Dispute Over Interest Rates Does Not Fall Under the Ambit of Initiation of CIRP | SC

  • Blog|News|Insolvency and Bankruptcy Code|
  • 2 Min Read
  • By Taxmann
  • |
  • Last Updated on 20 December, 2023

Recent Posts

News, Blog, Account & Audit

Classification and Disclosure of Late Payment Interest in Financial Statements

Blog, News, GST & Customs

Appellate Authority Can’t Dismiss an Appeal on Maintainability Grounds If Alternative Remedy Has Been Directed by the Court | HC

Latest from Taxmann

Dispute Over Interest Rates

Case Details: Vinay Yadav v. Anita Jindal - [2023] 157 taxmann.com 157 (SC)

Judiciary and Counsel Details

    • Dinesh Maheshwari & Sudhanshu Dhulia, JJ.
    • Neeraj Kishan Kaul, Sr. Adv., Toshiv Goyal, Dhruv Sharma, Chirag Pathor, Advs. & Aman Mohit Hingorani, AOR for the Appellant.
    • B.K. Satija, AOR, Himanshu Satija, Ms Neha Mehta, Harshit K. & Ms Aditi Gupta, Advs. for the Respondent.

Facts of the Case

In the instant case, the Financial Creditor advanced a certain amount to Corporate Debtor as a short-term loan, and Corporate Debtor issued two post-dated cheques for Rs. 57 lakhs and Rs. 30.5 lakhs with an intention of providing security for amount lent.

However, the said cheques were returned unpaid by bank with remark ‘insufficient funds’. Consequently, the Financial Creditor initiated proceedings against corporate debtor under Negotiable Instrument Act.

During ongoing proceedings, the Corporate Debtor paid an amount of Rs. 67.90 lakhs with 6 % interest vide a demand draft as per directions of Trial Court. Subsequently, the Financial Creditor filed an application under section 7 of the Insolvency and Bankruptcy Code, 2016 for initiation of CIRP against corporate debtor.

The application claimed an amount of Rs. 87.50 including 18 % of interest. The NCLT admitted said application and consequently, initiated CIRP against the corporate debtor.

Further, the NCLAT by impugned order set aside NCLT’s order on ground that having accepted 6 % interest, the Financial Creditor was now claiming an interest at 18 % per annum, recovery proceedings of this nature do not fall within scope and ambit of words ‘for any purpose other than resolution’ as defined under section 65 of the Insolvency and Bankruptcy Code, 2016.

Supreme Court Held

Consequently, an appeal was preferred with the Supreme Court. The Supreme Court observed that view as taken by NCLAT, particularly with reference to factual matrix of instant case, was a just and proper view of matter, more particularly with reference to latest view of Supreme Court as reflected in Vidarbha Industries Power Ltd. v. Axis Bank Ltd. [2022] 140 taxmann.com 252/173 SCL 355.

Therefore Supreme Court dismissed the instant appeal against the order of NCLAT.

List of Cases Reviewed

List of Cases Referred to

Disclaimer: The content/information published on the website is only for general information of the user and shall not be construed as legal advice. While the Taxmann has exercised reasonable efforts to ensure the veracity of information/content published, Taxmann shall be under no liability in any manner whatsoever for incorrect information, if any.

Leave a Reply

Your email address will not be published. Required fields are marked *

«
»

Everything on Tax and Corporate Laws of India

To subscribe to our weekly newsletter please log in/register on Taxmann.com

Author: Taxmann

Taxmann Publications has a dedicated in-house Research & Editorial Team. This team consists of a team of Chartered Accountants, Company Secretaries, and Lawyers. This team works under the guidance and supervision of editor-in-chief Mr Rakesh Bhargava.

The Research and Editorial Team is responsible for developing reliable and accurate content for the readers. The team follows the six-sigma approach to achieve the benchmark of zero error in its publications and research platforms. The team ensures that the following publication guidelines are thoroughly followed while developing the content:

  • The statutory material is obtained only from the authorized and reliable sources
  • All the latest developments in the judicial and legislative fields are covered
  • Prepare the analytical write-ups on current, controversial, and important issues to help the readers to understand the concept and its implications
  • Every content published by Taxmann is complete, accurate and lucid
  • All evidence-based statements are supported with proper reference to Section, Circular No., Notification No. or citations
  • The golden rules of grammar, style and consistency are thoroughly followed
  • Font and size that's easy to read and remain consistent across all imprint and digital publications are applied