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TMI Blog2017 (12) TMI 1844X X X X Extracts X X X X X X X X Extracts X X X X ..... lication under Section 9 of the 'I B Code' and the Appellant who is a 'Financial Creditor' cannot be treated as 'Operational Creditor'. If an application is filed by a person under Section 7 of the 'I B Code' and in case the Adjudicating Authority comes to the conclusion that the Applicant is not a 'Financial Creditor' in such case the Adjudicating Authority has jurisdiction to reject the application under Section 7 of the 'I B Code', but the said Authority cannot treat the format of the application under Section 7 of the 'I B Code' (Form-1) as an application under Section 9 of the 'I B Code' (Form-5), nor can treat such person an 'Operational creditor', in absence of any claim made under Section 9 of the 'I B Code'. Further, as the informations required to be given in Form-1 varies from the informations as required to be given in Form-5 (As per Section 9), including instructions made below the requisite form(s), no application filed under Section 7 can be treated as an application under Section 9 of the 'I B Code - in absence of a notice under sub-section (1) of Section 8 of the &# ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ree Ramakrishna Alloys Limited'. The said application on notice has been admitted by impugned order dated 29th August, 2017, order of moratorium has been passed and 'Interim Resolution Professional' has been appointed. The grievance of the Appellant is that though the application was preferred by the Appellant under Section 7 of the 'I B Code', at the request of the Respondent- 'M/s. Sree Ramakrishna Alloys Limited' ('Corporate Debtor'), the application has been treated to be an application under Section 9 of the 'I B Code', and order of admission has been passed. 6. Learned counsel appearing on behalf of the Appellant submits that in view of the fact that the application under Section 7 of the 'I B Code' has been treated to be an application under Section 9 of the 'I B Code', the Appellant is now deprived of its right as 'Financial Creditor' and cannot take part as a member of 'Committee of Creditors' which has a vital role to play. It was further submitted that the application having filed under Form-1 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016, (herein ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ; as per the policies of the Appellant. So, the Appellant was requested to approve and grant clearance for the purchase of 'M.S. Billets' through ILC for Rs. 4,99,97,493/- (Rupees Four Crores Ninety-Nine Lakhs Ninety-Seven Thousand Four Hundred and Ninety-Three Only) and enclosed the offer and proforma invoice with request to the Appellant- 'M/s. PEC Ltd.' to arrange an amount of Rs. 63,75,000/- (Sixty-Three Lakh Seventy-Five Thousand Only) towards the 12.5% margin money with conditions as mentioned therein, which reads as follows: SREE RAMAKRISHNA ALLOYS LIMITED INNOVATIVE GROWTH To M/s. PEC Limited A Govt. of India Enterprise (Under Ministry of Commerce) Jagannadh Nilayam, 10-27-17A, Waltalr Uplands, VISAKHAPATNAM-530 003 Tel. No. 0891-2710311, Fax No. 0891-6642008 Kind Attn: Shri G.Y. Dupate, Branch Manager Dear Sir, Sub: Proposal for procurement M.S. Billets as per your policies We are very thankful to you for your continued support. We now wish to procure 1292 MT of MS Billets from M/s. HARI HARA TRADERS MIG-81, D. No. 24-33-26, Vinayaka Nagar, Vuda Colony, Peda Gantyada ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to 12.5% on 100% of the value of the material to be procured through PEC. 2. SRAL has to pay 1% Trade Margin to PEC on invoice value of the material procured through PEC. 3. PEC shall raise Tax invoice by loading 1% Trade margin on purchase value immediately and differential VAT would be remitted to the state govt. and same shall be recovered from SRAL. 4. SRAL shall pledge the stock to PEC by way of entering into deed of pledge. 5. SRAL shall lift the entire stock with in the usance period of ILC i.e. 90 by making payment at the Release Order rate fixed by the PEC. 6. SRAL agrees to pay usance interest at the applicable rate. All bank charges, incidental expenses, taxes, levies duties involved in the said supply transactions shall be on SRAL's account. 7. In case PEC remains out of pocket beyond the recovery period of 90 days as stated above and PEC's fund remain blocked, SRAL will pay interest at the rate of 14.5% per annum for the delayed period beyond 90 days. 8. SRAL will also pay to PEC all bank charges including DD/Pay Order/Fax charges etc. and any other incid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s, loan stock or any similar instrument; (d) the amount of any liability in respect of any lease or hire purchase contract which is deemed as a finance or capital lease under the Indian Accounting Standards or such other accounting standards as may be prescribed; (e) receivables sold or discounted other than any receivables sold on non-recourse basis; (f) any amount raised under any other transaction, including any forward sale or purchase agreement, having the commercial effect of a borrowing; (g) any derivative transaction entered into in connection with protection against or benefit from fluctuation in any rate or price and for calculating the value of any derivative transaction, only the market value of such transaction shall be taken into account; (h) any counter-indemnity obligation in respect of a guarantee, indemnity, bond, documentary letter of credit or any other instrument issued by a bank or financial institution; (i) the amount of any liability in respect of any of the guarantee or indemnity for any of the items referred to in sub-clauses (a) to (h) of this clause. 14. From the letter referred to abo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... #39; cannot be treated as an application under Section 9 of the 'I B Code' and the Appellant who is a 'Financial Creditor' cannot be treated as 'Operational Creditor'. 20. Further, we hold that if an application is filed by a person under Section 7 of the 'I B Code' and in case the Adjudicating Authority comes to the conclusion that the Applicant is not a 'Financial Creditor' in such case the Adjudicating Authority has jurisdiction to reject the application under Section 7 of the 'I B Code', but the said Authority cannot treat the format of the application under Section 7 of the 'I B Code' (Form-1) as an application under Section 9 of the 'I B Code' (Form-5), nor can treat such person an 'Operational creditor', in absence of any claim made under Section 9 of the 'I B Code'. Further, as the informations required to be given in Form-1 varies from the informations as required to be given in Form-5 (As per Section 9), including instructions made below the requisite form(s), no application filed under Section 7 can be treated as an application under Section 9 of the 'I B Code. 21. Fur ..... X X X X Extracts X X X X X X X X Extracts X X X X
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