Interest In Invoices Without Acceptance By Corporate Debtor Cannot Count Toward Threshold Under IBC: NCLT Ahmedabad

The National Company Law Tribunal (NCLT) at Ahmedabad has reiterated that interest mentioned only in invoices without any contractual stipulation cannot be counted as operational debt for determining the statutory threshold under Section 4 of the Insolvency and Bankruptcy Code, 2016, while dismissing a plea filed by an operational creditor seeking initiation of insolvency proceedings.

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

“Where interest is claimed solely on the basis of unilateral terms printed in invoices, without evidence of acceptance by the corporate debtor, the same cannot be treated as undisputed operational debt for the purpose of admission of a petition under Section 9 of the Code.”

The petition was filed by Rumit Life Care, the operational creditor, seeking initiation of the Corporate Insolvency Resolution Process (CIRP) against Shari Pharmachem Private Limited for default in payment of Rs.6,09,50,590.60, comprising a principal amount of Rs.2,24,16,648.60 and interest of Rs.3,85,33,942 arising out of supply of goods.

The creditor, a partnership firm engaged in trading, import, and export of pharmaceutical intermediaries and active pharmaceutical ingredients (API), supplied goods pursuant to purchase orders placed between 2022 and 2023. It claimed that despite part payments, substantial dues remained outstanding.

A demand notice dated June 7, 2025, was issued under Section 8 of the IBC, but the dues were not cleared.

It was contended that the invoices were raised in USD while certain payments were made in INR, resulting in losses due to exchange rate fluctuations. The creditor also claimed additional amounts towards shipping, insurance, agency, warehouse and transport charges, and asserted that interest on delayed payments was a recognised commercial practice.

The corporate debtor argued that there was no agreement providing for payment of interest and that the invoices relied upon did not establish any accepted liability for such charges. It also contended that disputes existed between the parties and the petition was not maintainable.

After examining the purchase orders, the tribunal found that they did not contain any clause providing for payment of interest or additional charges. It noted that although some invoices mentioned interest, the terms were unilateral and there was no material to show that the respondent had agreed to them.

Relying on precedents of the NCLAT, the bench held that interest can form part of operational debt only when it arises from a contractual or statutory stipulation and cannot be included merely because it is mentioned in invoices.

The tribunal observed,

“Therefore, in absence of any contractual stipulation in the purchase orders or any separate agreement demonstrating acceptance of liability by the Corporate Debtor, the claims relating to interest and additional charges cannot be treated as undisputed operational debt for the purpose of determining the threshold under Section 4 of the Code.”

It held that interest and additional charges had to be excluded while computing the operational debt. After excluding those components and adjusting the payments made, the remaining principal amount was calculated at Rs.63,86,380, which fell below the minimum default threshold of Rs.1 crore prescribed under Section 4 of the IBC.

Holding that the statutory threshold must be satisfied on the date of filing of the application and that the Code cannot be used as a recovery mechanism, the tribunal refused to admit the petition.

Accordingly, the company petition was dismissed, with liberty to the operational creditor to avail themselves of other remedies available under law.