The Mumbai Bench of the National Company Law Tribunal dismissed the petition of Steel India Company (Operational Creditor) against Theme Developers Pvt. Ltd. (Corporate Debtor) seeking payment of interest under Section 9 of IBC, 2016 on the ground that the dispute under the meaning of Section 5(6)(a) was already into existence.

The corporate debtor contended that they have procured steels from Steel India Company in 2015-16 on the tune of Rs. 48,42,784/-. The total outstanding amount was paid in two parts. Rs. 14,79,242/- was paid in financial year of 2015-16 and rest of the amount of Rs. 30,87,650/- was paid through cheques. However, the operational creditor never presented them for clearance with the bank because of which the corporate debtor cancelled the cheques on its expiry.

On 28.12.18, Steel India Company issued a demand notice under Section 8 of the Code against the corporate debtor claiming the payment of outstanding amount Rs. 36,00,006/- which is inclusive of the interest @ 2%. Vide reply dated 09.01.19 respondents said that, since the invoice does not talk about the interest rate, hence they are not liable to pay the interest amount. Thereafter, principal outstanding amount of Rs. 13, 35.952/- was also cleared by the Corporate Debtor vide RTGS.

Subsequently, the operational creditor issued second demand notice vide letter dated 15.01.19 claiming the interest amount. Thereafter, petitioner filled the petition before NCLT, Mumbai under section 9 of the Code for initiation of CIRP against the respondents.

The corum of Hon’ble Bhaskara Pantula Mohan, Member (Judicial) and Hon’ble V. Nallasenaapathy, Member (Technical) ruled in the favor of the respondents stating that:

“..the dispute raised by the Corporate Debtor that they are not liable to pay interest as claimed by the Petitioner, which was categorically informed to the petitioner when reply was given to the first Demand Notice, as early as on 10.01.2019, whereas the second Demand Notice based on which this petition is filed was sent only on 15.01.2019, this is a clear dispute in existence as defined under Section 5(6)(a) of the Code.”

The appeal against the order is pending before the NCLAT.

Link of the Judgment: https://nclt.gov.in/sites/default/files/final-orders-pdf/C.P.%20IB%20843%20MB%202019%20-%20Steel%20India%20Vs%20Theme%20Developers%20-%2023.07.2019.pdf