Tribunal Upholds Resolution Professional's Decision to Admit Only Principal Debt Without Interest, Citing Lack of Contractual Evidence
In a significant ruling, the National Company Law Tribunal (NCLT) Indore Bench has dismissed the interest claim by Socrus Bio Sciences Ltd. and Socrus Pharmaceutical Ltd. in the insolvency proceedings of Pushp Ratna Realty Pvt. Ltd. The Tribunal, comprising Mr. Brajendra Mani Tripathi, Member (Judicial), and Mr. Man Mohan Gupta, Member (Technical), adjudicated on the application seeking recognition of interest at 18% per annum on unsecured loans.
The applicants, Socrus Bio Sciences Ltd. and Socrus Pharmaceutical Ltd., financial creditors of the corporate debtor, argued for interest admission based on parity with another creditor, Mr. Ashok Kumar Jain. However, the Tribunal held that interest can only form part of a financial debt if contractually agreed upon or evidenced by documents. The resolution professional acted within his statutory duties by admitting claims strictly based on substantiated amounts in the corporate debtor's books.
The NCLT emphasized the necessity for financial creditors to provide contractual or documentary proof to substantiate claims for interest. In the absence of such evidence, the Tribunal found no merit in the argument for equitable treatment among creditors. The decision reinforces the statutory framework under the Insolvency and Bankruptcy Code, 2016, which mandates verification based on documentary evidence rather than parity arguments.
The Tribunal's ruling aligns with the principles outlined in previous judgments, including the Supreme Court's decision in Swiss Ribbons Pvt. Ltd. v. Union of India, which recognized the differentiation between financial and operational creditors.
Bottom Line:
Claim for interest component under Insolvency and Bankruptcy Code, 2016 - Interest cannot be claimed merely based on parity with other creditors without contractual or documentary evidence. Resolution Professional acts within statutory duties when claims are admitted strictly based on substantiated amounts in Corporate Debtor's books.
Statutory provision(s): Insolvency and Bankruptcy Code, 2016 Sections 5(8), 31; CIRP Regulations, 2016 Regulations 13, 14
Socrus Bio Sciences Ltd. v. Hasti Mal Kacchara, (NCLT)(Indore Bench) : Law Finder Doc Id # 2830177
