Appeal dismissed: Interest beyond insolvency resolution prohibited under I&B Code

The appeal under Section 9 of the Insolvency and Bankruptcy Code was rejected by the Adjudicating Authority due to the absence of debt payable and default. Despite the Corporate Debtor clearing the total debt, the pursuit of an additional interest amount was deemed malicious and against the I&B Code's principles. The Tribunal dismissed the appeal, emphasizing the prohibition on realizing interest beyond insolvency resolution or liquidation under Section 65 of the I&B Code. The unilateral raising of invoices without consent was also considered invalid.

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Issues:
1. Rejection of application under Section 9 of the Insolvency and Bankruptcy Code, 2016.
2. Interpretation of debt payable and default under Section 9.
3. Claim for interest amount after total debt payment by the Corporate Debtor.
4. Validity of Invoices raised without consent for interest payment.
5. Malicious intent in pursuing application for interest amount post-debt payment.
6. Application of Section 65 of the Insolvency and Bankruptcy Code.

Issue 1: Rejection of application under Section 9 of the Insolvency and Bankruptcy Code, 2016:
The Appellant, S.S. Polymers, filed an application under Section 9 of the I&B Code against M/s Kanodia Technoplast Limited for initiation of Corporate Insolvency Resolution Process. The Adjudicating Authority rejected the application citing the absence of debt payable and default.

Issue 2: Interpretation of debt payable and default under Section 9:
The Appellant argued that the rejection was based on the wrong presumption of no agreement between the parties. It was contended that for an application under Section 9, the presence of an agreement is not necessary; rather, the focus should be on the existence of debt payable and default, supported by any relevant record as per Form 5 of the Insolvency and Bankruptcy Board of India.

Issue 3: Claim for interest amount after total debt payment by the Corporate Debtor:
Despite the Corporate Debtor clearing the total debt before the admission of the application, the Appellant pursued the case for an additional interest amount of Rs. 2,16,155. The Adjudicating Authority viewed this pursuit as against the I&B Code's principles, considering it a malicious intent to realize interest beyond the resolution of insolvency or liquidation, which is prohibited under Section 65 of the I&B Code.

Issue 4: Validity of Invoices raised without consent for interest payment:
The Counsel for the Appellant relied on invoices to support the claim for interest payment. However, the Tribunal dismissed this argument, stating that the invoices were unilaterally raised without the Corporate Debtor's consent, thus not carrying legal weight in the absence of a mutual agreement.

Issue 5: Malicious intent in pursuing application for interest amount post-debt payment:
The Tribunal found no merit in the appeal, concluding that the pursuit of the interest amount after the total debt payment was indicative of a malicious intent contrary to the objectives of the I&B Code. Such actions were deemed inappropriate for the resolution of insolvency or liquidation proceedings.

Issue 6: Application of Section 65 of the Insolvency and Bankruptcy Code:
In light of the pursuit of interest post-debt payment being considered malicious, the Tribunal dismissed the appeal, emphasizing the application of Section 65 of the I&B Code to prevent actions aimed solely at realizing interest amounts beyond the scope of insolvency resolution or liquidation proceedings.

This detailed analysis of the judgment highlights the key issues addressed by the National Company Law Appellate Tribunal concerning the rejection of the application under Section 9 of the Insolvency and Bankruptcy Code, 2016, and the subsequent considerations regarding debt, default, interest claims, and malicious intent in pursuing legal actions.

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