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TMI Blog2023 (7) TMI 263X X X X Extracts X X X X X X X X Extracts X X X X ..... gency Pvt. Ltd. (in short 'NAFA') i.e., 'Respondent No. 1'/ the 'Financial Creditor' against the Shraddha Energy & Infraprojects Pvt. Ltd./ the 'Corporate Debtor'. 2. Aggrieved by the same, the 'Appellant' has preferred the present appeal. 3. Heard the Counsel for Parties and perused the records made available including cited judgments. 4. Learned Counsel for the Appellant stated that the 'Corporate Debtor' is engaged in the business of production of sugar from sugarcane crops grown by its registered farmers in its common area. Learned Counsel for the Appellant further stated that on 03.10.2013, the 'Respondent No. 1' which is Non-Banking Financial Company (in short 'NBFC') entered into a tripartite agreement with the 'Corporate Debtor' along with Netafim Irrigation (India) Pvt. Ltd. (in short 'NIIPL') which is a sister concern of 'Respondent No. 1' engaged in the manufacture and supply of irrigation equipment/ systems. Learned Counsel for the Appellant stated that in terms of the said tripartite agreement, the 'Corporate Debtor' hired NIIPL for supply and installation of drip irrigation systems in the registered/ recommended farms which would supply the sugar to the 'Corporate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1' to recover outstanding deeds from farmers- borrowers. 8. Learned Counsel for the Appellant submitted that the 'Corporate Debtor' is solvent going concern company with 650 employees supporting more than 8000 farmers and there was no compulsion on the 'Adjudicating Authority' to admit Section 7 application of the Respondent No. 1' keeping in view Section 7(5)(a) of the Code, where the word 'may' has been used along with the ratio given in the judgment of Hon'ble Supreme Court of India passed in the case of Vidarbha Industries Power Limited Vs. Axis Bank Limited reported in [Civil Appeal No. 4633 of 2021]. 9. Learned Counsel for the Appellant stated that the application of the 'Respondent No. 1' before the 'Adjudicating Authority' under Section 7 of the Code was barred by limitation and should have been rejected by the 'Adjudicating Authority'. Learned Counsel for the Appellant further stated that the 'Adjudicating Authority' has not considered its legal, technical and factual objections while passing the 'impugned order'. 10. Summarising his arguments, Learned Counsel for the Appellant urged this 'Appellate Tribunal' to allow his appeal and dismiss the 'impugned order'. 11. P ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... spondents stated that the 'Respondent No. 1' used to send monthly management information system (MIS) reports as written certificate to the 'Corporate Debtor' from time to time providing the outstanding repayment status and list of defaulting borrowers. Learned Counsel for the Respondents stated that as on 31.03.2021, 580 farmer borrowers were in default of Rs. 5,41,34,813/- and the 'Financial Creditor' had to invoke the guarantee for repayment of entire outstanding amount vide legal notice dated 07.04.2021 calling the 'Corporate Debtor' to pay within 7 days and since the 'Corporate Debtor' did not pay by 15.04.2021, default occurred on 15.04.2021. 14. Learned Counsel for the Respondents pointed out that as per Clause 5 of the Tripartite Agreement dated 03.10.2013, it is the liability of the sugar factory/ 'Corporate Debtor' to repay the loan amount including interest which is also covered in Clause 14 of the said Tripartite Agreement. 15. Learned Counsel for the Respondents emphasised that as per Clause 12 of the Deed of Guarantee dated 03.10.2013, it was a 'Deed of continuing Guarantee' which required the 'Corporate Debtor' to repay the amount dues from the recommended farmers ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eement and Deed of Guarantee and the cited judgments. These read as under :- a) Laws- Section 7(5)(a), Section 3(11), 5(8) and 5(8)(i) of the Code. "3. Definitions. - (11) "debt" means a liability or obligation in respect of a claim which is due from any person and includes a financial debt and operational debt; 5. Definitions. - (8) "financial debt" means a debt alongwith interest, if any, which is disbursed against the consideration for the time value of money and includes- (i) the amount of any liability in respect of any of the guarantee or indemnity for any of the items referred to in sub-clause (a) to (h) of this clause;" (Emphasis Supplied) b) Except of the Tripartite Agreement dated 03.10.2013 :- "TRI PARTITE AGREEMENT (THE "Agreement") BETWEEN Netafim Irrigation (India) Private Limited (NIIPL) AND Shraddha Energy & Infra Projects Pvt. Ltd. (Maa Bageshwari Sugar Unit). AND Netafim Agricultural Financing Agency Pvt. Ltd. (NAFA) This Agreement is made on 03.10.2013 ("Effective Date") by and between: *** WHEREAS, NAFA is interested in the scheme of financing the Farmers in Sugar Factory's command area/ catchment/ operative area as defined by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the terms of the Credit Arrangement Letter till the closure of such loans including the penal charges (for the delayed period) within a period of 6 months from the repayment/ instalment repayment due date, during which NAFA and Sugar Factory jointly shall initiate & undertake recovery activities to recover the due/s from the defaulted farmer. Even if the Sugar Factory pays for the outstanding amount on behalf of the defaulted farmer, the recovery efforts shall continue till the entire overdue amount is recovered/ collected from the defaulted farmer. (Emphasis Supplied) 22. At first, we would like to take up the issue of limitation raised by the 'Appellant'. It is seen from the tripartite agreement that certain warranties were given by the 'Corporate Debtor' and the same also contained general conditions of the contract. As per Sub-clause 5 of the tripartite agreement it is responsibility of the 'Corporate Debtor' for making payment in case of default by the farmer. The sub-Clause 5 reads as under :- "The Sugar Factory shall provide an undertaking to NAFA to recover from the Farmers, the outstanding loan amount as per the terms and conditions as stated in Annexure V and to pay ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the legality or propriety and notwithstanding any dispute between the Borrower(s) and the Lender, all the amounts payable by the Borrower(s) under the Loan Agreement (s) together with interest of @24% p.a. on the amounts so demanded in the event of any delay in their making the payment to the Lender in terms of the notice of demand issued in this behalf by the Lender*** 8. To give effect to this Deed, the Lender may act as though the Guarantoris the principal debtor to the Lender. 11. Deed shall be irrevocable and the obligations of the Guarantor hereunder shall be unconditional 12. This Deed shall be a continuing one and shall remain in full force and effect till such time the Borrower(s) repay in full the Loan together with all interest, liquidated damages, costs, charges and all other monies that they may from time to time become due and payable and remain unpaid to the Lender under the Loan Agreement. 13. A certificate in writing signed by a duly authorized official of the Lender shall be conclusive evidence against the Guarantor of the amount for the time being due to the Lender from the Borrower(s) in any action or proceeding brought on this Deed against the Guarantor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dues and only on the default, the legal notice was issued and based on the continuing Deed of Guarantee and the 'Corporate Debtor' was called upon to settle outstanding dues on account of farmer- borrowers loans within seven days and due to non-payment of such loans, amounting to Rs. 5,41,34,813/-, the date of default was treated as 15.04.2021. 27. In view of all above, it is evident that there was clear liability on the part of the 'Corporate Debtor' to make the payment on demand on breach/ default by farmer- borrowers and hence, the 'Adjudicating Authority' has passed correctly the 'impugned order' treating outstanding money as a financial debt of more than Rs. 1 Crore for which default took place on 15.04.2021 and therefore, rightly approved initiation of the CIRP against the 'Corporate Debtor'. 28. The other issue raised by the Appellant regarding the applicability of Vidarbha Industries Power Limited (Supra) is not directly relevant, looking into the various facts and circumstances as brought out in the present appeal. 29. As regard, the cited judgments both by the 'Appellant' as well as the 'Respondents', the same have been looked into. It is settled position in the law t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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