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TMI Blog2017 (1) TMI 1058X X X X Extracts X X X X X X X X Extracts X X X X ..... letter, indicated to the respondent that, since, it had not protected its title qua the receivables, it was seeking from the respondent the payment of the amounts involved. In support of its stand, the petitioner alluded to Clauses 7 and 9 of GARMA in the said communication. Importantly to lend clarity to the submissions advanced as indicated to the counsel for the petitioner during the course of hearing to advert to the specific sub-clause (8) in Clauses 7 and 9, based on which, it was sought to be asserted that even in a situation where the Approved Debtor had turned insolvent, the petitioner could take recourse to the respondent. We must record that the counsel for the petitioner was not able to point to any provision, which would run counter to the provisions of Clause 9.1.1 of GARMA. As a matter of fact, as indicated in my narration, the 12th Metropolitan Magistrate, Mumbai, in coming to the conclusion that the respondent along with its Directors/guarantors was not guilty of the offence with which they were charged, had based his reasoning on Clause 9.1.1 of GARMA. My view, in the matter, is no different. This apart, the issue raised, in defence, to the present Compa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... limit upto a maximum of ₹ 2,85,00,000/- (Rupees two crores and eighty five lakhs only) in favour of the respondent. 2.6. The said facility was secured by execution of the following documents : i. Letter of undertaking dated 11.11.2006 ii. Letter of confirmation dated 11.11.2006, by which, the respondent confirmed that in the event, it avails of any preshipment finance in respect of any receivables assigned to the petitioner, it will advise the petitioner as to the details of such facility, and that, all payments made in respect of such receivables would be made directly to the pre-shipment account iii. Execution of a Global Accounts Receivables Management Agreement (in short GARMA ) dated 11.11.2006. iv. Letter of Guarantee, dated 11.11.2006, issued by Mr.S.V.Sreenivasen, who at the relevant time, was acting in his capacity as the Proprietor of the respondent v. Letter dated 11.11.2006, issued by Mr.S.V.Sreenivasen, whereby, he undertook, that the Proprietor's Capital Account would not be reduced below ₹ 1,42,90,000/-; which incidentally at the relevant time was the balance then obtaining in the account. vi. Letter dated 11.11.2006, whereby, Mr.S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 44,000,000 4.4. Like in 2006, the relevant documents and undertakings were executed. 4.5. On 26.06.2007, the sanction letter of 16.04.2007 was amended. This was, in effect, the third amendment. However, Approved Debtors remained the same, i.e., BCPMS and Al-Riffa Jewellery LLC. Furthermore, the Debtors Credit Limit and Debtors Credit Protected Limit also remained unchanged. 4.6 Consequent thereto, a series of security documents and undertakings, including GARMA, were executed between the parties herein, all of which, were dated 16.07.2007. 4.7. The record shows that several realignments of the Trade Finance Facility took place between December, 2007 and October, 2008, with the execution of sanction letters dated: 12.12.2007; 01.01.2008; 18.01.2008; 16.06.2008; 19.09.2008; and 10.10.2008. 4.8. Admittedly, the relevant security documents and undertakings were executed between the parties herein every time, there was a realignment of the Trade Finance Facility. It appears that, sometime, in the early part of 2009, post the issuance of the sanction letter dated 10.10.2008, the respondent's account, become, sticky , which resulted i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... #8377; 5,00,00,000/-, available to the Approved Debtor, ie., BCPMS), the petitioner could have no recourse to the respondent or its Guarantors. 6.2. The thrust of the reply was that the factoring facility offered by the petitioner was different from the conventional Billdiscounting facility offered by the local commercial banks, in as much as, it came with an added feature, which was, that it could have no recourse to the respondent in case the Approved Debtor became insolvent. 6.3. The respondent's Advocate also adverted to the fact that the Guarantor Directors' had, as a matter of fact, instituted a Civil Suit, which was numbered as: O.S.No.126 of 2009, in the Court of Additional District Judge, Coimbatore, in respect of matters raised in the petitioner's legal notice. The fact that the Directors/Guarantors of the respondent had taken a stand that they were neither liable nor any amount was paid to them was disclosed in the reply, more particularly, by appending a copy of the plaint to the said reply. 7. The petitioner, in the interregnum, had presented the postdated cheques, which were dated 10.09.2009, with its bankers. These cheques, however, bounced, wher ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not a case of an admitted liability, which, the respondent had failed to liquidate. 13.1. Mr. Vidhya Shankar, relied upon Clause 9.1 of GARMA to contend that in a situation, where the Approved Debtor became insolvent, the petitioner could not take recourse to the respondent qua the liability of BCPMS. Learned counsel further submitted that, since, the amount outstanding, vis-a-vis, the Approved Debtor, ie., BCPMS, was within the Debtors Protection Limit, the entire burden had to be borne by the petitioner. 13.2. Learned counsel, also, relied upon the counter affidavit to draw my attention to the averments made therein which pointed in the direction that not only had the petitioner approached the Administrators of BCPMS, but had also, taken secured itself against risks, vis-a-vis, amounts paid under the Trade Finance Facility Agreement, by taking out an insurance with ICICI Lombard. 13.3. In sum, it was the contention of the learned counsel that the defence was bona fide and tenable and, therefore, a winding up petition would not lie against the respondent. REASONS: 14. I have heard the learned counsel for the parties and perused the record, what emerges theref ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vables against the exports made by the respondent would directly come to the fold of the petitioner. The only exception carved out to this arrangement was, the Approved Debtor's insolvency. Clause 9.1. of GARMA, quite clearly, exemplifies this position. 15.1. For the sake convenience, the said clause is extracted, herein below: 9. RECOURSE AND CREDIT PROTECTION 9.1. GTF shall have Recourse in respect of : 9.1.1 each Receivable which the Debtor shall be, or shall claim to be, unable to pay by reason of legal constraints ( other than those created by the Debtor's insolvency ) or acts or orders of Government (unless otherwise specified in paragraph 9 of the Schedule); 9.1.2. each Receivable in respect of which the Debtor shall dispute liability for payment whether in whole or in part; 9.1.3 each Receivable in respect of which the Debtor shall assert any right of lien, retention, counterclaim or set-off or shall claim discount, commission or allowance not previously Notified in writing by the Client to GTF; 9.1.4 the non-payment of each [Approved] Receivable which has arisen as a consequence (whether direct or indirect) of the occurrence of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fact is laid bare on perusal of letter dated 30.01.2009, issued by KPMG, the Administrators of BCPMS. 16.1. Furthermore, if there was any doubt with regard to aforesaid it is set to rest upon a perusal of the petitioner's own letter dated 25.08.2009, wherein, it makes a reference to the Administrators of BCPMS. The said letter is a clear pointer to the fact that the petitioner was in touch with the Administrators of BCPMS and, it had, dispatched the said communication, when, the Administrators informed the petitioner that no outstandings were owed by BCPMS to the petitioner. 16.2. It is, in this context, that the petitioner, by very same letter, indicated to the respondent that, since, it had not protected its title qua the receivables, it was seeking from the respondent the payment of the amounts involved. In support of its stand, the petitioner alluded to Clauses 7 and 9 of GARMA in the said communication. 16.3 Importantly to lend clarity to the submissions advanced before me, I had indicated to the counsel for the petitioner during the course of hearing to advert to the specific sub-clause (8) in Clauses 7 and 9, based on which, it was sought to be asserted that ev ..... X X X X Extracts X X X X X X X X Extracts X X X X
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