Section 9 IBC Interest Claim – NCLAT Finds CIRP Invalid

Case Details: SNJ Synthetics Ltd. v. PepsiCo India Holdings (P.) Ltd. - [2025] 174 taxmann.com 398 (NCLAT-New Delhi)

Judiciary and Counsel Details

• Ashok Bhushan, Chairperson, Barun Mitra & Arun Baroka, Technical Members
• Anupam Lal Das, Sr. Adv., Nithin Chowdary Pavuluri, Anirudh Singh & Subham Saurabh, Advs. for the Appellant.
• Krishnendu Dutta, Abhijeet Sinha, Srs. Advs., Ms Avni Sharma & Ms Simarpreet Kaur N., Advs. for the Respondent.

Facts of the Case

In the instant case, the appellant-operational creditor had supplied goods to the respondent-corporate debtor. However, the respondent defaulted in making payment, and the appellant filed an application under section 9 of the IBC, claiming unpaid operational debt towards principal and interest on delayed payment.

The Adjudicating Authority (NCLT), by the impugned order, dismissed the section 9 application on the ground that the CIRP could not be initiated against the corporate debtor since the principal amount had already been paid by the corporate debtor and, therefore, the section 9 petition was non-maintainable for the interest component alone.

It was noted that since there had been no amendment of the agreement, the terms agreed between the parties in the supply agreement prevailed over unilateral invoices. Further, where the principal amount had already been paid and only a contested interest claim remained, there was no legally enforceable unpaid operational debt as required under section 9(5) of the IBC to trigger the CIRP.

NCLAT Held

The NCLAT held that the provisions of the IBC cannot be turned into debt recovery proceedings, and to commend any such course of action would tantamount to forcing the corporate debtor to face the perils of corporate death instead of being rejuvenated and revived.

Therefore, the Adjudicating Authority had not committed infirmity in not allowing the CIRP of the corporate debtor to be initiated solely based on a claim of a contested and unsubstantiated interest component.

List of Cases Reviewed

• Order of NCLT (Chandigarh) in Company Petition (IB) No.157/CHD/HRY/2021, dated 02.01.2025 (para 18) affirmed.
• Krishna Enterprises v. Gammon India Limited in CA (AT) (Ins) No. 144 of 2018 (para 13)
• S.S. Polymers v. Kanodia Technoplast Limited in CA (AT) (Ins.) No. 1227 of 2019 (para 16) followed.
• Prashat Agarwal judgment and Anuj Sharma judgment (para 14) distinguished.

List of Cases Referred to

• Jatin Koticha v. VFC Industries Pvt. Ltd. 2007 SCC Online Bom 1092 (para 5).