2022 (7) TMI 361 - Tri - Insolvency and Bankruptcy

Validity of decision of the Liquidator of Kalisma Steel Pvt. Ltd. rejecting the Applicant s claim as Financial Creditor as well as Operational Creditor - Section 42 r/w section 35 of the Insolvency Bankruptcy Code, 2016 read with Regulation 20 of the Insolvency and Bankruptcy Board of India (Liquidation Process) Regulation, 2016, Section 60(5) of the Insolvency and Bankruptcy Code, 2016 and Rule 11 of the National Company Law Tribunal Rules, 2016 - Liquidator informed the applicants that any Claim received after the last date of submission can be admitted only after specific orders from this Tribunal. HELD THAT - It is noted that the Applicant being located out of the State was unaware of the order of liquidation dated 22.04.2021 as passed by the Tribunal, against the Corporate Debtor. The Applicant came to know of the commencement of liquidation process on 19.06.2021 from Mr. Modilal Pamecha, the valuer appointed by the Respondent. Therefore, the delay on part of the Applicant was unintentional and hence, this Bench hereby condones the delay, ordering the liquidator to consider the claims - This Tribunal is of the opinion that as per the document annexed in Exhibit C by the Applicant, the Corporate Debtor admits that the Applicant has made an advance against supplies with the interest @12% for an amount of Rs. 2 Cr. This shows that there was clearly a relationship of Debtor and Creditor between the Corporate Debtor and Applicant. Hence, the claim of the Respondent that it is neither a financial debt nor an operational debt is erroneous. This Tribunal relies upon the Supreme Court s Judgement in M/s Consolidated Construction Consortium Ltd. v. M/s Hitro Energy Solutions (P) Ltd., 2022 (2) TMI 254 - SUPREME COURT , where in dealing with a case involving two controversial terms; operational debt and operational creditor of IBC, the 3-judges Bench explained that the appellant would be an operational creditor under the IBC, since an operational debt will include a debt arising from a contract in relation to the supply of goods or services from the corporate debtor. Thus it is concluded that the appellant is an operational creditor under the IBC, since an operational debt will include a debt arising from a contract in relation to the supply of goods or services from the corporate debtor. The Tribunal holds that there is no clarity regarding the second operational debt from both parties - the respondent are directed to verify the claim of the Corporate Debtor and submit the balance sheet of the Corporate Debtor showing the relevant transactions and the Applicant is hereby directed to submit the copy of the Purchase Orders along with all the relevant clauses - application disposed off.

Summary

Issues Involved:
1. Rejection of the Applicant's claim as a Financial Creditor.
2. Rejection of the Applicant's claim as an Operational Creditor.
3. Delay in submission of claims by the Applicant.
4. Classification of debt as Financial or Operational.

Detailed Analysis:

1. Rejection of the Applicant's claim as a Financial Creditor:
The Applicant, TVS Motor Company Limited, challenged the decision of the Liquidator of Kalisma Steel Pvt. Ltd., which rejected its claim as a Financial Creditor. The Applicant contended that it had provided financial assistance to the Corporate Debtor by transferring a loan amount of Rs. 2 Crore, which was acknowledged by the Corporate Debtor with an agreement to repay with interest at 12% per annum. The Liquidator, however, rejected this claim, stating that the debt was in the nature of an advance for the supply of goods and not a financial debt. The Tribunal, upon examining the documents, concluded that the relationship between the Corporate Debtor and the Applicant was that of Debtor and Creditor, and thus, the claim should be considered as financial debt.

2. Rejection of the Applicant's claim as an Operational Creditor:
The Applicant also claimed to be an Operational Creditor, citing unpaid freight charges and other operational costs. The Liquidator rejected this claim, arguing that as per the Audited Books of Accounts, TVS Motors was a debtor, not a creditor. The Tribunal, referencing the Supreme Court's judgment in M/s Consolidated Construction Consortium Ltd. v. M/s Hitro Energy Solutions (P) Ltd., determined that a debt arising from a contract related to the supply of goods or services qualifies as an operational debt. Therefore, the Tribunal recognized the Applicant as an Operational Creditor.

3. Delay in submission of claims by the Applicant:
The Applicant submitted its claims after the deadline, arguing that it was unaware of the liquidation order due to being located out of state and only learned about it on 19.06.2021. The Liquidator had made a public announcement on 26.04.2021, with the last date for submission of claims being 22.05.2021. The Tribunal acknowledged the Applicant's lack of knowledge and condoned the delay, directing the Liquidator to consider the claims.

4. Classification of debt as Financial or Operational:
The Liquidator classified the debt as an advance for the supply of goods, not a financial debt, and rejected the claim due to the absence of essential documentation like a loan agreement or promissory note. The Tribunal, however, found that the advance payment made by the Applicant for the supply of goods constitutes an operational debt, as per the Supreme Court's interpretation in relevant cases. Additionally, the Tribunal noted that the shares pledged as collateral security were provided by the Promoter in an official capacity, thereby creating a security interest in favor of the Applicant, making it a Secured Creditor under Section 3 (30) of IBC, 2016.

Conclusion:
The Tribunal directed the Liquidator to verify the claims and the balance sheet of the Corporate Debtor, and the Applicant to submit relevant purchase orders and clauses. The application was disposed of with these directions.