9911796707
TMI Blog2017 (9) TMI 278X X X X Extracts X X X X X X X X Extracts X X X X ..... Partner, J. Sagar Associates and Mr. Rohit Khanna, Advocate, all rights to act, appear and plead on behalf of the company for initiation of corporate insolvency against the "Corporate Debtor". It was further resolved to appoint and authorise Ms. Rakhi Lalwani to file requisite applications, papers, documents and affidavits to represent the company in the above proceedings. The contents of the application are supported by an affidavit of Ms. Rakhi Lalwani, resident of Mumbai. The affidavit is at page 95-A of the paper book. 3. The "Financial Creditor" was incorporated on 04.12.2013 and in column No.6 of Part-I of the application, the name and address of the person authorised to accept service of the process is Mr. Varghese Thomas, resident of Mumbai on the basis of resolution of the Board of Directors (Annexure I (A). The respondent was incorporated as a company under the Companies Act, 1956 on 17.11.2008 having its registered office at Ludhiana. Therefore, the matter falls within the territorial jurisdiction of this Tribunal. The certificate of incorporation is at Annexure I (B) (Colly). 4. It is slated that the "Financial Creditor" extended the Trade Finance Facility to the "Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0 for an amount of USD: 40,429.00 was issued by the "Corporate Debtor" to its buyer. Copy of the purchase order and the corresponding invoice is at Annexure I (F). 8. In accordance with clause 3 of the Agreement, the "Corporate Debtor" assigned all the rights to the Financial Creditor with respect to the payments under both the invoices. The notice of assignment sent to the first buyer is at Annexure I (H), dated 21.03.2016 and the buyer acknowledged the receipt of the assignment which is at page 62 of the paper book and agreed to act in accordance with the terms thereof. Similarly, the notice dated 04.01.2016 of assignment was issued by the "Corporate Debtor" to the second buyer and that notice is at Annexure I (M) and the acknowledgement of this notice by the buyer is at page 70 of the paper book and the buyer agreed to act in accordance with the terms thereof. 9. The "Corporate Debtor" having failed to make the payment under both the invoices. Several reminder notices were issued to the respondent and a demand notice dated 29.08.2016 Annexure I (S) was sent to the "Corporate Debtor" and the "Corporate Debtor" sent response dated 04.09.2016 to the demand notice raising frivolou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rned and construed in accordance with the English law and disputes from the said agreement were to be settled by Arbitration in London. It was, therefore, stated that the application is not maintainable before this Forum. 14. On merits, it was alleged that the "Corporate Debtor" issued a legal notice dated 01.11.2016 to the "Financial Creditor" demonstrating mis-representation and the acts of default committed by them, for which the respondent suffered losses. Copy of the notice is at Annexure R-1. It is further stated that the credit facility to the tune of USD: 600,000 was extended to the "Corporate Debtor" on payment of 1% processing charges, but the respondent was never allowed to use full credit extended to it despite various requests. Further that the "Financial Creditor" established direct contact with the buyers of the consignment of the goods and has taken payment from them directly, which has not been adjusted nor appropriate payment released to the respondent. 15. I have heard the learned counsel for the parties and carefully perused the records with their able assistance. 16. Sub-section (3) of Section 7 of the Code reads as under:- "The financial creditor shall, a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nts, the main contention of the learned counsel for "Corporate Debtor" was that the petitioner could at best proceed against the buyers as the transactions were assigned to the "Corporate Debtor". It is thus contended that in this way, the petitioner has assumed the character of "Operational Creditor" of the buyers. 22. Learned counsel further submitted that as per clause 8 of the agreement, the petitioner had lien over the relevant goods and the documents relating thereto for all sums due by the 'Seller' or by the 'Buyer' under this Facility Agreement, the Bills of Lading issued with respect to the relevant goods and any other contract relating to the relevant goods. Even if, goods were released without payment, the petitioner as an "Operational Creditor" has to fall back upon the 'Buyers' of the assignment of the debt, as the debt has been assigned to the petitioner. 23. So, the first question would be whether the petitioner falls within the definition of the term "Financial Creditor". The term "Financial Creditor" is defined in sub-section (7) of section 5 of the Code, as meaning any person to whom a financial debt is owed and includes a person to whom ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... goods by public auction or private treaty, without notice to 'Seller' and 'Buyer' the petitioner's right to lien shall survive delivery of relevant goods. 27. This contention can be straightaway repelled by referring to the letter Annexure I (T), dated 04.09.2016 sent by the "Corporate Debtor" to the petitioner. A story has been developed in this notice that the representatives of the petitioner in its office in Mumbai have stopped giving credit for the supply of goods to the African countries but that subject is not at all relevant to the issue Reference was also made to certain buyers from Malawi, where the payments were made to the "Financial Creditor" on time. To highlight the stand of the respondent, it is stated in the notice sent by the respondent as under:- "We have spoken to our buyer who is very upset and unhappy with your approach towards the agreement and deal and he has shown his clear picture that every delayed shipment has put him in good losses and further YM Power Machineries payment was supposed to pay from first three containers payment as was planed by him, but due to delayed delivery by Maersk (Petitioner), he is yet to get the payment fr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion decide whether or not to grant a Loan to the Seller. Should the petitioner agree to grant the proposed Loan, the term of such Loan shall be governed by this Agreement and the relevant Disbursement Request, unless the petitioner accepts other terms in writing. So, the petitioner was not bound to accept every disbursement request of the respondent. 30. The other contention of the "Corporate Debtor" is based on the objection that as per clause 22 of the agreement, the contract is to be governed by English law and the dispute have to be settled by arbitration in London and, therefore, the instant petition is not maintainable before this Tribunal. 31. There is no substance in the above contention. I am of the considered view that once the petitioner is proved to be a "Financial Creditor" and there being abundant evidence to determine the existence of default committed by the "Corporate Debtor", the application under Section 7 of the Code is maintainable. Sub-section (4) of Section 7 of the Code reads as under:- "The Adjudicating Authority shall, within fourteen days of the receipt of the application under sub-section (2), ascertain the existence of a default from the records of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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