Tanay Securities & Services Pvt. Ltd. & Anr. Vs Mittal Soya Protein Pvt. Ltd. (NCLAT Delhi)
NCLAT held that small disputed amounts below ₹1 crore do not justify Section 7 proceedings or penalties under Section 65 when debt is substantially repaid.
The appeal arose against the NCLT Indore Bench order, which dismissed a Section 7 application filed by the financial creditor claiming a default of Rs. 4,08,78,824/- by the corporate debtor. The adjudicating authority found that the corporate debtor had substantially repaid the claimed debt, except for Rs. 19,19,500/-, which was below the statutory threshold of Rs. 1 crore. Consequently, the Section 7 petition was rejected. Additionally, the NCLT had imposed a penalty under Section 65 of the IBC suo moto, holding the financial creditor liable.
The appellant contended that since the adjudicating authority acknowledged the repayment of the debt, imposing a penalty under Section 65 was unjustified. The respondent noted that the disputed sum had also been paid and highlighted that the financial creditor was a shareholder and co-promoter of the corporate debtor.
NCLAT examined the record, noting paragraph 39 of the NCLT order, which emphasized that the twin requirements of “debt” and “default” were not fully met due to substantial repayment and the remaining disputed sum being below the threshold. The Tribunal agreed with the rejection of the Section 7 application but held that the penalty under Section 65 was unwarranted, as the adjudicating authority had recognized the repayment.
