Operational debt and default established; excessive interest objection failed, leading to admission of the insolvency petition.

An objection that invoice interest at 24% per annum was excessive under the Usurious Loans Act, 1918 failed because the rate was examined against prevailing market conditions and was not found to be usurious. The Tribunal also found that the operational debt and default were established under Section 9 of the Insolvency and Bankruptcy Code, 2016, since the statutory demand notice had been issued, no dispute was raised on debt or goods quality, and a settlement between third parties did not bind the petitioner. The petition was admitted, moratorium was ordered, and an Interim Resolution Professional was appointed.

---

---

Issues: (i) Whether the claim of excessive interest warranted rejection of the petition under the Usurious Loans Act, 1918. (ii) Whether the operational debt and default were established so as to admit the petition under Section 9 of the Insolvency and Bankruptcy Code, 2016.

Issue (i): Whether the claim of excessive interest warranted rejection of the petition under the Usurious Loans Act, 1918.

Analysis: The interest stipulated in the invoices at 24% per annum on delayed payment was examined in the context of prevailing market conditions. The contention that the claim was usurious was not accepted, and the request to invoke the Usurious Loans Act, 1918 to scale down or invalidate the interest claim was rejected.

Conclusion: The objection based on the Usurious Loans Act, 1918 failed, and the interest claim was not held to be excessive or exorbitant.

Issue (ii): Whether the operational debt and default were established so as to admit the petition under Section 9 of the Insolvency and Bankruptcy Code, 2016.

Analysis: The petitioner had issued the statutory demand notice, and the Corporate Debtor did not raise any dispute regarding the debt or the quality of goods supplied. The settlement between other groups was held not to bind the petitioner, as it was not a party to that arrangement. On the materials and invoices placed before it, the Tribunal found the debt and default to be established and the petition to satisfy the requirements for initiation of CIRP.

Conclusion: The petition was admitted and moratorium was ordered with the appointment of an Interim Resolution Professional.

Final Conclusion: The proceeding resulted in initiation of insolvency resolution against the Corporate Debtor, with statutory moratorium and consequential directions following admission of the petition.

Ratio Decidendi: A petition under Section 9 of the Insolvency and Bankruptcy Code, 2016 cannot be defeated by an unsubstantiated plea of excessive interest where the debt and default are otherwise established, and a private settlement between third parties does not extinguish the operational creditor's claim.

---