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2019 (7) TMI 1189 - AT - Insolvency and BankruptcyAdmissibility of petition - Arbitral Award - financial creditor - it was submitted that an Arbitral Award cannot be treated as a financial debt - initiation of CIRP against two sets of Corporate Debtor for the same set of claim - HELD THAT - It is not in dispute that the Gujarat NRE Mineral Resources Limited - ( Corporate Debtor ) since amalgamation failed to perform its duty, for the said reason, the Award was passed in favour of the 1st Respondent. Therefore, the amount disbursed by the 1st Respondent- Jindal Steel and Power Limited to the Corporate Debtor on failure, performance became time value for money as the 1st Respondent is entitled for interest @ 30% p.a. on the unadjusted advance payment as allowed by the Arbitral Tribunal - Therefore, the 1st Respondent comes within the meaning of the Financial Creditor . In the present case, the Appellant has not triggered any application under Section 7 or Section 9 against Gujarat NRE Coke Limited which is undergoing liquidation. Gujarat NRE Coke Limited filed application under Section 10 on the basis of which Corporate Insolvency Resolution Process was started. The Appellant has triggered Corporate Insolvency Resolution Process only against Bharat NRE Coke Limited - ( Corporate Debtor ), therefore, it cannot be held that the Appellant had triggered two Corporate Insolvency Resolution Process against two different sets of the Corporate Debtor for same set of claim. Further the Financial Creditors of the Corporate Debtor having 96% of the voting shares have also not raised any such plea. In fact, it appears that the contest between the Appellant and the 1st Respondent is whether 1st Respondent can be a member of the Committee of Creditors or not which cannot be decided by this Appellate Tribunal while deciding the question of initiation of the Corporate Insolvency Resolution Process against the Corporate Debtor - there is no merit in the appeal - appeal dismissed.
Issues Involved:
1. Whether 'Jindal Steel and Power Limited' qualifies as a 'Financial Creditor' under Section 5(7) read with Section 5(8) of the Insolvency and Bankruptcy Code, 2016. 2. Whether an Arbitral Award can be treated as a 'financial debt'. 3. Whether the same claim can trigger 'Corporate Insolvency Resolution Process' against two different 'Corporate Debtors'. 4. Whether the appeal under Section 61 is maintainable by the Appellant as a 'Financial Creditor'. Issue-wise Detailed Analysis: 1. Qualification of 'Jindal Steel and Power Limited' as a 'Financial Creditor': The Appellant argued that 'Jindal Steel and Power Limited' does not fall within the definition of 'Financial Creditor' as per Section 5(7) read with Section 5(8) of the I&B Code. The Tribunal, however, found that 'Jindal Steel and Power Limited' disbursed an amount for the purchase of coal with a stipulation that in the event of non-performance, interest at 30% per annum would be paid on the unadjusted advance payment, fulfilling the requirement of 'time value for money'. Consequently, the Tribunal held that 'Jindal Steel and Power Limited' qualifies as a 'Financial Creditor'. 2. Treatment of Arbitral Award as 'Financial Debt': The Appellant contended that an Arbitral Award cannot be treated as a 'financial debt'. The Tribunal observed that the amount disbursed by 'Jindal Steel and Power Limited' to the 'Corporate Debtor' became 'time value for money' upon the failure of performance, entitling the 1st Respondent to interest as allowed by the Arbitral Tribunal. Therefore, the Tribunal concluded that the Arbitral Award could be considered as 'financial debt'. 3. Triggering 'Corporate Insolvency Resolution Process' against Two Different 'Corporate Debtors': The Appellant relied on the decision in "Dr. Vishnu Kumar Agarwal v. M/s. Piramal Enterprises Limited" to argue that a 'Financial Creditor' cannot trigger 'Corporate Insolvency Resolution Process' against two 'Corporate Debtors' for the same claim. The Tribunal clarified that the Appellant had not triggered any application against 'Gujarat NRE Coke Limited', which was undergoing liquidation, and had only initiated the process against 'Bharat NRE Coke Limited'. Thus, it was held that the Appellant had not triggered two processes for the same claim. 4. Maintainability of Appeal under Section 61: The Tribunal examined whether the appeal under Section 61 was maintainable by the Appellant, a 'Financial Creditor'. It was noted that the Appellant, being a 'Financial Creditor', could not be considered an aggrieved person against the initiation of the 'Corporate Insolvency Resolution Process'. The Tribunal emphasized that the initiation of the process would not affect the Appellant's rights, who could submit its claim before the 'Resolution Professional'. Additionally, the Tribunal highlighted that the 'Financial Creditors' holding 96% of the voting shares had not raised any objections. Conclusion: The Tribunal dismissed the appeals, concluding that 'Jindal Steel and Power Limited' qualifies as a 'Financial Creditor', the Arbitral Award constitutes 'financial debt', the Appellant had not initiated two processes for the same claim, and the appeal under Section 61 was not maintainable by the Appellant. The Tribunal found no merit in the appeals and dismissed them without costs.
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