application of the Applicant on the ground that the debt of the Applicant is an operational debt, he cannot club the principal amount with interest to comply with Section 4 of the IBC, 2016.

Case Title:CBRE South Asia Pvt. Ltd. v. M/s United Concepts and Solutions Pvt. Ltd.

Citation: (IB)-797(ND)2021

Counsel for the Applicant: Mrs. Pratik Malik, Counsel

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