Operational Debt and Interest Claims: Section 9 insolvency cannot continue once the principal debt is paid.

An application under Section 9 of the Insolvency and Bankruptcy Code cannot be maintained or continued once the principal operational debt has been discharged, because a surviving claim for interest alone is not operational debt under Section 5(21). The text distinguishes operational debt from financial debt, noting that interest is expressly contemplated for financial debt under Section 5(8) but not for operational debt absent an agreed covenant. CIRP cannot be used as a recovery tool for an unagreed interest claim, and any separate remedy for interest, if available, must be pursued before the competent forum.

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Issues: Whether an application under Section 9 of the Insolvency and Bankruptcy Code, 2016 can be maintained or continued when the principal operational debt has been paid and only a claim for interest survives.

Analysis: The principal amount due to the operational creditor stood discharged, and the settlement did not contain any covenant for payment of interest. Operational debt under Section 5(21) of the Insolvency and Bankruptcy Code, 2016 does not include interest, whereas financial debt under Section 5(8) expressly contemplates interest if any. Once the operational debt itself is paid, the remaining claim for interest alone does not constitute operational debt for the purpose of initiating or continuing CIRP under Section 9. The insolvency process cannot be used as a recovery mechanism for an unagreed claim of interest, and any independent remedy for interest, if available in law, lies before the competent forum.

Conclusion: The application under Section 9 of the Insolvency and Bankruptcy Code, 2016 cannot be maintained or continued for a mere claim of interest after discharge of the principal operational debt.

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