2022 (3) TMI 1417 - Tri - Insolvency and Bankruptcy

Applicants deemed operational creditors, not financial creditors under IBC. Application under Section 7 dismissed. Liberty to file under Section 9.

The Tribunal concluded that the applicants were operational creditors, not financial creditors, as there was no direct disbursal to the Corporate Debtor. ... Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Creditors - existence of debt and dispute or not - HELD THAT:- The invoice shall mean the unpaid genuine invoices raised by the seller on a customer pursuant to the sales of goods or rendering of services as applicable and listed by the customer on the platform and the consideration means the price as determined by customer i.e., the financier agrees to pay the seller for creation of rights and interest in the receivable under the invoice by the customer in favour of the financier. It is noticed that the invoice is also defined under the agreement, which means the unpaid genuine invoices raised by the seller on a customer in pursuant to the sale of goods or rendering of the services, as applicable and listed by the customer on the platform - An invoice receivable is also defined in Clause (b) of Definition Clause which says invoice receivable shall mean all or such part of receivable under invoice, as may be agreed to acquire by the financier, for the consideration listed in the platform, which is referred to in Annexure - A. It is further observed that Right and interest receivable under invoice, may be owned fully or partly by the financier alongwith one or more than one financier. Further, the goods are supplied by the sellers and not by the applicants. The Sellers have assigned the Right and interest receivable under invoice to the applicant. Admittedly, the debt is assigned to the applicants by the seller who have raised the invoice (s) and in lieu of that invoice(s) the applicants had paid the amount in the account of the seller and not in the account of the Corporate Debtor. In the case in hand also, there is no disbursal of the amount to the respondent rather the amount was disbursed to the third person. As it is observed that the applicants are claiming the discounted invoices, therefore, in view of Section 21 (5) of IBC 2016, where an Operational Creditor has assigned or legally transferred any operational debt to a financial creditor, the assignee or transferee shall be considered as an operational creditor to the extent of such assignment or legal transfer. Therefore, though the applicants may be the Operational creditor(s) but in terms of Section 5 (7), Part 11 of the IBC, 2016, the applicants cannot be treated as the financial creditor (s). The present application filed under Section 7 of IBC is not maintainable and on this score alone, the application is liable to be dismissed - the present application is not maintainable under Section 7 IBC, therefore, it is needless to consider the other submissions raised on behalf of the respondent on the point of maintainability of the application. Application dismissed. Issues Involved:1. Maintainability of the application under Section 7 of the Insolvency and Bankruptcy Code (IBC), 2016.2. Classification of the applicants as financial creditors.3. Compliance with the threshold requirement under Section 4 of the IBC.4. Applicability of Section 21(6)(A)(b) of the IBC for class of creditors.5. Disbursal of the amount and its classification as financial debt.Detailed Analysis:1. Maintainability of the application under Section 7 of the IBC, 2016:The application was filed by the applicants under Section 7 of the IBC, 2016, seeking initiation of the Corporate Insolvency Resolution Process (CIRP) against the Corporate Debtor for failing to pay Rs. 2,27,40,735.08/-. The applicants argued that they are financial creditors as per the Agreement for Creation of Rights (COR Agreement) and that the Corporate Debtor defaulted on payments due under the invoices.2. Classification of the applicants as financial creditors:The applicants contended that they advanced money for invoice discounting transactions benefiting the Seller, who assigned the right to collect money due under invoices to the applicants. However, the respondent argued that the applicants are operational creditors since the primary transaction was for goods and services, and the money was disbursed to the Seller, not the Corporate Debtor. The Tribunal referred to the decision in Cooperative Rabobank, U.A. Singapore Branch v. M/s. Shailender Ajmera and Anuj Jain's case, concluding that the applicants are operational creditors, not financial creditors, as there was no direct disbursal to the Corporate Debtor.3. Compliance with the threshold requirement under Section 4 of the IBC:The respondent argued that the individual amounts claimed by each applicant were less than Rs. 1 crore, which is the minimum threshold required under Section 4 of the IBC to initiate the CIRP. The Tribunal did not delve deeply into this argument as it dismissed the application on other grounds.4. Applicability of Section 21(6)(A)(b) of the IBC for class of creditors:The respondent claimed that the applicants fall under the definition of a class of creditors as per Section 21(6)(A)(b) of the IBC, requiring a joint application by at least 100 creditors or 10% of the total creditors in the same class. The Tribunal did not address this issue in detail due to the dismissal of the application on other grounds.5. Disbursal of the amount and its classification as financial debt:The Tribunal emphasized that for a debt to be classified as financial debt under Section 5(8) of the IBC, there must be a disbursal against the consideration for the time value of money. The Tribunal found that the applicants disbursed the amount to the Seller, not the Corporate Debtor, and the applicants were claiming the full invoice amount, not just the discounted amount. Therefore, the applicants could not be considered financial creditors.Conclusion:The Tribunal concluded that the applicants are operational creditors, not financial creditors, as there was no direct disbursal to the Corporate Debtor. Consequently, the application under Section 7 of the IBC was not maintainable. The Tribunal dismissed the application but allowed the applicants the liberty to file an appropriate application under Section 9 of the IBC, 2016.