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TMI Blog2022 (5) TMI 658X X X X Extracts X X X X X X X X Extracts X X X X ..... selling the pledged property would not be available. The Operational Creditor has stopped at the stage of issuing notice and did not go further on the sale of the pledged goods - Issue is answered in favour of the Operational Creditor holding that this Petition filed by Operational Creditor is maintainable. Whether there is a debt due by the Corporate Debtor to the Operational Creditor and whether the Corporate Debtor has defaulted in discharging the said debt? - HELD THAT:- The law is well settled that the Adjudicating Authority has to admit the application once it is found that the admitted debt due is beyond the threshold limit which in this case is Rs. 1 Lakh and it is evident that the Corporate Debtor has not discharged even the admitted debt - the Corporate Debtor is due a debt to the Operational creditor and has defaulted in discharging the same. The petition is admitted - moratorium declared. X X X X Extracts X X X X X X X X Extracts X X X X ..... ransaction or case in the Company Petition in that regard. There is no Company stamp or seal affixed or endorsed on the Petition. The Operational Creditor suppressed the material facts and material documents. Admittedly, the Operational Creditor and Corporate Debtor entered into a "Back to Back Trade Facility Agreement" dated 26.06.2015, for providing finance upto a limit, for payment of raw materials procured by the Corporate Debtor upon trade margins in terms of the said Agreement, In the said Agreement, both the Operational Creditor and Corporate Debtor agreed that any dispute or difference has to be referred to Arbitration. The Operational Creditor and Corporate Debtor have executed a Supplementary Back to Back Agreement, wherein M/s. Benita Industries Limited and M/s. Pushpit Steels Private Limited were also parties as pledgor and confirming party respectively. Through the said Supplementary Agreement, M/s. Benita Industries Limited undertook to repay the unpaid dues if any by the Corporate Debtor herein and pledged 20,000 MT of Iron Ore after beneficiation and it has executed an Agreement for Pledge of Movable Property dated 26.10.2015. As per the terms of all the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he liability and the principal payable is only Rs. 2,37,49,667.33/- as on 26.11.2018 besides admitted interest. If the Iron Ore is lifted by the Operational Creditor, there would not be any liability. Admittedly, there are pre-existing disputes. Admittedly, the Operational Creditor invoked the pledge on 21.10.2016 and thereby the Corporate Debtor was discharged of any liability and there are no dues or liability left as unpaid, as alleged. The Operational Creditor neither produced any statement of account nor any record of the alleged transactions. Since, the Corporate Debtor is aggrieved by the mischievous conduct of the Operational Creditor in filing two separate company Petitions, the Corporate Debtor approached the NCLT, Principal Bench, New Delhi seeking for clubbing of the two Petitions, for effective adjudication and it is pending. The Corporate Debtor also filed an Application under Section 11(6) of Arbitration and Conciliation Act before the Bombay High Court for appointment of an Arbitrator for adjudication of disputes and the same is pending. It is further submitted that Indian Economy is currently not very conducive for the successful running of the Industries, particul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... imited is mentioned as Operational Creditor, the same was not agitated by the Counsel at the time of hearing. Moreover the explanation for the said fact comes forth in the rejoinder by stating that it is a mistake. It obviously seems to be a mistake, since nowhere else in the Petition the name of the Operational Creditor is mentioned as M/s. Indian Steel Corporation Limited. 6. From the pleadings and the arguments, the points that arise for consideration are as follows; I. Whether the Operational Creditor can file this Petition in terms of the Supplementary Agreement which provides for sale of the pledged property in case of default. II. Whether there is a debt due by the Corporate Debtor to the Operational Creditor and whether the Corporate Debtor has defaulted in discharging the said debt. III. To what result. I. Whether the Operational Creditor can file this Petition in terms of the Supplementary Agreement which provides for sale of the pledged property in case of default: a. The main emphasis of the Senior Counsel appearing for the Corporate Debtor is that the Agreement provides for sale of the pledged property, hence, an application under Section 9 of IBC is not main ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the pawnor is still liable to pay the balance. If the proceeds of the sale are greater than the amount so due, the pawnee shall pay over the surplus to the pawnor. 177. Defaulting pawnor's right to redeem - If a time is stipulated for the payment of the debt, or performance of the promise, for which the pledge is made, and the pawnor makes default in payment of the debt or performance of the promise at the stipulated time, he may redeem the goods pledged at any subsequent time before the actual sale of them, but he must, in that case, pay, in addition, any expenses which have arisen from his default." b. The Supreme Court observed that the above two provisions, when read in conjoint manner, clearly establish that a pledge does not get extinguished and, in fact, continues even when the Pawnee has sued and recovered a part of the debt without enforcement of the pledge or the security. As per Section 176, when the Pawnor makes default in making the payment, the Pawnee may bring a suit upon the debt or promise and retain the goods pledged as a collateral security. A Pawnee has both collateral and concurrent rights and can institute a suit for the purpose of realization of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case the Pawnor makes default, but if the Pawnee does not exercise the discretion, no blame can be put on the Pawnee and Pawnee has a right to bring a suit for recovery of the debt and retain the goods pledged as collateral security. It was also noted that a doubt was also expressed whether the defendant as Pawnor could force the Pawnee to dispose of the pledged goods without the defendant clearing the debt. It was held in the cited decision that it is the discretion of the plaintiff bank to file a suit for recovery of the debt and retain the pledged goods as collateral security or in the alternative it could resort to selling the pledged goods after giving reasonable notice of sale to the defendants. Hence, in the light of the above judgments it is clear that the Operational Creditor has a right to invoke Section 9 of IBC irrespective of there being a right under an Agreement for him to bring the pledged goods for sale and realize the debt. d. The contention that by issuing a notice that the pledged goods would be put to sale, the right to proceed under Section 9 of IBC is not available to the Operational Creditor, is not impressive. The Pawnee is given ample powers under Secti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Corporate Debtor has raised a dispute with regard to the due amount by way of a reply dated 26.10.2016, wherein the correctness of the quantum of debt is questioned and a request to reconcile the accounts was made. The Counsel contends that there is no reply to the said letter. The Counsel for the Operational Creditor contends that no such letter was received by the Operational Creditor. He also contends that no letter dated 05.10.2018, which is contended by the Corporate Debtor as having been issued, is also received. Letters filed along with the counter are, a letter issued by the Operational Creditor on 21.11.2016 calling upon the Corporate Debtor to pay the amount which is due to it, which is stated to be Rs. 5,06,95,378/-. On the same day a letter was addressed to M/s. Benita Industries Limited, informing that the Operational Creditor wishes to invoke the pledge and requested M/s. Benita Industries Limited to make the property available in a transportable condition. In reply to the said letter the Corporate Debtor issued a letter dated 26.10.2016 requesting the Operational Creditor to re-check the company ledger accounts and communicate with them for the outstanding dues. I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Adjudicating Authority to ascertain, investigate or fix the exact amount of liability at the admission stage. After the admission of the Petition it is a duty of the Resolution Professional (RP) to collate the claims and ascertain the liability. In the said judgment the Corporate Debtor's main contention was that the amounts paid by the Operational Creditor and its financial statements do not match. Hence, in view of the above, it can be concluded that the Corporate Debtor is due a debt to the Operational creditor and has defaulted in discharging the same. b. The question with regard to the existence of the arbitration clause is not agitated. A Judgment of the Supreme Court reported in (2011) 5 SCC 532 between Booz Allen and Hammilton ILC Vs. SBI Home Finance Limited and others, wherein, it was held that all disputes relating to rights in rem are required to be adjudicated by the Court and Public Tribunals being unsuited for (private) arbitration. It also held that though the disputes in questions were covered by arbitration clause, they not being arbitrable as they related to rights in rem, cannot be referred to arbitration. It would be an absurd interpretation to say tha ..... X X X X Extracts X X X X X X X X Extracts X X X X
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