Combining interest with the principal sum is permissible to meet the Rs. 1 crore threshold under Section 4 of the IBC when stipulated in the invoice: NCLT New Delhi ruling in the case of Late Smt. Sunil Chhabra vs. M/s. Shib Dass Metal Pvt. Ltd
In the above captioned matter "Late Smt. Sunila Chhabra, an Operational Creditor, filed an application on 19.11.2021 under Section 9 of the IBC to initiate the CIRP against M/s. Shib Dass Metals Pvt. Ltd., a Corporate Debtor. The application cited a default in clearing an outstanding amount of Rs. 1,55,78,369/-, comprising the principal sum of Rs. 80,04,000/- and interest of Rs. 75,74,369/- at 18% p.a.
The Corporate Debtor objected to the application, arguing that the claimed amount is below the Rs. 1,00,00,000/- threshold as defined in Section 4 of the Code and that interest should not be combined with the principal for this threshold.
The Adjudicating Authority ruled that there were differing opinions within the Tribunal. It referenced the case of M/s. Bhotika Trade & Services Pvt. Ltd. Vs. M/s. Avinash EM Projects Pvt. Ltd., which stated that interest could contribute to the threshold if specified in the agreement.
The Authority considered the invoice and found that it mentioned interest at 18% per annum for delayed payment. It concluded that interest could indeed be combined with the principal to meet the threshold.
The Corporate Debtor denied receiving invoices and accused them of being forged. The Operational Creditor countered that the invoice was computer-generated and did not require the Corporate Debtor's stamp or signature. The ledger and tax invoice were signed by the legal heir of Smt. Sunila Chhabra.
The Corporate Debtor argued that the legal heirs signed documents before Smt. Sunila Chhabra's death. However, records confirmed proper receipt and acknowledgment of the documents by the Corporate Debtor, and the Authority rejected the Corporate Debtor's objections.
Considering the facts, the Authority concluded that the Operational Creditor had proven the debt's validity and the Corporate Debtor's default. Therefore, the application under Section 9 of the IBC, 2016 was deemed admissible."