TaxTMI 
TaxTMI 
TaxTMI 
2014 (6) TMI 748
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...., an internationally accepted financing solution that allows a client to convert its accounts receivables - to cash, thereby enabling the client to raise instant cash against its invoices. It is said that the provision of factoring services is enabled by the Central government and the Master Guidelines issued by the Reserve Bank of India (RBI) every year, cover para-banking activities including Factoring Services. The respondent is said to have entered into a contract with the petitioner, dated 27.3.2008, entitled - Invoice Discounting/Factoring Agreement. The facility amount which was Rs.5 crore initially, was enhanced to Rs.10 Crore, as on 26.9.2008. It is claimed that the respondent committed default in repayment, in respect of which, the petitioner is said to have issued a legal notice dated 22.4.2009 demanding payment of a sum of Rs.8,66,28,184.86p with interest thereon. The respondent is said to have denied the liability entirely, by its reply dated 29.4.2009. However, it is stated, that the respondent had arrived at a settlement with the petitioner in respect of the above claim and a Memorandum of Agreement dated 2.7.2009 is said to have been executed by the respondent in ....
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....by the debtor, namely the insurance cover for which premium had been collected by the petitioner at the rate of 0.14%. It is asserted that in terms of clause 9 of the Factoring Agreement, the petitioner had a right to recourse in respect of any unappropriated debt following non-payment of its debt and in the event, the debt exceeded 100% of its credit cover, beyond a period of 60 days, the amount would be recovered from the respondent, in excess of the amount covered by insurance. It was for the petitioner to ensure that the purchase of debts did not exceed the aggregate limit of Rs.5 Crore. In September 2008, the petitioner is said to have enhanced the factoring limit to Rs.10 Crore. However, the facility was said to have been limited to two of the respondent's customers, Arvind brand and Hasbro. The insurance cover was revised and the premium collected at 0.24% of the invoice value. It is admitted by the respondent that on account of a world wide recession in the market, during January 2009, the above said customers had defaulted in payments and the respondent had assisted the petitioner in following up the process of recovery from the above customers. This, the respondent ....
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....ecided on merits. However, it is pointed out that the apex court had appreciated the fact that the transaction in question was with respect to purchase and repurchase of debts in the following terms : "ORDER Mr. Sundaram, learned senior counsel appearing on behalf of the petitioners does not dispute that as on 30th September, 2010, the petitioners have to pay Rs.5,75,51,034.35 subject to the respondents furnishing uncollected bills of that amount. Mr. Jayant Bhushan, learned senior counsel appearing on behalf of the respondents undertakes to furnish photocopies of the bills within four weeks from today and on producing the said bills within four weeks, learned senior counsel for the petitioners states that payment would be made within a week thereafter. List these matters after six weeks." However, it is stated that the petitioner failed to furnish the bill wise details against which the claims were made. However, the petitioner is said to have lodged recovery proceedings against the respondent before the DRT, seeking recovery of a sum of Rs.5.60 crore, as if it was a loan amount due from the respondent....
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....hould be recovered and allocated from the respondent - company. Moreover, the petitioner had a right to seek recourse from the respondent - company on fulfilling three conditions. (a) That the amount factored would have to exceed the sanctioned limit of Rs.100 million and that after the customers of the respondent - company becoming insolvent and unable to pay the amount to the petitioner, and (b) The amount to be claimed from the respondent-company has to be over and above the risk cover. (c) Having accepted the complete and exclusive responsibility of recovering the amounts from the respondent - company's customers, the petitioner had no business in the first place to ask the staff of the respondent - company to allocate any bills of Arvind Brands or Hasbro Clothing as against amounts purportedly recovered by them for reasons that: (i) The respondent - company had no account in the like of a bank account with the petitioner to monitor credit and debit as the petitioner is not the banker of the respondent - company. &nb....