CIRP claims and MSME interest: decree-backed debts, Council determination, and OTS proposals in insolvency

A CIRP claim supported by an unchallenged civil decree is not to be rejected as time-barred merely because the underlying invoices are old, provided the decree remains operative and the execution period has not expired. By contrast, an MSME supplier's interest claim cannot be admitted by the resolution professional without a determination by the Facilitation Council under the statutory scheme. The CIRP claim-filing period is directory, so delay alone does not bar a claim, but the creditor must still show that the debt was legally enforceable when CIRP commenced. The Tribunal also lacks jurisdiction to direct consideration of an OTS proposal or to interfere with lenders' treatment of an approved resolution plan.

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Issues: (i) Whether an operational creditor's claim could be rejected as time-barred when the debt had already been reduced to a decree and the execution period had not expired; (ii) whether interest on an MSME supplier's unpaid dues could be admitted by the resolution professional without a determination by the Micro and Small Enterprises Facilitation Council; (iii) whether a claim filed belatedly in CIRP could be rejected solely for filing beyond the claimed 90-day period and on limitation; (iv) whether the Tribunal could entertain an application seeking directions regarding an OTS proposal and restrain consideration of the approved resolution process.

Issue (i): Whether an operational creditor's claim could be rejected as time-barred when the debt had already been reduced to a decree and the execution period had not expired.

Analysis: The claim was based on invoices for which a civil court decree and judgment had already been obtained. That decree had not been set aside or modified. The claim form also disclosed the decree. In those circumstances, the debt could not be treated as unenforceable merely because the underlying invoices were old, and rejection on limitation was unsustainable.

Conclusion: The issue was decided in favour of the petitioner; the claim could not be rejected as time-barred on that basis.

Issue (ii): Whether interest on an MSME supplier's unpaid dues could be admitted by the resolution professional without a determination by the Micro and Small Enterprises Facilitation Council.

Analysis: The statutory scheme for MSME dues provides for payment of principal and interest, but disputes regarding such amounts are to be referred to the Facilitation Council. Until the Council determines the dispute and any interest liability, the resolution professional cannot admit the interest claim on the basis urged.

Conclusion: The issue was decided against the petitioner; the interest claim was not admissible in the absence of a Council determination.

Issue (iii): Whether a claim filed belatedly in CIRP could be rejected solely for filing beyond the claimed 90-day period and on limitation.

Analysis: The period fixed for submission of claims in CIRP is directory and not mandatory, so delay by itself could not justify rejection. However, the applicant still had to show that the debt remained legally enforceable on the date of commencement of CIRP. Since the applicant failed to establish that enforceability, the claim could not be admitted on limitation grounds.

Conclusion: The issue was decided partly against the petitioner; delay alone did not bar the claim, but the claim remained inadmissible for want of an enforceable debt.

Issue (iv): Whether the Tribunal could entertain an application seeking directions regarding an OTS proposal and restrain consideration of the approved resolution process.

Analysis: The Tribunal found no provision in the insolvency framework conferring jurisdiction to direct consideration of an OTS proposal or to compare such a proposal with an approved resolution plan. The choice whether to consider an OTS proposal lies with the lenders, and the application was therefore not maintainable.

Conclusion: The issue was decided against the petitioner; the application was not maintainable.

Final Conclusion: The applications were disposed of with mixed outcomes: one operational creditor claim was directed to be admitted, one interest claim and the belated/unenforceable claim were rejected, and the OTS-related applications were dismissed as not maintainable.

Ratio Decidendi: A CIRP claim supported by an existing, unchallenged decree cannot be rejected as time-barred merely because the underlying invoices are old, but interest under the MSME regime requires statutory determination by the Facilitation Council and the Tribunal will not assume jurisdiction to entertain OTS proposals outside the insolvency framework.

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