The NCLAT, New Delhi expounded that when the principal amount had already been paid by the Appellant and the issue was only regarding the recovery of interest, a Section 9 Application under the Insolvency and Bankruptcy Code, 2016 (hereinafter referred to as “IBC”) could not have been maintainable as the Code envisages ‘resolution of debt’ and not ‘recovery.
Brief Facts:
The present appeal has been filed against the order of the NCLT vide which the application of the Operational Creditor against the Corporate Debtor for initiating the corporate insolvency resolution process (CIRP) was admitted.
During the pendency of the proceedings, the principal amount was paid by the Appellant.
The Respondent still pursued the application for recovery of interest, litigation charges, court fees, etc.
Contentions of the Appellant:
It was submitted that the amount was being claimed based on 2 invoices. The purchase order does not refer to any payment of interest in case of delay. The issue raised by the Appellant was that the invoice based on which the interest is being claimed was not signed by the Appellant, hence, it was a unilateral document.
Contentions of the Respondent:
It was submitted that the goods were supplied on basis of 2 orders placed by the Appellant. The second order was placed via telephone and hence, was orally placed. It was regarding this transaction, that the interest had been imposed.
Observations of the Tribunal:
The Tribunal opined that the principal amount had already been paid by the Appellant and the issue was only regarding the interest, for which a Section 9 Application could not have been maintainable as the Code envisages ‘resolution of debt’ and not ‘recovery.
The decision of the Tribunal:
Therefore, based on the aforementioned reason, the appeal was allowed and accordingly, the order of the NCLT was set aside.
Case Title: Rohit Motawat v. Madhu Sharma
Coram: Justice Mr. Rakesh Kumar Jain (Judicial Member), Mr.Naresh Salecha (Technical Member)
Case No: Rohit Motawat v. Madhu Sharma
Advocates for Appellant: Advs. Mr. Prateek Gupta, Mr. Nikhil Saini
Advocates for Respondent: Advs. Mr. Mitul Jain, Mr. Ravindra Chaingale
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