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2019 (2) TMI 1703 - Tri - Insolvency and BankruptcyAdmissibility of petition - initiation of Corporate Insolvency Resolution Process - Corporate Debtor had defaulted in repaying a sum - existence of debt of default - Section 7 of Insolvency and Bankruptcy Code, 2016, R/w Rule 4 of Insolvency Bankruptcy (Application to the Adjudicating Authority) Rules, 2016 - whether Petitioner is Financial Creditor and that Corporate Debtor owed financial debt to the Petitioner and if so, is there any default? HELD THAT - If Petitioner is able to establish that debt payable by Corporate Debtor is a financial debt and it is a Financial Creditor and debt is committed default, then Petition is liable to be admitted. It is not in dispute Financial Creditor is del-credere agent of M/S RIL. All Purchase orders to be placed through Financial Creditor who undertakes to provide credit facility for the supply of goods to the Corporate Debtor and interest for 20-30 days from the date of supply is at 15% and beyond the said period, interest will be charged at 18%. It is strongly established that Financial Creditor extended credit facility to the Corporate Debtor and goods are supplied to the Corporate Debtor. M/S RIL is not directly extending any credit facility to the Corporate Debtor. M/S RIL will supply goods only on payment. Payment was being made by Financial Creditor in respect of purchase orders and goods are delivered to Corporate Debtor. The credit facility extended by Financial Creditor is subject to payment of interest. Money is paid to M/S RIL on behalf of Corporate Debtor against time value for money. It is proved that Petitioner is a Financial Creditor and that the debt due by Corporate Debtor is a Financial Debt. Petition is in order and as such Petition is liable to the admitted - Petition admitted - moratorium declared.
Issues Involved:
1. Whether the Petitioner is a Financial Creditor. 2. Whether there is a financial debt owed by the Corporate Debtor to the Petitioner. 3. Whether the Petition under Section 7 of the Insolvency and Bankruptcy Code (IBC), 2016 is maintainable. Issue-wise Detailed Analysis: 1. Whether the Petitioner is a Financial Creditor: The Petitioner, M/s. Gowra Petrochem Private Limited, claimed to be a Financial Creditor to the Corporate Debtor, M/s. Ashok Polymers Limited, based on their role as a del-credere agent for M/s. Reliance Industries Limited (RIL). The Tribunal examined the agreement dated 01.07.2004 between the Petitioner and RIL, which was renewed on 29.06.2017, confirming the Petitioner’s position as a del-credere agent. The agreement dated 06.06.2012 between the Petitioner and the Corporate Debtor further established that the Petitioner extended a credit facility to the Corporate Debtor for purchasing polymers from RIL, thereby affirming the Petitioner’s status as a Financial Creditor. 2. Whether there is a financial debt owed by the Corporate Debtor to the Petitioner: The Tribunal analyzed whether the debt owed by the Corporate Debtor constituted a financial debt. The agreement dated 06.06.2012 indicated that the Corporate Debtor was liable to repay the Petitioner for the amounts paid to RIL, along with applicable interest. The invoices provided by the Petitioner showed that the Corporate Debtor was the buyer, and the Petitioner was the consignee, corroborating that the Petitioner paid RIL on behalf of the Corporate Debtor. The Corporate Debtor failed to provide evidence of direct payments to RIL, reinforcing the Petitioner’s claim of a financial debt. 3. Whether the Petition under Section 7 of the Insolvency and Bankruptcy Code (IBC), 2016 is maintainable: The Tribunal considered the definitions under Section 5(7) and 5(8) of the IBC to determine the maintainability of the petition. The Petitioner satisfied the conditions of being a Financial Creditor, and the debt owed was disbursed against the consideration for the time value of money, meeting the criteria of a financial debt. The Tribunal found that the Corporate Debtor defaulted on its payment obligations, thus validating the Petitioner’s claim and the maintainability of the petition under Section 7 of the IBC. Findings: The Tribunal concluded that the Petitioner is a Financial Creditor, and the debt owed by the Corporate Debtor is a financial debt. The Corporate Debtor’s arguments were not substantiated with evidence, and the Petitioner’s claims were supported by documentary proof. Consequently, the petition was admitted, and the Tribunal declared a moratorium, prohibiting suits or proceedings against the Corporate Debtor, and appointed an Interim Resolution Professional to carry out the functions under the IBC. Order: The Tribunal admitted the petition under Section 7 of the IBC, 2016, with the following directions: - Prohibition of suits or proceedings against the Corporate Debtor. - Continuation of essential goods or services to the Corporate Debtor. - The moratorium to be effective from 19th February 2019 until the completion of the Corporate Insolvency Resolution Process or further orders. - Public announcement of the initiation of the Corporate Insolvency Resolution Process. - Appointment of Ms. Sandhya Tadla as the Interim Resolution Professional. Accordingly, the petition was admitted.
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