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CIRP can’t be triggered solely on basis of unpaid interest when principal debt has been discharged: NCLT

After hearing the arguments and going through the provisions of the Code, the Bench of Justice Abni Ranjan Kumar Sinha and LN Gupta noted that interest is not included in the term “debt” per se. Rather, the “interest” can be claimed as “financial debt” only if such debt exists.

Relying on the ruling of the National Company Law Appellate Tribunal in SS Polymers v. Kanodia Technoplast Ltd, the Tribunal held,

“…the “interest” component alone cannot be claimed or pursued, in absence of the debt, to trigger a CIR process against the corporate Debtor. Further, the application pursued the for realization of the interest amount alone is against the intent of the IBC, 2016.”

Hence, the appeal stood dismissed.

Source: Barandbench

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