Skip to main content

Clubbing of charges with principal amount to cross minimum threshold limit

Cause Title : North West Carrying Company, LLP vs Metro Cash and Carry India Pvt. Ltd, CP (IB) No.133/BB/2022, National Company Law Tribunal Bengaluru Bench

Date of Judgment/Order : 25/5/2023

Corum : Hon’ble Justice (Retd.) T. Krishnavalli, Member (Judicial) & Hon’ble Shri. Manoj Kumar Dubey, Member (Technical)

Citied: 

  1. Prashat Agarwal v. Vikash Parasrampuria, Company Appeal (AT)(Ins) No. 690 of 2022 dated 15.07.2022
  2. Asset Reconstruction Company (India) Limited vs Tulip Star Hotels Limited & Ors, 2022 SCC Online SC 944 

Background

The petition under section 9 of the Insolvency and Bankruptcy Code, 2016, r/w. Rule 6 of the I&B (Application to Adjudicating Authority) Rules 2016, was filed by M/s North West Carrying Company, LLP. - ‘Operational Creditor/Petitioner’ to initiate Corporate Insolvency Resolution Process against M/s. Metro Cash and Carry India Pvt. Ltd  on the ground that the Corporate Debtor has committed a default for a total outstanding amount of Rs. 1,63,71,799/-.

The Respondent argued that the principal amount is only Rs. 12,46,204/- and other amounts as claimed by the petitioner i.e interest, legal charges, balance cost of amortization, notice period rent neither forms part of any contractual arrangement nor can even be considered as an operational debt. The petitioner purposefully clubbed these amounts with the principal amount to arrive at the minimum threshold of Rs.1 crore for complying with the provisions of Section 4 of IBC, which cannot be done.

Judgment

The NCLT observed that in Prashat Agarwal (supra) it has been held that the total amount for maintainability of claim will include both principal debt amount as well as interest on delayed payment in case the same was stipulated in the invoice. In other decisions it has been decided that only if interest was to be levied in accordance with some agreement between the two parties, can it be considered for inclusion for the purpose of Section 9 of the Code.

Therefore the NCLT held that in order to club other charges with the principal amount express stipulation has to be incorporated specifically in the agreement, the purchase order or the invoice and in the absence of the same, neither interest nor any other charges can be clubbed with the principal amount which has not happened in this matter. Therefore, the petitioner’s contention in this regard is devoid of merit.

Comments

Post a Comment

Most viewed this month

One Sided Clauses In Builder-Buyer Agreements Is An Unfair Trade Practice

In CIVIL APPEAL NO. 12238 OF 2018, Pioneer Urban Land & Infrastructure Ltd. vs Govindan Raghavan, an appeal was filed before the Supreme Court  by the builder against the order of the National Consumer Forum. The builder had relied upon various clauses of the Apartment Buyer’s Agreement to refute the claim of the respondent but was rejected by the commission which found the said clauses as wholly one-sided, unfair and unreasonable, and could not be relied upon. The Supreme Court on perusal of the Apartment Buyer’s Agreement found stark incongruities between the remedies available to both the parties. For example, Clause 6.4 (ii) of the Agreement entitles the Appellant – Builder to charge Interest @18% p.a. on account of any delay in payment of installments from the Respondent – Flat Purchaser. Clause 6.4 (iii) of the Agreement entitles the Appellant – Builder to cancel the allotment and terminate the Agreement, if any installment remains in arrears for more than 30 da...
Post a Comment
Read more

Inherited property of childless hindu woman devolve onto heirs of her parents

In Tarabai Dagdu Nitanware vs Narayan Keru Nitanware, quashing an order passed by a joint civil judge junior division, Pune, the Bombay High Court has held that under Section 15 of the Hindu Succession Act, any property inherited by a female Hindu from her father or mother, will devolve upon the heirs of her father/mother, if she dies without any children of her own, and not upon her husband. Justice Shalini Phansalkar Joshi was hearing a writ petition filed by relatives of one Sundarabai, who died issueless more than 45 years ago on June 18, 1962. Article referred:http://www.livelaw.in/property-inherited-female-hindu-parents-shall-devolve-upon-heirs-father-not-husband-dies-childless-bombay-hc-read-judgment/
Post a Comment
Read more

Court approached in the early stages of arbitration will prevail in all other subsequent proceedings

In National Highway Authority of India v. Hindustan Steelworks Construction Limited, the Hon'ble Delhi High Court opined that once the parties have approached a certain court for relief under Act at earlier stages of disputes then it is same court that, parties must return to for all other subsequent proceedings. Language of Section 42 of Act is categorical and brooks no exception. In fact, the language used has the effect of jurisdiction of all courts since it states that once an application has been made in Part I of the Act then ―that Court alone shall have jurisdiction over arbitral proceedings and all subsequent applications arising out of that agreement and arbitral proceedings shall be made in that Court and in no other Court. Court holds that NHAI in present case cannot take advantage of Section 14 of the Limitation Act, 1963 for explaining inordinate delay in filing present petition under Section 34 of this Act in this Court.
Post a Comment
Read more