IBC Pecuniary Threshold: – Interest Component to Be Merged with Principal Debt?


Status as on- 25/07/2022


National Company Law Appellate Tribunal (NCLAT) declares that for application under S/9 of Insolvency and Bankruptcy Code (IBC), the interest component can be included with the principal debt to arrive at the minimum pecuniary threshold of Rs. 1 Crore if delayed payment is stipulated in Invoice or agreement.

In the case of Vikas parasprampuria (Operational Creditor) V/s Bombay Rayon Fashions Ltd (Corporate Debtor), the operational creditor supplied goods to the corporate debtor, and nine invoices were raised by the operational creditor which was accepted by the corporate debtor without any dispute.

The corporate debtor made part payments for certain invoices and the payment of the remaining invoices defaulted. Several reminders were sent to the corporate debtor, but still, there was no payment.

The operational creditor sent a demand notice followed by the reminders and there was no response from the corporate debtor to the said demand notice.

Thereafter, the operational creditor filed the application u/s 9 of the IBC, seeking to initiate the Corporate Insolvency Resolution Process (CIRP) against the corporate debtor for defaulting amount of Rs.1,60,87,838/- including the interest.

Then, Hon’ble NCLT gave ample opportunity to the Corporate Debtor to file its reply. Despite, the ample opportunity Respondent didn’t file its reply. But approached the Hon’ble NCLAT to set aside the order of the Hon’ble NCLT.

Contention By Operational Creditor

On the issue, that the interest component will be included in the principal amount to meet the threshold requirement i.e., 1 crore for initiating the CIRP process, it made reliance on Pavan Enterprises v. Gammon India, Company Appeal No.148 of 2018, wherein it was held that “if in terms of any agreement interest is payable to the Operational of Financial Creditor then the debt will include interest”. No reply was filed by the corporate debtor.

Decision Of NCLT

The Hon’ble NCLT Mumbai bench vide its order dated 07.06.2022, observed that: –

  • Corporate Debtor had sufficient time to file its plea.
  • Corporate Debtor through various letters, invoices, and making part payments acknowledging its liability towards the operational creditor.
  • That application u/s 9 of the IBC complete in all aspects and initiated CIRP against Corporate Debtor.

Before NCLAT

Aggrieved by the Hon’ble NCLT order dated 07.06.2022, the appellant, approached the Hon’ble NCLAT to stay the CIRP process initiated against the corporate debtor.


NCLAT held that, since, invoices produced by operational creditor stipulates interest on delayed payment. Therefore, it entails the right to claim under section 3(6) of the IBC and will also form a part of the debt under section 3(11) of the IBC.  

NCLAT also held that it has mentioned under terms and conditions that “interest will be charged @18% GST p.a. after the due date of the bill”.

NCLAT further held that all 9 invoices produced by operational creditors stipulated the provision of interest on delayed payment.

Hence, from these facts, it is clear that the total amount for maintainability of claim will include both principal debt amount as well as interest on delayed payment which was stipulated in the invoice itself.


From the above-mentioned matter, it is concluded that the interest component can include in the principal debt to acquire a minimum threshold limit i.e., 1 crore if delayed payment stipulated in the agreement or invoice.

Disclaimer: The above article is based on the personal interpretation of the related orders and laws. The readers are expected to take expert opinions before relying upon the article. For more information, please contact us at rera@centrik.in




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