Tribunal Dismisses Claim for Interest Without Documentary Evidence; Emphasizes Statutory Requirements for Claim Verification
In a significant ruling, the Indore Bench of the National Company Law Tribunal (NCLT) has dismissed the application of Jayshree Agnihotri, a financial creditor, seeking the inclusion of an interest component in her claim against Pushp Ratna Realty Pvt. Ltd., currently undergoing Corporate Insolvency Resolution Process (CIRP). The judgment, delivered by Mr. Brajendra Mani Tripathi, Member (Judicial), and Mr. Man Mohan Gupta, Member (Technical), emphasizes the necessity of contractual or documentary evidence to substantiate claims of interest under the Insolvency and Bankruptcy Code, 2016 (IBC 2016).
The applicant, Jayshree Agnihotri, had filed an interlocutory application under Section 60(5) of the IBC, seeking directions to admit her interest component at a contractual rate of 18% per annum. The application also sought a revision of the resolution plan to incorporate the interest claim before its approval under Section 31 of the IBC. However, the tribunal found that the applicant failed to provide any contractual basis or documentary evidence to support her claim for interest.
The tribunal's decision rests on the principle that financial debt under Section 5(8) of the IBC includes interest only if it is contractually agreed upon or evidenced. The judgment highlights that self-prepared calculations or parity arguments without corroborating documents such as loan agreements or balance sheet entries are insufficient to substantiate claims for interest.
The Resolution Professional (RP), Hasti Mal Kacchara, had admitted the principal amount of Rs. 60,93,663 as reflected in the corporate debtor's books but rejected the interest component, citing lack of documentary evidence. The tribunal upheld the RP's decision, noting that his actions were within his statutory duties and aligned with the regulations governing claim verification.
In its analysis, the tribunal referred to the Supreme Court's decision in Swiss Ribbons Pvt. Ltd. v. Union of India, which distinguishes between financial and operational creditors and emphasizes the need for substantiating claims with cogent evidence. The tribunal observed that the principle of equity among creditors does not override the statutory requirement for substantiating claims.
The ruling reinforces the procedural rigor required in verifying claims under the IBC, as outlined in the IBBI (CIRP) Regulations, 2016. The tribunal concluded that the absence of any proof of contractual stipulation for interest justified the exclusion of the interest component from the claim and the resolution plan. Consequently, the application was dismissed, with no order as to costs.
Bottom Line:
Insolvency and Bankruptcy Code, 2016 - Financial debt includes interest only if contractually agreed or evidenced. Self-prepared calculations or parity arguments without corroborating documents like loan agreements or balance sheet entries cannot substantiate claims for interest.
Statutory provision(s): Insolvency and Bankruptcy Code, 2016 Sections 5(8), 18, 31, 60(5), IBBI (CIRP) Regulations, 2016 Regulations 13, 14.
Jayshree Agnihotri v. Hasti Mal Kacchara, (NCLT)(Indore Bench) : Law Finder Doc Id # 2833350
