Claim for Non-Transfer of Property under Incentive Scheme Not Classified as "Operational Debt" Under IBC
In a recent decision, the Ahmedabad Bench of the National Company Law Tribunal (NCLT) rejected an insolvency petition filed by M/s Green Consultancy against M/s Jhaveri Spices Private Limited. The tribunal, comprising Mrs. Chitra Hankare and Dr. Velamur G Venkata Chalapathy, ruled that the claim arising from a failure to transfer an immovable property under an incentive scheme does not constitute an "operational debt" as defined under Section 5(21) of the Insolvency and Bankruptcy Code (IBC), 2016.
The petitioner, Green Consultancy, sought the initiation of a Corporate Insolvency Resolution Process (CIRP) against Jhaveri Spices, claiming a default amounting to Rs. 1.2 crore. This amount represented the value of a flat or commercial office promised under an incentive scheme, contingent upon achieving specific sales targets.
Jhaveri Spices, engaged in the procurement and marketing of spices, had introduced a performance-linked incentive scheme on January 1, 2022. Green Consultancy claimed to have met and exceeded the sales target of Rs. 6 crore by the stipulated deadline of July 31, 2023. Despite this, the promised property was allegedly not transferred, prompting Green Consultancy to file the petition on March 15, 2026.
The core issue before the tribunal was whether such a claim could be classified as an "operational debt" under the IBC. The tribunal noted that the IBC is designed to address unpaid dues for goods supplied or services rendered, typically backed by invoices. However, the petitioner's claim was based on a promised incentive in the form of immovable property, which does not fit the definition of operational debt.
The tribunal emphasized that the IBC is not a substitute for recovery proceedings or the enforcement of contractual rights unrelated to operational debt. The nature of the claim was identified as a reward or incentive, possibly requiring enforcement through specific performance or recovery proceedings outside the purview of the IBC.
The tribunal cited a similar judgment from the NCLT Kolkata Bench in the case of Ankit Metal & Power Ltd. v. West Bengal Industrial Development Corporation, reinforcing the precedent that such incentive-based claims do not qualify as operational debts under the IBC.
Consequently, the petition was deemed non-maintainable and was dismissed. This judgment clarifies the scope of claims that can be pursued under the IBC, reiterating that only debts arising directly from goods or services provided fall within its ambit.
Bottom line:-
Insolvency and Bankruptcy Code, 2016 - Claim arising from failure to transfer immovable property under an incentive scheme does not constitute "operational debt" as defined under Section 5(21) of IBC. Such claims are outside the ambit of IBC and are better suited for enforcement under specific performance or recovery proceedings unrelated to operational debt.
Statutory provision(s): Insolvency and Bankruptcy Code, 2016 Sections 3(12), 5(21), 8, and 9
