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TMI Blog2022 (7) TMI 355X X X X Extracts X X X X X X X X Extracts X X X X ..... f the gas supplied gets transferred to the Corporate Debtor only when the gas reaches the Delivery Point thereby constituting a triggering event for accrual of right to payment. The triggering event for accrual of right to payment is bolstered by the construction of other terms of the GSAs. Under Article 3.1 of the GSAs it is obligatory for the Corporate Debtor to purchase, receive and take the gas at the Delivery Point, and pay for gas at prices determined in accordance with the GSA or pay amounts in respect of TOP Liability in the event the Corporate Debtor fails to receive and take such gas that is supplied in accordance with the Annual Contracted Quantity (ACQ) decided between the Applicant and the Corporate Debtor in terms of Article 6.1 of the GSAs. It cannot be, that the Applicant has generated Annual Statement and claim letter towards the amounts arising till the end of the entire tenure of the GSAs (i.e., 2028 and 2037). In absence of such Annual Statements, the Applicant has itself stated in the computation table annexed as Annexure F to the Application that the claim letter date mentioned in the table is simply a tentative date of issuing claim letter . At the t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... archand Mangaldas Co. Section 30,42 and 7 of IBC, 2016 For the Applicant : Mr. Janak Dwarkadas, Counsel. For the Respondent : Mr. Akshat Khare, Counsel. ORDER Per : Justice P. N. Deshmukh, Member (Judicial) 1. This is an application filed GAIL India Limited (hereafter referred as GAIL ) which is a Government Company under Section 617 of the Companies Act, 1956, bearing CIN L40200DL1984GO1018976, having its Registered Office at 16 Bhikaiji cama Place, R K Puram, New Delhi 110066, seeking admission of claim of Rs.9,775.19 Crores (approx.) which was rejected by the Resolution Professional stating that the said quantum of claim relates to future liabilities under GSA which is not duly performed and as such not being covered under the definition of claim as defined in Sec. 3 (6) of IBC. Brief Facts of the Case: 2. The State Bank of India, Financial Creditor of the Corporate Debtor, had filed an application under Section 7 of the Insolvency and Bankruptcy Code (hereafter referred as Code ), r/w rule 4 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 201, for initiation of the Corporate Insolvency Resolution Proce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rticle No. 14.1. As per said Article No. 6, the Corporate Debtor was required to take minimum quantity of gas as described therein and against which the applicant would raise the gas supply bills to the Corporate Debtor, which was required to be paid within 7 days by the Corporate Debtor. The Payment due date is defined in Article No. 12.3 of GSAs. 7. Under the said guaranteed demand by the Corporate Debtor in GSAs, the applicant would have to ensure the supply of the said guaranteed quantity of gas at any point of time to the Corporate Debtor. As natural gas being rare natural resourse, there has been regular industry practice across the world to incorporate Take or Pay obligation/charges (further referred as TOP obligation/charges) which is required to be paid by the buyer of the gas to the seller of the gas if the buyer fails to offtake or draw minimum guaranteed demanded quantity of gas. In other words, in the instant case, the Corporate Debtor has guaranteed a minimum demand of total 0.20607 MMSCMD (Metric Million Standard Cubic Metre per Day) approximate average daily volume quantity of gas per day under three GSAs from the applicant under the Article No. 6.1 of respec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... therefore in due course of contract period under GSAs, the applicant had raised Demand Notice dt. 01.03.2021 towards actual gas supply TOP claim for Contract year 2020 under all three GSAs were still in existing with the Corporate Debtor and GAIL was continuing to provide gas supply. Thus, GAIL has maintained continuous supply of the essential goods in nature of natural gas for steel plant which is essential for keeping furnace of steel plants in running mode. However, Respondent, vide letter dt. 17.03.2021, has requested GAIL to withdraw the demand raised towards TOP claims as the CD is not running in full capacity. Subsequently in reply, GAIL by letter dt. 08.04.2021, had informed that GAIL has already up-stream commitments from where such gas has been imported and TOP claim has been claimed under contractual obligation/due. 12. The applicant further submitted that as per Article 12.1 of the Gas Sale Agreement, the invoices for the actual gas lifted by the Corporate Debtor are raised fortnightly and the claim towards adjusted annual contract quantity are raised annually after collaborating the total lifted gas quantity in the entire one-year contract period. In other wo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt. Moreover, GAIL had already filed SLA (C) Diary no. 828 of 2022 before Hon ble Supreme Court challenging the said order. 17. Whereas, GAIL had filed IA no. 413 of 2018 before NCLT Ahmedabad against rejection of claim by RP himself without putting it even before CoC in CIRP of Alok Industries. The said IA came to be allowed by order dt. 13.02.2019 passed by NCLT Ahmedabad with directions to RP to admit the claim of GAIL. As a matter of fact, the legality of TOP claim has been held as valid legal contractual claim by Arbitral Tribunal comprising of Hon ble former Justice C K Thakker, Retired Supreme Court Judge where similar claim of ONGC was allowed, copy of award is annexed to application. 18. The non-admission of GAIL s claim would adversely affect, as Hon ble Supreme Court in the case of Ghanashyam Mishra Sons Pvt. Ltd. Vs EARC other, order dt. 13.04.2021, had held that if the claim is not admitted under CIRP then same cannot be agitated after approval of Resolution plan. Moreover, the law on adjudicatory power of RP to adjudicate claims is settled by Hon ble Supreme Court in case of Arcelor Mittal India Pvt. Ltd. Vs. Satish Kumar Gupta and Ors in Civil Appeal no. 94 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing amounts for a period pertaining to post Insolvency Commencement date i.e. Post-ICD Amount. Pursuant to the clarification the Applicant vide letter dated 06.11.2020, revised the claim to an amount of Rs.10088,53,37,177/-, bifurcated the claim between Pre- ICD amount and Post-ICD Amount, and provided the following justification for computation: (a) In respect of LT RLNG GSAs: Under the subject Gas Sale Agreement on the basis of the longterm demand by various buyers including the Corporate Debtor, GAIL has imported said gas from RasGas (a company incorporated under the law of Qatar) and was brought to the terminal of M/s Petronet LNG Limited (PLL) wherein the regasification of the gas process is being carried out. Thereafter, the said Reliquified natural gas (RLNG) is delivered to the delivery point of the Corporate Debtor as defined under LT RLNG Gas Sale Agreement (s) which is 'Donvat' and 'Pali Road Complex' in Khopoli, Dist Raigad, Maharashtra .. (b) In respect of HH RLNG GSA: Under the subject Gas Sale Agreement on the basis of the long-term demand by various buyers including the Corporate Debtor, GAIL has imported said LNG under LNG Sale a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f CIRP, cannot be admitted by the Resolution Professional 21. That for any amount to be claimed in the CIRP of a corporate debtor, a creditor must furnish documents to demonstrate that it has a right to payment . In this regard, the definition of claim as per Section 3(6)(a) of the Code is reproduced as follows: (a) a right to payment, whether or not such right is reduced to judgment, fixed, disputed, undisputed, legal, equitable, secured or unsecured . 22. Further, Section 3(11) of the Code defines the term debt as follows: (11) debt means a liability or obligation re respect of a claim which is due from any person and includes a financial debt and operational debt . Therefore, for an obligation or liability to qualify as a debt it is must be due from the Corporate Debtor. 23. In light of the construction of the statute described above, Article 2.4 of the GSAs states that the gas sold by the Applicant to the Corporate Debtor shall be tendered to the Corporate Debtor at delivery point, i.e., pipeline connecting the gas transporter s facilities to the Corporate Debtor s plant (hereinafter referred to as Delivery Point ). Further, the Article sta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icant has generated Annual Statement and claim letter towards the amounts arising till the end of the entire tenure of the GSAs (i.e., 2028 and 2037). In absence of such Annual Statements, the Applicant has itself stated in the computation table annexed as Annexure F to the Application that the claim letter date mentioned in the table is simply a tentative date of issuing claim letter . At the threshold, the amount does not qualify as a claim as there is no basis for claiming such hypothetical amounts which may or may not be payable at a future date by the Corporate Debtor. 29. Notably, the triggering event for accrual of right to payment in respect of TOP Liability it yet to happen at a later point in time, when the gas will be supplied to the Corporate Debtor in the future, i.e., after commencement of CIRP. Therefore, the amount claimed in respect of TOP Liability does not qualify as a claim in terms of the definition of claim under the Code. 30. The amount claimed in respect of TOP Liability that may arise at a later point in time, does not qualify as an operational debt under Section 5(21) of the Code. Operational debt is defined as a claim in respect of the provisi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of an IRP/RP to reject a claim or portion thereof for want of sufficient documents/evidence backing up such a claim. III. Resolution Plan, minutes of the meetings of Committee of Creditors and other relevant documents cannot be shared with the Applicant 34. The that the RP is bound to ensure the confidentiality of the information in relation to CIRP, under Clause 21 of the First Schedule under Regulation 7(2)(h) of the Insolvency and Bankruptcy Board of India (Insolvency Professional Regulations), 2016. 35. The section 25 of the Code mandates that the RP is duty-bound to present all resolution plans to the Committee of Creditors. In view of such express provisions in relation to Resolution Plans it is clear that the statutory mandate requires that a resolution plan can only be presented to the CoC and other members who attend the CoC such as certain Operational Creditors and erstwhile directors of the corporate debtor for CoC s approval and presented before this Tribunal for its satisfaction in approving the same. The code of the Regulations thereunder do not contemplate presentation or supply of a resolution plan or a copy thereof to any other body or entity. Therefo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion Applicant (if any) c. Alternatively, for directing the Resolution Applicant to make a prerequisite condition in the Resolution Plan for continuation of the GSA-1, GSA-2 GSA-3 . 40. The Respondent submits that this Tribunal is not empowered to grant specific performance of any contracts during the CIRP of the Corporate Debtor and/or modify the terms of a Resolution Plan and hence, any such prayer is untenable. A Resolution Plan is submitted by a Resolution Applicant on the basis of various parameters with a view to restore the CD s business back to a commercially viable concern. Further, in this case, the Resolution Plan received has already been approved by 100% by the CoC of the CD on the basis of their commercial wisdom. Findings: 41. We have perused the records and agreements, in light of the construction of the statute described above, Article 2.4 of the GSAs states that the gas sold by the Applicant to the Corporate Debtor shall be tendered to the Corporate Debtor at delivery point, i.e., pipeline connecting the gas transporter s facilities to the Corporate Debtor s plant (hereinafter referred to as Delivery Point ). Further, the Article states th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le is simply a tentative date of issuing claim letter . At the threshold, the amount does not qualify as a claim as there is no basis for claiming such hypothetical amounts which may or may not be payable at a future date by the Corporate Debtor. 46. Notably, the triggering event for accrual of right to payment in respect of TOP Liability it yet to happen at a later point in time, when the gas will be supplied to the Corporate Debtor in the future, i.e., after commencement of CIRP. Therefore, the amount claimed in respect of TOP Liability does not qualify as a claim in terms of the definition of claim under the Code. 47. It is a settled position of law that a right to payment that pertains to a period till the end of tenure of the GSAs (year 2028 2037) i.e. a period beyond the date of commencement of CIRP cannot be admitted by an RP. Hence, the Post-ICD Amount claimed by the Applicant fails to qualify as a claim. 48. It is trite law that such verification is distinct from adjudication of claims, and an IRP is empowered to make a best estimate of the amount of the claim based on the information available under Regulation 14 of CIRP Regulations. It is the duty of an R ..... X X X X Extracts X X X X X X X X Extracts X X X X
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