# In the matter of City Oil Private Limited C.P. (IB) No. 150-KB-2021

> NCLT judgment dated 2023-04-19. Citation: TCN-2023-NCLT-03726. Gandhar Oil Refinery (India) Limited filed a Company Petition under Section 9 of the Insolvency…

- **Court:** NCLT
- **Order date:** 19 Apr 2023
- **Citation:** TCN-2023-NCLT-03726
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-division-bench-court-i-chenn/city-oil-private-limited-cp-ib-no-150-kb-2021-7150063b

## Summary

### Background

Gandhar Oil Refinery (India) Limited filed a Company Petition under Section 9 of the Insolvency and Bankruptcy Code, 2016, against City Oil Private Limited, seeking initiation of Corporate Insolvency Resolution Process (CIRP) due to unpaid operational debt. The operational creditor claimed a default of Rs. 1,04,39,547/-, including principal and interest, arising from invoices for goods supplied. The corporate debtor acknowledged outstanding dues but disputed the interest component, arguing it was a unilateral clause in the invoices and not agreed upon. The corporate debtor also filed a Title Suit seeking a declaration that the interest clause was void. The petition was filed on 07 April, 2021.

## Facts

Gandhar Oil Refinery (India) Limited (Operational Creditor) filed a petition under Section 9 of the Insolvency and Bankruptcy Code, 2016, against City Oil Private Limited (Corporate Debtor) for unpaid operational debt. The total amount claimed in default was Rs. 1,04,39,547/-, comprising Rs. 64,03,566/- as principal and Rs. 40,35,941/- as interest. The debt arose from invoices raised by the Operational Creditor for the supply of goods to the Corporate Debtor between April 2018 and August 2018. The Corporate Debtor made partial payments, leaving an outstanding amount of Rs. 73,48,542.35/- as of October 19, 2019. The Operational Creditor issued a demand notice on March 5, 2020, claiming Rs. 1,02,71,361.35, including interest calculated at 24% per annum. The Corporate

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## Issues and analysis

### Issue 1: Whether ‘interest' can be clubbed with principal debt to cross over the threshold limit of 1 Crore …

**Ratio:** The ratio is that interest cannot be clubbed with the principal amount to meet the

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**Reasoning:** The court reasoned that the interest claimed by the operational creditor was based on a

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**Interpretation:** The interpretation is that the definition of 'debt' under the IBC requires a

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**Application:** In this case, the court applied the ratio and reasoning to the specific facts

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## Parties

- **Judges:** BIDISHA BA…; Balraj…
- **Appellants:** Gandhar Oil…; Gandhar Oil…
- **Respondents:** City Oil Private…
- **Advocates:** Ajay Ga…; Vedica S…; +1 more

## Timeline

- **2018-04-01 — Purchase…**: Corporate Debtor issued purchase…
- **2018-04-28 — Outstanding…**: An amount of Rs.3,61,91,915.35 was due and payable by the Corporate Debtor to the…

## Legal provisions

- [Insolvency and Bankruptcy Code, 2016, Section 8 — Insolvency resolution by operational creditor](https://caseease.in/legal-provisions/insolvency-and-bankruptcy-code-2016/section-8)

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