2025 (1) TMI 793

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....eved by the Impugned Order, the present Appeal is being filed. Submissions of the Appellant 2. The Appellant is Comet Performance Chemicals Private Limited and is engaged in the business of manufacturing and selling construction chemicals, water treatment chemicals and textile chemicals. Aarvee Denims and Exports Limited i.e. Corporate Debtor had approached the Appellant around 2018 for the supply of the good which includes various types of the chemicals for their textile business. The Appellant from time to time has supplied the required materials to the Corporate Debtor and the same was accepted by the Corporate Debtor without any demur. For the material supplied by the Appellant, the Appellant had raised the invoices from time to time from 2019 to 2021 upon the Corporate Debtor. All the invoices were accepted by the Corporate Debtor, along with the conditions mentioned therein. All the invoices received by the Corporate Debtor contain the clause for interest amount on the delayed payment after the due date, i.e. the interest @24% per annum will be charged after the due date which is the outer limit for considering the interest component. The Corporate Debtor had paid a cer....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

.... of the Corporate debtor to make the payment to the Appellant, the Appellant initiated the Corporate Insolvency Resolution Process under IBC by filing Section 9 Application being CP (IB) No. 275 of 2023 before the National Company Law Tribunal, Ahmedabad. The Adjudicating Authority vide order dated 21.11.2023 had asked to submit the chart of the invoices, mentioning the date of the invoices as well as the due dates of the payment of each invoices, which were filed by an Affidavit dated 09.12.2023. The Ld. NCLT passed Impugned Order dated 02.07.2024 by which it dismissed the CP (IB) No. 275 of 2023 on the ground that (i) debt claimed is below the threshold limit specified under the Section 4 of the IBC (ii) interest amount is disputed. The Ld. NCLT has erred in not considering the interest amount on the delayed payment which is clearly mentioned in the invoices that interest will be charged on the delayed payment at the interest rate of the 24%. All the invoices were sent by the Appellant to the Respondent and the same was accepted by the Respondent without any demur. Further, the Ld. NCLT erred in considering that the invoices fall within Section 10 A of the IBC. Being aggrieved by....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....cy) No. 1881 of 2024] has held that invoices with interest clauses, which were not part of the formal agreement, are unenforceable. 7. The invoices raised between 13.11.2019 and 07.02.2020 [a total of Rs 36,46,200/- (rupees thirty-six lakhs, forty-six thousand and two hundred only)] clearly fall under Section 10 A of the IBC. Section 10 A bars the initiation of insolvency proceedings for default in repayment of dues that occurred during the restricted period. Therefore, the default amount for these invoices cannot be claimed under Section 9 of the IBC. Even after excluding the default amount related to the invoices during the 10 A period, the total outstanding dues worth Rs 23,98,600 (rupees twenty-three lakhs, ninety-eight thousand and six hundred only) still do not meet the threshold required for initiating insolvency proceedings. Furthermore, when considering the total default amount of Rs 1,36,30,679/- (rupees one crore, thirty-six lakhs, thirty thousand, six hundred and seventy-nine only) (principal plus alleged interest), after excluding the Rs 36,46,200/- (rupees thirty-six lakhs, forty-six thousand and two hundred only) default during the 10 A period, the remaining defau....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....e Ld. AA's decision is correct, and the Appeal should be dismissed with appropriate costs. Appraisal : 12. Heard counsels for both sides and perused materials placed on record. 13. The Appeal under Section 61 challenges the Order dated 02.07.2024, passed by the Adjudicating Authority which dismissed the Section 9 Petition filed by the Appellant/Operational Creditor/Comet Performance Chemicals Private Limited against the Respondent/Corporate Debtor/Aarvee Denims and Exports Limited, primarily on the grounds that the debt claimed was below the statutory threshold limit of rupees one crore as specified under Section 4 of the IBC and that the interest amount claimed was disputed. It is claimed that the Corporate Debtor was liable to make payment of Rs 1,36,30,679 (rupees one crore, thirty-six lakhs, thirty thousand, six hundred and seventy-nine only), [Rs 60,44,800/- (rupees sixty lakhs, forty-four thousand and eight hundred only) towards principal, Rs 45,01,893/- (rupees forty-five lakhs, one thousand, eight hundred and ninety-three only) towards interest @ 24% on outstanding principal amount and Rs 30,83,986/- (rupees thirty lakhs, eighty-three thousand, nine hundred and eig....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....idered part of the operational debt. Consequently, without interest the outstanding principal amount alone is Rs 60,44,800/- (rupees sixty lakhs, forty-four thousand and eight hundred only) and is well below the threshold of Rs 1 crore specified under Section 4 of the IBC. 17. The Respondent relies upon Rishabh Infra Through Hari Mohan Gupta vs Versus Sadbhav Engineering Ltd [Company Appeal (AT) (Insolvency) No. 1881 of 2024] wherein it has been held that invoices with interest clauses, which were not part of the formal agreement, are unenforceable. This judgment supports the case of the Respondent. 18. Accordingly, we agree with the submissions of the Respondent and also the findings of the Adjudicating Authority that no interest can be charged against the supply of goods and services for delayed payments until and unless there is an express agreement between the parties. We find justification in the claim of the Respondent that the interest claim was unilaterally imposed and lacked any contractual basis. 19. Next we look into the exclusion of Claims falling within the Section 10 A period. The invoices dated between 29.11.2019 and 07.02.2020, amounting to Rs 36,46,200/- (....