Wild Dreams Trading Company Pvt. Ltd. Vs Ascendancy Financial Services Pvt. Ltd. (NCLAT Delhi)
The National Company Law Appellate Tribunal (NCLAT) considered an appeal filed under Section 61 of the Insolvency and Bankruptcy Code, 2016 against the order of the National Company Law Tribunal (NCLT), Chandigarh Bench, which had dismissed the appellant’s application under Section 7 of the Code seeking initiation of the Corporate Insolvency Resolution Process (CIRP) against the corporate debtor. The NCLT had held that the interest component could not be added to the claim merely on the basis of Tax Deducted at Source (TDS) deductions and consequently concluded that the amount of default fell below the statutory threshold prescribed under Section 4 of the Code.
The appellant had advanced financial assistance to the corporate debtor through eleven Inter Corporate Deposits (ICDs) between 22.07.2016 and 18.07.2024, aggregating to ₹2.32 crore. Under an oral understanding between the parties, the ICDs carried interest at 11.50% per annum for advances made during the financial years 2016-17 and 2017-18, which was subsequently revised to 8% per annum. Although the corporate debtor repaid the principal amount relating to several ICDs either fully or partially, it did not pay interest on any of the borrowings. According to the appellant, ₹62 lakh remained outstanding towards principal along with accrued interest of ₹45.08 lakh, making the total outstanding financial debt ₹1,07,08,010.
