Interest On Operational Debt Cannot Be Claimed If There Is No Clause In Agreement For Payment Of Interest: NCLAT

The National Company Law Appellate Tribunal (NCLAT) ruled that interest payments constitute operational debt under the Insolvency and Bankruptcy Code (IBC) if specified in the agreement. This decision clarifies the treatment of interest payments in insolvency proceedings, providing guidance on the classification of debts. The tribunal emphasized that interest payments, when contractually agreed upon, form part of the operational debt and must be considered in insolvency resolutions. The ruling aims to ensure fair treatment of creditors and uphold the contractual obligations of debtors. By recognizing interest payments as operational debt, the tribunal seeks to provide clarity and consistency in insolvency proceedings. This decision is expected to impact numerous cases, guiding the resolution process and ensuring that creditors’ rights are protected. The ruling highlights the role of appellate tribunals in interpreting insolvency laws and providing clarity on complex legal issues.