TMI Blog2019 (6) TMI 519X X X X Extracts X X X X X X X X Extracts X X X X ..... . Tiwari and S.K. Tiwari, ORDER M/s. Jindal Steel Power Limited - the Financial Creditor filed this application under section 7 of the Insolvency Bankruptcy Code, 2016 (in short, I B Code) against M/s.Bharat NRE Coke Limited. - the Corporate Debtor to start Corporate Insolvency Resolution Process (in short, CIRP ) of the Corporate Debtor alleging that the Corporate Debtor committed default in paying the financial debt of ₹ 94,18,89,786/- (including principal sum, interest accrued thereon, amount payable towards damages and costs of arbitration proceeding). 2. The following facts are not in dispute 2.1 M/s. Gujarat NRE Coke Ltd. (the company now in liquidation, as per order dated 11.01.2018 passed by this authority in CP No. 182/KB/2017, M/s. Gujarat NRE Mineral Resources Ltd. (Now Know as M/s Bharat NRE Coke Ltd.) Gujarat NRE Mineral Resources Ltd. (now known as M/s.Bharat NRE Coke Ltd.) - the Corporate Debtor and the applicant/ Financial Creditor entered into coal purchase agreement dated 27.08.2013 (Annexure P-VII). In order to facilitate smooth supply of coal and as at that point of time, M/s. Guja ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , any amount is payable that amount is not crystalised as the value of shares as on today has not been ascertained. The main transaction for which they stood as the guarantor was the agreement of the sale of the coal. Hence, the amount that could be said to be due and payable, would be operational debt and cannot be a financial debt as stated by the applicant. There is a dispute pending about the existence of debt. They have challenged the award by filing review petition in the Hon'ble High Court. This application is not maintainable. It may be rejected. 5. I heard the Ld. Sr.Counsel for the applicant/ Financial Creditor, Mr. Ratnanko Banerjee. Ld. Sr.Counsel, Mr. Joy Saha for the corporate debtor at length. Both of them relied on number of rulings and orders of various NCLT Benches and the orders of the Hon'ble NCLAT. I would consider those rulings/ orders at proper stage. They also filed on record written notes of argument. 6. Ld. Sr. Counsel Mr. Banerjee for the Financial Creditor submitted that there is no dispute about the existence of the debt and its default by the corporate debtor. By the award dated 16.08.2016, the corporate debtor was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t as the corporate debtor has filed review petition. In such situation, this application is not maintainable. 8. Ld. Sr. Counsel also pointed out that the applicant herein has filed its claim before the Liquidator in liquidation proceeding against Gujarat NRE Coke Ltd. stating it to be operational creditor. Now, they cannot turn around and claim that they are financial creditors. Ld. Sr. Counsel also relied on some of the rulings/orders of which note would be taken at appropriate state during discussion of the evidence on record. 9. On the basis of pleadings of the parties, the arguments made at the bar, the following points of controversy arise for my determination. I record my findings thereon with the reasons stated below: (i) whether the amount claimed by the applicant/financial creditor on the basis of award dated 16.08.2016 is the financial debt or the operational debt ? (ii) My answer to the above point is that it is the financial debt. 10. As noted earlier, most of the facts are not in dispute. On the basis of admitted facts, I have to ascertain the nature of the debt. There are two separate a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Interest @30% (compounded monthly) on unadjusted Advance Payment calculated from the date of Buyer making such advance payment and till the date of refund of the advance payment by the seller to the buyer. This further makes clear that advance payment was made by the applicant was made subject to time value of the money advanced. This clearly falls in the definition of financial debt under section 5(8) clause (f) of I B Code, i.e., the financial debt means a debt alongwith the interest, if any, which is disbursed against the consideration for time value of money and includes (of) any amount raised under any other transaction, including any forward sale or purchase agreement, having commercial effect of borrowings. No doubt explanation is added to sub-clause (f) of agreement dated 06.06.2018 but thereby original meaning of the clause is not narrowed down but by way of explanation, its scope is widened. To support my this view, I rely on ruling of the Apex Court in case of [B.Trading Company v. State of Uttar Pradesh [1993] Supplementary (3) SCC 361(1)], wherein it was held that, It is well settled rule of interpretation that whether the legislature uses words means and inclu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to show that (i) there is a debt alongwith interest, if any, which has been disbursed and (ii) such disbursement has been made against the 'consideration for the time value of money'. Thereby, if the Claimant claims to be 'Financial Creditor' he will have to show that debt is due which he has disbursed against the 'consideration for the time value of money' and that the borrower has raised the amount directly or through other modes like credit facility or its dematerialised equivalent, note purchase facility or the issue of bonds, notes, debentures, loan stock or any other similar instrument. The amount of any liability in respect of any lease or hire purchase contract which is deemed as a finance or capital lease under the Indian Accounting Standards or such other accounting standards can also be referred to by the Creditor to claim that there is a 'financial debt' due to him which has been disbursed against the 'consideration for the time value of money'. 17. In this case, the applicant made an advance payment of money to Gujarat NRE Coke Ltd. They were to supply the coal. The Corporate Debtor is the Guarantor of Gujarat N ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eal filed against the award is dismissed. It is submitted that the corporate debtor filed review petition. Be that as it may. In view of the facts of the case and evidence on record, it is to be held that the corporate debtor has committed default in paying the financial debt of the financial creditor more than ₹ 1 lakh. 21. Ld. Sr. Counsel for the corporate debtor submitted that the debt is not crystallised. This defence is also not available to the corporate debtor in view of the judgment of the Hon'ble Supreme Court in the case of Innoventive Industries Ltd. v. ICICI Bank Ltd. 320/143 SCL 325. In para 27 of the order, It has been held by the Hon'ble Apex Court that, The scheme of the Code is to ensure that when a default takes place, in the sense that a debt becomes due and is not paid, the insolvency resolution process begins. Default is defined in Section 3(12) in very wide terms as meaning non-payment of a debt once it becomes due and payable which includes non-payment of even part thereof or an instalment amount. For the meaning of debt , we have to go to Section 3(11), which in turn tells us that a debt means a liability of obligation in respe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e debt. 26. The financial creditor suggested the name of Mr. Samir Kumar Bhattacharyya (Mob.8584947677) of CJ-104, CJ Block, Ground floor, sector-2, Salt Lake, Kolkata- 700 091 having Email id: skbhatt54@gmail.com and registration no.IBBI/IPA-002/IP-N00273/2017-18/10831. A written communication dated 23.08.2018 of Mr. Samir Kumar Bhattacharyya, proposed IRP, mentions that there are no disciplinary proceedings pending against him with the Board or Indian Institute of Insolvency Professionals of ICAI. This application is defect-free. Hence, I admit the Corporate Debtor in CIRP by the following order: ORDER (i) The application filed by the Financial Creditor under Section 7 of the Insolvency Bankruptcy Code, 2016 is hereby admitted for initiating the Corporate Resolution Process in respect of Bharat NRE Coke Ltd. (ii) The moratorium is declared for the purposes referred to in Section 14 of the Insolvency Bankruptcy Code, 2016. The IRP shall cause a public announcement of the initiation of Corporate Insolvency Resolution Process and call for the submission of claims under Sec. 15. The public announcement referred to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 091 having Email id: skbhatt54@gmail.com and registration no.IBBI/IPA-002/IP-N00273/2017-18/10831 is appointed as the Interim Resolution Professional for Corporate Debtor for ascertaining the particulars of creditors and convening a Committee of Creditors for evolving a resolution plan. (ix) In view of admission of CIRP of the Corporate Debtor, CA(IB) NO.1110/KB/2018 stands disposed off. (x) Financial Creditor to pay ₹ 1,00,000/- as advance fees to the IRP as per Regulation 33(2) of IBBI (IRP for the Corporate Persons), 2016 (xi) IRP is directed to complete the CIRP process in time bound manner as stated in Regulation 40A of IBBI Regulations, 2016. (xii) Registry is hereby directed to communicate the order to the Financial Creditor, Corporate Debtor and to the Interim Resolution Professional by Speed Post and also by email. CA(IB) 1110/KB/2018 stands rejected. Let the certified copy of the order be issued upon compliance with requisite formalities List the matter on 24.04.2019 for filing the progress report. - - TaxTMI - TMITax - Insolvency ..... X X X X Extracts X X X X X X X X Extracts X X X X
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