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TMI Blog2024 (10) TMI 1353X X X X Extracts X X X X X X X X Extracts X X X X ..... NS PRIVATE LIMITED VERSUS KIRUSA SOFTWARE PRIVATE LIMITED [ 2017 (9) TMI 1270 - SUPREME COURT ] after going through the Scheme of IBC, 2016 in depth in relation to an Application under Section 7 filed by a Financial Creditor as compared to the one filed under Section 9 by an Operational Creditor, that in relation to a Section 7 Application where there is an existence of a financial debt and the default in excess of Rs. 1,00,00,000/-, this Tribunal is bound to admit the Application and as a consequence trigger the Corporate Insolvency Resolution Process (CIRP) and in relation to a Section 7 Application defence of set off or counter claim put forth by the Corporate Debtor cannot be considered as a dispute in relation to the Financial debt and default in relation to it. In the present case, it is clear that there is a default on the part of the Corporate Debtor for a sum exceeding Rs. 1 Crore. The Applicant / Financial Creditor has proved that there is a debt and default on the part of the Corporate Debtor and hence in term of Section 7(5) of IBC, 2016, the present application is required to be admitted and Corporate Insolvency Resolution Process as against the Corporate Debtor is req ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Debtor receives the money due to it at a discounted price, whereas the Enterprise secures time for meeting its debts due to the Corporate Debtor. It is stated that on or before the date on which the sum of money becomes due [which, in the present case is 90 (ninety) days] ( maturity date ), the Enterprise pays the full invoice value into an escrow account maintained by KredX and against the receipt thereof, each of the Creditor receives the monies due under the agreement. It is stated that the Creditors who provided a discounted value to the Corporate Debtor, realise the returns on their loans, when the Enterprise pays the full value of the said invoice without any discounts. Thus, difference between the discounted invoice value paid by the Creditors to the Corporate Debtor and the full amount of the invoice paid by the Enterprise into the said escrow account, represents the return on investment made by the creditors. 6. It is stated that not only time is the essence of the agreement, but the said agreement also provides for payment of a late fee and an interest rate of 2% percent per month. Thus, the monies advanced by the Creditors fulfil the requirement of time value of money b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es Pvt. Ltd through various Agreements for Transfer of Rights. 9. To prove the financial debt and default, the applicants have submitted following documents: a) Bank Confirmation Agreement dated 11.01.2019 signed by KredX, Corporate Debtor and the Enterprise (CBRE South Asia Pvt Ltd). b) Seller Services Agreement between the financial creditors and Corporate Debtor dated 19.04.2021, c) Invoices of the Corporate Debtor, d) Agreements for Transfer of Rights to Applicants e) Statement of Accounts of Applicants and f) The Record of Default by NeSL for a default amount of Rs. 1,12,08,569/- with DEEMED TO BE AUTHENTICATED status on 11.10.2023. The report was filed by Minion Ventures Pvt Ltd and date of default is mentioned as 03.04.2023. 10. During the proceedings, respondents have not filed counter despite opportunities given on the hearings dated 13.02.2024, 06.06.2024 etc. On 29.07.2024, the right to file reply of the respondent was closed. It was also held that as reply has not been filed, rejoinder would not be taken into consideration. 11. As per the documents filed, the Date of Default is 03.04.2023 i.e., the date on which the Corporate Debtor was due to pay the full amounts due. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ong with the Purchaser, the Purchaser s right on the receivables under the Invoice shall be to the extent of the Invoice Receivables purchased and shall rank pari-passu among the other Purchasers with respect to such Invoice. (c) Upon execution of this Agreement, the Purchaser shall be the full owner of the Invoice Receivables. (d) The Sale made by the Seller is on full recourse. basis, that is to say, where the Customer does not pay the Invoice Receivables by the Due Date, the Sale shall stand annulled and the Purchaser shall be entitled to receive the amounts as set out in Clause 6 of this Agreement. Clauses 6.1, 6.2 and 6.3 of the agreement talk about default, deposit of cheques and restitution as under: 6. DEFAULT AND RESTITUTION 6.1. In the event the Invoice Receivables is not remitted into the Settlement Escrow/Nodal Account by Customer in accordance with the terms of the Invoice within 10 (ten) Business Days from the Due Date, such default shall be deemed to be a material breach of this Agreement by the Seller and the Agreement shall stand terminated ( Termination ) and the provisions of this Clause 6 shall survive. 6.2. Pursuant to the Termination, the Seller shall be liabl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ix Laser Solutions (P) Limited in Com Appeal (AT) (Insolvency) No.38 of 2017 vide order dated 22.12.2017, Hon'ble NCLAT held that to fall within the ambit of financial debt, the claimant must show that there is a debt along with interest, if any, which has been disbursed. Any such disbursement has been against the consideration for time value of money . It was held that a person can show that the disbursement has been made against the consideration of time value of money through any instrument. 15. It has been held by the Hon ble Supreme Court in Innoventive Industries Ltd. v. ICICI Bank and another (2018) 1 SCC 407 as well as in Mobilox Innovations Pvt. Ltd. v. Kirusa Software Pvt. Ltd. (2018) 1 SCC 353 after going through the Scheme of IBC, 2016 in depth in relation to an Application under Section 7 filed by a Financial Creditor as compared to the one filed under Section 9 by an Operational Creditor, that in relation to a Section 7 Application where there is an existence of a financial debt and the default in excess of Rs. 1,00,00,000/-, this Tribunal is bound to admit the Application and as a consequence trigger the Corporate Insolvency Resolution Process (CIRP) and in relat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ovisions of Section 14(1) and as extracted hereunder shall follow in relation to the Corporate Debtor: a. The institution of suits or continuation of pending suits or proceedings against the respondent including execution of any judgment, decree or order in any court of law, tribunal, arbitration panel or other authority; b. Transferring, encumbering, alienating or disposing of by the respondent any of its assets or any legal right or beneficial interest therein; c. Any action to foreclose, recover or enforce any security interest created by the respondent in respect of its property including any action under the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002; d. The recovery of any property by an owner or lessor where such property is occupied by or in the possession of the respondent. Explanation.-For the purposes of this sub-section, it is hereby clarified that notwithstanding anything contained in any other law for the time being in force, a licence, permit, registration, quota, concession, clearance or a similar grant or right given by the Central Government, State Government, local authority, sectoral regulator or any othe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... professional all the information regarding maintaining the backup and regarding the service provider kept under Rule 3(5) and Rule 3(6) of the Companies Account Rules, 2014, especially the name of the service provider, the internet protocol of the Service Provider and its location and also the address of the location of Books of Accounts maintained in the cloud. In case accounting software is maintained, the IRP/RP is to check that the audit trail in the same is not disabled as required under the notification dated 24.03.2021 of Ministry of Corporate Affairs. The Rule 3(5) and Rule 3(6) of the Companies Account Rules, 2014 are reproduced as under: 5) There shall be a proper system for storage, retrieval, display or printout of the electronic records as the Audit Committee, if any, or the Board may deem appropriate and such records shall not be disposed of or rendered unusable, unless permitted by law: Provided that the back-up of the books of account and other books and papers of the company maintained in electronic mode, including at a place outside India, if any, shall be kept in servers physically located in India on a daily basis . (6) The company shall intimate to the Registr ..... X X X X Extracts X X X X X X X X Extracts X X X X
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