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TMI Blog2021 (11) TMI 283X X X X Extracts X X X X X X X X Extracts X X X X ..... se and that the said advances will squarely come within the definition of Section 5(8)(e) of the I B Code, 2016. The Adjudicating Authority in the impugned order had observed that the Respondent was not an Insolvent Company and that it was of the considered view that Respondent should be given some more time to repay the debt etc. had directed the Respondent / Corporate Debtor to repay the balance debt or the amount as settled with the Appellant within a period of six months failing which the Appellant / Petitioner would be at liberty to file a fresh petition for admission - this Tribunal interferes with the impugned order, since it suffers from patent legal infirmities. Appeal allowed - decided in favor of appellant. - Company Appeal (AT)(CH) (Ins.) No. 167 of 2021 - - - Dated:- 8-11-2021 - [Justice M. Venugopal] Member(J) And [Kanthi Narahari] Member (T) For the Appellant : Mr. Chandrashekhar Chakalabbi, Advocate for Mr. Dharmaprabhas, Advocate For the Respondent : Notice served (No Appearance) JUDGEMENT ( Virtual Mode ) M. Venugopal (J) Introduction The Appellant / Petitioner/Financial Creditor has preferred the instant Appeal bef ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t year. It has a net profit of ₹ 77 lakhs and an improving and positive return to equity ratio. Thus prima facie, it has sufficient income and assets to repay its debt and cannot be termed as insolvent. 9. We may add that the impact of the present financial distress caused by the global novel corona virus pandemic necessitating a nationwide lockdown, cannot be ignored. Major decisions have been taken to protect industry from its effects, to inject economic stimulus and to revive the economy. More specifically, on 24.03.2020 the Legislature increased the minimum threshold of default from ₹ 1 Lakh to ₹ 1 Crore so that the Code is not used merely for recovery of debt. Modifications and suspension of various provisions of the Code have been initiated so that companies facing financial stress due to the pandemic can be supported rather than be pushed into CIRP, else in the present scenario they may end up in liquidation and lose value further, which is the not objective of the IBC or other enactments. Steps have also been taken to ensure availability of more funds in the hands of businesses so that they can cope with the present economic scenario and restart their ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... set of COVID Pandemic. 6. The Learned Counsel for the Appellant contends that the Adjudicating Authority had committed an error in making an observation in the impugned order to the effect that the application u/s 7 of the Code filed by the Appellant / Petitioner was one for recovery. In fact, the Appellant / Financial Creditor / Petitioner is interested in the revival of the Company that can take care of all the claims and run the business. 7. It is represented on behalf of the Appellant that the Adjudicating Authority in the absence of necessary pleadings by the Corporate Debtor , had assumed the defenses that could have been taken by the Corporate Debtor . Claim 8. Section 3(6) of the I B Code, 2016 defines claim meaning (a) a right to payment, whether or not such right is reduced to judgement, fixed, disputed, undisputed, legal, equitable, secured or unsecured (B) right to remedy for breach of contract under any law for the time being in force, if such breach gives rise to a right to payment, whether or not such right is reduced to judgement, fixed, matured, unmatured, disputed, undisputed, secured or unsecured. Corporate Debtor 9. Section 3(8) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... issued in favour of Financial Creditor dated December 12, 2018(Undertaking) and the request for Corporate Debtor dated July 9, 2019, the Financial Creditor paid an aggregate amount of USD 36,532.00 (USD Thirty Six Thousand Five Hundred and Thirty Two only) to Corporate Debtor towards assignment of its 3 invoices under Invoice Number CCPL/M011/19-20, CCPL/M013/19-20 and CCPL/M014/19-20, details of which are specified in Invoice Schedule (together referred to as Invoices ). The said Invoices were primarily payable by Aquarius USA Inc. at Sight through bank transfer. The Invoices mentioned that it has been assigned to Financial Creditor by stating This invoice has been sold and assigned to Drip Capital Inc., 555 Bryant St #356 Palo Alto, CA 94301 USA . Further, the Receivables under the Invoices were assigned by Corporate Debtor to the Financial Creditor on with recourse basis under the Undertaking, against the payment of aforesaid aggregate amount i.e. in case of happening of Commercial Dispute or failure to repay the aforesaid aggregate amount, the Financial Creditor shall have right of recourse to the Corporate Debtor for recovery of aforesaid payments. A true copy of the Receiv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 018 read with Undertaking dated December 12th, 2018 (annexed as Exhibit 5 and Exhibit 6) is USD 38,213.38 (US Dollar Thirty-Eight Thousand Two Hundred and Thirteen and Thirty-Eight cents Only) approximately equivalent to INR 27,39,899.33/- (INR Twenty Seven Lakh Thirty Nine Thousand Eight Hundred and Ninety Nine and Thirty Three Paise only) along with other amoutns due as per the RPA and other allied documents. The initial date of default by the Corporate Debtor is October 17,2019. The computation relating to the default amount and days of default is annexed hereto and marked as Exhibit 7. 16. Apart from the above, in part V of the application particulars of financial debt it is mentioned as under: - 1. PARTICULARS OF SECURITY HELD, IF ANY, THE DATE OF ITS CREATION, ITS ESTIMATED VALUE AS PER THE CREDITOR. Demand Promissory Note granted by the Corporate Debtor: The Corporate Debtor has given a Demand Promissory Note Deed December 12th, 2018 in favour of the Financial Creditor. Annexed hereto and marked as Exhibit 11 is a copy of the Demand Promissory Note. 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Corporate Debtor had requested the Appellant / Financial Creditor / Applicant to purchase and assigned in favour of the Financial Creditor, the receivables under the three invoices on with recourse basis. As a matter of fact, the said goods shipped under the invoices were primarily purchased by Aquarius USA Inc. each invoice mentioned that it was assigned to Financial Creditor by stating This Invoice has been sold and assigned to the Appellant. 19. In this connection, it is pointed out on behalf of the Appellant that the Appellant / Financial Creditor had remitted payment to Corporate Debtor in respect of the purchase and consequential assignment of said three invoices, to the tune of USD 36,532.00(USD) 36,532/- only. Further, the Receivables under the Invoices were assigned by the Corporate Debtor to the Financial Creditor on with recourse basis under the Undertaking against the payment of aforesaid aggregate amount etc. 20. The Learned Counsel for the Appellant / Financial Creditor/Applicant points out that the Appellant had reminded Aquarius USA Inc. of its obligations to make payments towards the Invoices directly to the Financial Creditor on Repayment Due Date ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the Appellant / Financial Creditor to the Corporate Debtor was supported by the Irrevocable Undertaking for Recourse and as such, it is within its ambit to demand the repayment from the Corporate Debtor etc. Added further, it cannot be forgotten that the invoices purchased and assigned to the Appellant / Financial Creditor/Petitioner were with Recourse and that the said advances will squarely come within the definition of Section 5(8)(e) of the I B Code, 2016 which reads as under: - Section 5(8) financial debt means a debt alongwith interest, if any, which is disbursed against the consideration for the time value of money and includes----- Xx xx xx (e) receivables sold or discounted other than any receivables sold on non-recourse basis; 26. Before the Adjudicating Authority the Respondent / Corporate Debtor had entered appearance but had not filed its Reply to the application in CP No.(IB)61/BB/2020. In this connection, on behalf of the Appellant / Financial Creditor / Applicant it is pointed out before this Tribunal that during the pendency of Section 7 Application before the Adjudicating Authority, the Appellant / Financial Creditor / Applicant had ..... X X X X Extracts X X X X X X X X Extracts X X X X
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