Authority: National Company Law Appellate Tribunal Principal Bench, New Delhi

Order Date: 24 August 2026

Case Overview

This Interlocutory Application (IA No. 2832 of 2025) was filed by M/s. Kurlon Limited (now known as M/s. Kanara Consumer Products Limited) seeking modification of the interest rate awarded in the NCLAT judgment dated 31 January 2025. The financial creditor had advanced a loan of ₹52,50,000 to India Green Reality Limited under a Loan Agreement dated 25 April 2017, which stipulated 1.75% monthly interest during the loan period and 3% monthly interest (36% annually) in case of default.

The underlying insolvency proceedings (CP (IB) No. 195 of 2019) were initiated by Kurlon for a claimed amount of ₹71,61,091 and admitted by the Adjudicating Authority on 22 December 2023. During pendency, the corporate debtor paid ₹65,00,000, leading NCLAT to set aside the admission order on 31 January 2025 while directing payment of the balance amount with interest at 9% per annum. Kurlon appealed to the Supreme Court (Civil Appeal No. 4338 of 2025), which dismissed the appeal on 7 April 2025 but granted liberty to seek interest rate modification before NCLAT.

Final Outcome

The NCLAT dismissed the application and maintained the interest rate at 9% per annum. The tribunal found that the original judgment had consciously exercised judicial discretion after considering the complete factual matrix, including the contractual terms and substantial repayments made. The principal amount of ₹52,50,000 had been fully repaid, and only interest remained payable. The tribunal emphasized that the Insolvency and Bankruptcy Code is not intended as a recovery mechanism for contractual interest claims and that applying the contractual default rate of 3% per month would be disproportionate and contrary to the Code's objectives. The ruling affirms that courts may exercise discretion in awarding interest rates different from contractual terms when justified by circumstances, particularly when the principal debt has been discharged and insolvency proceedings have been terminated.

Topics: Interest Rate Dispute, Insolvency Proceedings, Contractual Enforcement