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

Most viewed this month

Partition proceedings are vitiated even if single co-sharer is not made party or is not served in accordance with law

Cause Title :  Bhagwant Singh vs  Financial Commissioner (Appeals) Punjab, Chandigarh,  CWP-2132-2018 (O&M), High Court Of Punjab & Haryana At Chandigarh Date of Judgment/Order : 31.08.2022 Corum : Hon’ble Mr. Justice Sudhir Mittal Background A large parcel of land was owned by the Nagar Panchayat. Thereafter, some of the co-sharers sold their shares to third parties including the petitioners herein. On 22.11.1995, respondents No.3 to 5 filed an application for partition of the land. The petitioners were not impleaded as parties.  On completion of proceedings, sanad was issued on 28.08.1996. Vide two separate sale deeds dated 28.05.2008 respondents No.3 and 5 sold some portion in favour of respondent No.6 and 7. These respondents sought implementation of the sanad resulting in issuance of warrants of possession dated 05.06.2008. Allegedly, it was then that the petitioners realized that joint land had been partitioned and that proceedings h...

Power of Attorney holder can also file cheque bounce cases: Supreme Court

The Supreme Court has held that a criminal complaint in a cheque bounce case can be filed and pursued by a person who holds a power of attorney (PoA) on behalf of the complainant. A three-judge bench headed by Chief Justice P Sathasivam gave the "authoritative" pronouncement on the issue, referred to it by a division bench in view of conflicting judgements of some high courts and the apex court. "We are of the view that the power of attorney holder may be allowed to file, appear and depose for the purpose of issue of process for the offence punishable under Section 138 of the Negotiable Instruments Act (which deals with cheque bounce cases)," the bench, also comprising justices Ranjana Prakash Desai and Ranjan Gogoi, said. The bench, in its judgement, said, "...we clarify the position and answer the questions in the following manner: "Filing of complaint petition under Section 138 of Negotiable Instruments Act through PoA holder is perfectly legal...

Christian who reconverts as Hindu SC will get quota benefits

Amid the controversy over “ghar wapsi”, the Supreme Court on Thursday ruled that a person who “reconverts” from Christianity to Hinduism shall be entitled to reservation benefits if his forefathers belonged to a Scheduled Caste and the community accepts him after “reconversion”. Citing articles by B R Ambedkar and James Massey, and reports by Mandal Commission and Chinappa Commission, the court said: “There has been detailed study to indicate the Scheduled Caste persons belonging to Hindu religion, who had embraced Christianity with some kind of hope or aspiration, have remained socially, educationally and economically backward.” The bench of Justices Dipak Misra and V Gopala Gowda held that a person shall not be deprived of reservation benefits if he decides to “reconvert” to Hinduism and adopts the caste that his forefathers originally belonged to just because he was born to Christian parents or has a Christian spouse. Expanding the scope of a previous Constitution benc...