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TMI Blog2023 (7) TMI 157X X X X Extracts X X X X X X X X Extracts X X X X ..... nts : Mr. Sanjiv Sen , Sr. Advocate with Mr. Abhay Itagi , Mr. Mohd Azeem , Ms. Anjali Singh and Mr. Mridul Suri , Advocates for R - 1 . JUDGMENT ASHOK BHUSHAN , J. 1. This Appeal by Suspended Director of the Corporate Debtor-Arcons Infrastructures and Constructions Pvt. Ltd. has been filed challenging Order dated 11.11.2022 passed by National Company Law Tribunal, Mumbai Bench, Court-I (hereinafter referred to as "The Adjudicating Authority") admitting Section 7 Application of Insolvency and Bankruptcy Code, 2016 (hereinafter referred to as "The Code") filed by the Respondent No.1-M/s. India Factoring and Finance Solutions Pvt. Ltd. 2. Brief facts of the case necessary to be noticed for deciding this Appeal are:- a. Respondent No. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t. c. Corporate Debtor admitted the debt. Corporate Debtor made certain payments. All due debt having not been paid by Respondent No. 2, Financial Creditor filed an Application under Section 7 of the Code on 25th March, 2019 before the NCLT, Mumbai. d. In the Application, financial creditor claimed an amount of Rs. 4,52,13,711/- as on 28.11.2019. Reply was filed to Section 7 Application by the Corporate Debtor contesting the claim of the Financial Creditor. The Reply stated that applicant has right to recover the monies solely from ITNL. Liability under Factoring Agreement being payable by ITNL, Application under Section 7 is not maintainable. e. The Adjudicating Authority after hearing the parties vide order dated 11.11.2022 admitted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 018 indicate that agreement was on no recourse basis. It is submitted that agreement being on no recourse basis there is no financial debt within meaning of Section 5(8)(e) of the Code. He submits that Financial Creditor was to recover the amount only from ITNL and the Adjudicating Authority committed error in admitting Section 7 Application of the Code. It is further submitted that appellant in the Appeal has offered to deposit the amount of Rs. 4,52,13,711/- being the amount claimed as default. It is submitted that Financial Creditor to provide an undertaking that any amount received from ITNL received by Financial Creditor shall be transferred to corporate debtor. 6. Learned Counsel for Respondent refuting the submissions of Learned Cou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or the Appellant is that amount which is subject matter of Section 7 Application is not a Financial Debt within the meaning of Section 5(8)(e) of the Code. Section 5(8)(e) provides as follows: "Section 5: Definitions. (8) "financial debt" means a debt along with interest, if any, which is disbursed against the consideration for the time value of money and includes- (a)........ ..... (e) receivables sold or discounted other than any receivables sold on nonrecourse basis; ......." 9. The above provision clearly indicates that receivables sold or discounted other than any receivables sold on nonrecourse basis is covered with the definition of Financial Debt. The submission of the Appellant is that the agreement between the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hich is covered by Factoring Agreement is clearly covered within meaning of Section 5(8)(e) of the Code and the Financial Creditor was entitled to being recourse. 12. We thus do not find any substance in the submission of Learned Counsel for the Appellant that Factoring Agreement was non-recourse agreement. 13. We have noticed above that Appellant at the outset offered to deposit amount of Rs. 4,32,13,711/- which was deposited under orders of this Tribunal on 07.12.2022. The submission which has been pressed by Learned Counsel for the Respondent is that while deciding the Application filed by the Financial Creditor and delaying the matter, the corporate debtor intend to absolve itself from liability to pay the interest at the rate of 14.5 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gh including the interest, penalties etc the total sum due and payable towards the Facilities granted as recorded in FIU statement amounts to Rs. 4,52,13,711.60 (Rupees Four crore fifty two lakhs thirteen thousand seven hundred and eleven only) as on 28.01.2019. The bill of exchange dated 09.07.2018 became due and payable on 05.01.2019. The dates on which the default occurred qua the Respondent are the dates when the right of recourse in respect of the aforesaid bills of exchange was exercised against the Respondent vie legal notice i.e. 07.01.2019. 15. From aforesaid statement in Section 7 Application, it is clear that amount of Rs. 4,52,13,711/- was amount as due on 28.01.2019. The Adjudicating Authority found the said amount due and pa ..... X X X X Extracts X X X X X X X X Extracts X X X X
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