2022 (1) TMI 63 - Tri - Insolvency and Bankruptcy

Rejection of claim made by the Respondent/RP - seeking to allow the claim of the Applicant together with interest from 01.04.2019 till the date of payment - claim rejected on the ground that the Applicant does not qualify to be a 'financial creditor' in respect of the Corporate Debtor - HELD THAT - In order for the claim to satisfy as a 'financial debt' it has to fall within the definitions stipulated under Section 5(8)(a) to (i) of IBC, 2016 as extracted supra. As to the present case, it is seen that the Applicant claims to be a Del Credere Agent for a third party/mill owners and for the supplies made by such third party/mill owners to the Corporate Debtor, the Applicant pays the money on behalf of the Corporate Debtor to such third party/mill owners - the Learned Counsel for the Applicant stated that since the Applicant has paid money on behalf the Corporate Debtor for the goods supplied by the mill owners, it is implied that he is a financial creditor. The said contention of the Learned Counsel for the Applicant is required to be brushed aside in view of the fact that the claim of the Applicant, in the absence of any legally binding agreement between the parties, is not falling under any of the category stipulated under Section 5(8)(a) to (i) of IBC, 2016 in order to qualify as a 'financial creditor'. It is seen that the Applicant has preferred the present Application before this Tribunal only on 25.08.2021 and has also failed to explain such enormous delay of 12 months in filing the present application. Even though liberty was granted for the Applicant to file a fresh Application, the Applicant has been keeping silent and sleeping over a period of one year and only at the fag end of CIRP when the Resolution Plan in respect of the Corporate Debtor is in the offing and after the same was approved by the CoC, the Applicant has preferred the present Application, which in any case, is devoid of any merits. The order passed by the RP rejecting the claim of the Applicant is free from all legal infirmities and does not warrant interference of this Adjudicating Authority - application dismissed.

Summary

Issues:
Adjudication of rejection of claim under Section 60(5) of the Insolvency and Bankruptcy Code, 2016.

Detailed Analysis:
1. The Applicant sought relief under Section 60(5) of the Insolvency and Bankruptcy Code, 2016, claiming a sum with interest against the rejection of their claim by the Respondent/RP. The Applicant, acting as a Del Credere agent, arranged for the supply of yarn to the Corporate Debtor and financed them, seeking repayment with interest. The Applicant paid on behalf of the Corporate Debtor to the suppliers and claimed to be a financial creditor due to the implied agreement for the time value of money.

2. The key issue was whether the Applicant qualifies as a 'financial creditor' as defined under Section 5(8) of the IBC, 2016. The Tribunal analyzed the definition of 'financial debt' under Section 5(8), emphasizing that the claim must fall within the specified categories to be considered a financial creditor. The absence of a legally binding agreement between the parties and the nature of the transactions led to the conclusion that the Applicant's claim did not meet the criteria outlined in the statute to qualify as a financial creditor.

3. The Tribunal also addressed the contention that the issuance of cheques by the Corporate Debtor and the deduction of TDS did not automatically confer financial creditor status upon the Applicant. Referring to relevant judgments, including the Prayag Polytech Pvt. Ltd. case and the Pawan Kumar case, the Tribunal emphasized that mere TDS deduction does not establish a financial debt. The Applicant's arguments regarding TDS deduction and cheque issuance were deemed insufficient to establish financial creditor status.

4. Additionally, the Tribunal highlighted the procedural aspects of the case, noting the Applicant's delay in filing the present application after a previous dismissal. The Tribunal observed a significant delay of 12 months in filing the current application, raising concerns about the timing and lack of merits in the claim. The Applicant's failure to provide a satisfactory explanation for the delay further weakened their case, leading to the dismissal of the application.

5. In conclusion, the Tribunal found the rejection of the Applicant's claim by the RP to be legally sound and free from infirmities, thereby dismissing the IA(IBC)/1108(CHE)/2021. The Tribunal emphasized the importance of meeting the statutory criteria to qualify as a financial creditor and highlighted the significance of timely and meritorious filings in insolvency proceedings.