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TMI Blog2019 (4) TMI 2171X X X X Extracts X X X X X X X X Extracts X X X X ..... ncy Resolution Process against 'Ruchi Soya Industries Ltd.' (Corporate Debtor), the Appellant - 'Cooperative Rabobank U.A. Singapore Branch', one of the creditors, made claim before the Resolution Professional stating that the Corporate Debtor owed to pay USD 107,36,972.90, basing on the Bills of Exchanges, ordering this Corporate Debtor to pay to the Creditor for the goods supplied by another party in between, i.e. 'Avanti Industries Pvt. Ltd.'. The Appellant claimed to be the 'Financial Creditor' which was rejected by the Resolution Professional. The Adjudicating Authority (National Company Law Tribunal), Mumbai Bench by order dated 14th May, 2018 also held that the Appellant is not a 'Financial Credito ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 39; would discourage banks and financial institutions from financing trade debts, unless they want to be automatically classified as 'operational creditors' much like suppliers of goods. This would defeat the very objective of the Insolvency and Bankruptcy Code, 2016 to promote the growth of credit market in India. 6. According to the Appellant, it entered into a Master Sales and Purchase Agreement dated 22nd October 2013 (MSPA), wherein it was agreed that upon acceptance by the Corporate Debtor of certain BoEs, the Appellant would discount the BoEs and disburse the discounted proceeds to a third party supplier of the Corporate Debtor, Aavanti Industries Pvt. Ltd. (Aavanti). (Clause 1, 2 of the MSPA). 7. It was further agreed unde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Bill of Exchange. Under the law, unless agreed to the contrary, the drawer would continue to remain liable. However, in the present case, the Bill of Exchanges were discounted without recourse to the Drawer i.e. 'Avanti Industries Pvt. Ltd.'. Reliance has been placed on the decision of Hon'ble Supreme Court in "American Express Bank Ltd. Vs. Calcutta Steel Co. MANU/SC/0667/1992 : (1993) 2 SCC 199". 12. It was further submitted that discounting of Bill of Exchange falls within the definition of 'Financial Debt' as defined under Section 5(8) of the Insolvency and Bankruptcy Code, 2016 (for short 'I&B Code') and the 'time value' means the compensation or the price paid for the length of time for which the m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rce and payable to the Central Government, any State Government or any local authority'. Admittedly, the Corporate Debtor owed money to 'Aavanti', who is an 'Operational Creditor', which supplied goods which falls squarely within the definition of 'Operational Debt'. Furthermore, in the books of accounts of the 'Corporate Debtor', the overdue amounts have been reflected as over-dues towards 'provision of goods and services'. 17. Section 5(20) of the Code defines an 'Operational Creditor' to mean not only a person to whom an 'Operational Debt' is owed but also a person to whom such 'operational debt' is assigned. In other words, the 'Aavanti' having transferred its ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to Banks and Financial Institutions Act, 1993, the Limited Liability Partnership Act, 2008 and the Companies Act, 2013, shall have the meanings respectively assigned to them in those Acts." In view of Section 3(37), the Appellant cannot derive any advantage of expressions used in Negotiable Instruments Act, 1881. 21. The agreement dated 22nd October, 2013 has been enclosed by the Appellant. It is between 'Aavanti Industries Pte Ltd.' (the "Seller") and 'Cooperatieve Centrale Raiffeisen-Boerenleenbank B.A. (trading as Rabobank International) Singapore Branch' (the "Bank"). The relevant portion relating to transaction is as under:- 22. The Deed of Exchange has also been enclosed, which is between 'Aavanti Industries Pte ..... X X X X Extracts X X X X X X X X Extracts X X X X
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