Debt Denominated In Foreign Currency Must Be Converted At Invoice Date Rate For IBC Threshold: NCLT Ahmedabad

The Ahmedabad bench of the National Company Law Tribunal has recently held that where an operational debt is denominated in foreign currency, the exchange rate on the date of the invoice must be used to determine whether the Rs. 1 crore threshold under the Insolvency and Bankruptcy Code is met.

On applying this, the Tribunal found that the amount fell below Rs. 1 crore and dismissed the petition as not maintainable.

The bench of Judicial Member Shammi Khan and Technical Member Sanjeev Sharma observed that,

“In the considered view of this Tribunal, where the operational debt arises from invoices denominated in foreign currency, the conversion into Indian Rupees for the purpose of determining the statutory threshold under Section 4 of the Code is required to be undertaken on the basis of the exchange rate prevailing on the date of the invoice.”

The application was filed by PM Copper Wire & Cables, the operational creditor, against Relicab Cable Manufacturing Limited under Section 9 of the Code for initiation of the corporate insolvency resolution process. The claim related to an operational debt of about of USD 1,23,597.

PM Copper Wire & Cables, a Malaysian company engaged in manufacturing and trading copper wires, entered into a sales contract dated September 7, 2019 with the corporate debtor for supply of 1.60 mm annealed copper wire on CIF Nhava Sheva basis. Goods aggregating 24.384 metric tonnes were supplied and invoiced on September 19, 2019 for USD 148,742.

After adjustment of a refundable security deposit of USD 20,000 and a price settlement credit of USD 5,145, the outstanding amount stood at USD 1,23,597.

Payment was to be made within 45 days, which fell due on November 3, 2019. The amount remained unpaid.

An earlier petition filed in 2021 had been dismissed in June 2023 on the ground that the converted value of the debt did not meet the Rs. 1 crore threshold. Liberty was granted to revive the proceedings subject to the outcome of the Supreme Court's ruling in Jumbo Paper Products v. Hansraj Agrofresh Pvt. Ltd.

The creditor filed the present petition in January 2026, recalculating the amount by applying the RBI reference rate as on January 19, 2026 and contending that the threshold was met. A demand notice was issued on January 20, 2026. The corporate debtor raised objections including limitation, lack of authority, and receipt of insurance proceeds.

The operational creditor contended that there was no pre-existing dispute and that the application was within limitation under Article 137 of the Limitation Act, 1963.

The tribunal identified the issue as the relevant date for converting foreign currency into Indian Rupees for the purpose of Section 4, whether the date of invoice, the date of default, or any subsequent date.

It observed that the invoice represents the point at which the liability stands quantified and crystallised, and reflects the value of the transaction when the debt is incurred.

Referring to the Supreme Court's ruling in Forasol v. ONGC, the Tribunal held that the date of conversion must be fixed with reference to a definite and legally justifiable point in time. In the present case, that point was the date of the invoice.

Applying the exchange rate prevailing on September 19, 2019, the Tribunal found that the amount fell below ₹1 crore.

It further observed that adopting a subsequent exchange rate would make the determination of the threshold uncertain and dependent on external factors such as currency fluctuations.

The tribunal noted that the minimum threshold under Section 4 is a jurisdictional requirement and cannot be satisfied by relying on values arising from later exchange rate changes.

The petition was accordingly dismissed as not maintainable.