NCLAT Denies Interest Claim on Delayed Fund Release from NCLT Registry

Tribunal rules no entitlement for interest on funds without specific direction in orders

In a significant ruling, the National Company Law Appellate Tribunal (NCLAT) has dismissed an application seeking interest on delayed release of funds from the National Company Law Tribunal (NCLT) registry. The case involved Jaypee Infratech Ltd. (JIL) and Jaiprakash Associates Ltd. (JAL), with JIL seeking interest on funds released following tribunal orders.

The judgment, delivered by Justice Ashok Bhushan and Barun Mitra, clarified that entitlement for interest on delayed funds requires explicit direction in interim or final orders, which was absent in this case. The tribunal emphasized that JIL received its full entitlement as determined without any entitlement to interest on delayed payment.

The case arose when JIL filed an application requesting directions for the release of Rs. 15.15 crore, citing delayed payment from the NCLT Allahabad registry. JIL argued that it was entitled to interest accrued on funds directed to be released by both NCLT and NCLAT.

The tribunal reviewed the procedural history, noting that JAL was initially directed by the Supreme Court to deposit Rs. 750 crores in the registry. Subsequently, NCLT allocated these funds between JIL and JAL, with JIL's entitlement affirmed by NCLAT, excluding any claim for interest.

Despite receiving the principal amount, JIL sought interest for the period from the interim order dated 16.03.2023 to the release on 05.08.2023, and post-final judgment from 28.08.2023 until 01.02.2024. The tribunal, however, found no basis for such entitlement as the orders did not specify interest payments or deadlines for fund release.

The tribunal's decision underscores the importance of explicit directions in legal orders for any claims of interest on delayed payments. JIL's application was dismissed, affirming the release of funds without interest was in accordance with the tribunal's orders.

Bottom Line:

Entitlement for interest on the delayed release of funds from the NCLT registry cannot be claimed if there is no specific direction in the tribunal's order for payment of interest or a fixed time period for release of funds.

Statutory provision(s): Insolvency and Bankruptcy Code, 2016

Jaypee Infratech Ltd. v. Jaiprakash Associates Ltd., (NCLAT)(Principal Bench, New Delhi) : Law Finder Doc Id # 2804477