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2020 (10) TMI 732 - Tri - Insolvency and BankruptcyMaintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - existence of debt and dispute or not - HELD THAT:- The Principal amount had been paid by the Respondent and the interest thereupon had also been paid by issue of shares, and when the same had been accepted by the BIFR as the final settlement of its liability under the revised Scheme, further interest, i.e. interest on interest, being charged by the Petitioner would not constitute debt as per the Code, even if it is otherwise payable. As per Section 5(8) of the Code, financial debt means "a debt along with interest, if any, which is disbursed against the consideration for the time value of money - The interest upon interest claimed after much time is not receivable against any disbursement against the consideration for the time value of money, or against any Agreement or Contract between the parties concerned, and does not give rise to a right to payment in the hands of the creditor. No claim or debt therefore arises. There could, therefore, also be no "default" under the Code. The Petition fails on this account. The entire exercise of repayment of debt in this Petition is an exercise in recovery. Once the matters have been brought under the IBC 2016, and all earlier matters have abated, they have to be considered under the provisions of the Code. It is a settled position of law that the provisions of the Code cannot be invoked for recovery of outstanding amount but can be invoked to initiate CIRP for justified reasons as per the Code - In the instant case there was no debt within the meaning of the Code, even if there may otherwise be amounts payable by the Respondent, and that too was disputed from the very beginning requiring the intervention of the BIFR with the Petitioner opposing various proposals, from time to time. There was. therefore, no clear debt. Proceedings under the Code are summary proceedings where the debt, if any, has to be undisputed and clear. This is not the case here. Petition dismissed.
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