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Issues: Whether an application under the Insolvency and Bankruptcy Code, 2016 can be pursued solely for the interest component of an operational claim after the principal amount has been paid.
Analysis: The claim arose from supply transactions under tax invoices stipulating interest on delayed payment, but the principal amount was paid during the pendency of the application. The Tribunal noted that operational debt under the Insolvency and Bankruptcy Code, 2016 does not contemplate initiation of insolvency proceedings for interest alone where the liability to interest is disputed and has not been established by a clear agreement. The correspondence relied upon showed only discussions and requests regarding reduction of interest, not a concluded agreement to pay the claimed rate. The dispute over interest would require evidence and adjudication outside the insolvency process, and the Code is not meant to function as a debt recovery forum for a contested interest claim. The Tribunal also held that the circumstances did not justify a finding of malicious prosecution, but that did not cure the maintainability defect.
Conclusion: The application could not be maintained or admitted merely for recovery of the interest component, and the petition was dismissed.
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