TaxTMI 
TaxTMI 
2019 (6) TMI 519
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....lowing facts are not in dispute 2.1 M/s. Gujarat NRE Coke Ltd. (the company now in liquidation, as per order dated 11.01.2018 passed by this authority in CP No. 182/KB/2017, M/s. Gujarat NRE Mineral Resources Ltd. (Now Know as M/s Bharat NRE Coke Ltd.) Gujarat NRE Mineral Resources Ltd. (now known as M/s.Bharat NRE Coke Ltd.) - the Corporate Debtor and the applicant/ Financial Creditor entered into coal purchase agreement dated 27.08.2013 (Annexure P-VII). In order to facilitate smooth supply of coal and as at that point of time, M/s. Gujarat NRE Coke Ltd. was in dire need of funds as a working capital, the applicant gave advance of Rs. 39.50 crores to them under that agreement. The Corporate Debtor herein was the Guarantor cum Pledger assured the applicant of their advance payment to the Gujarat NRE Coke Ltd. stating that in event the Gujarat NRE Coke failed to supply the coal as agreed, the corporate debtor would pay back the amount. The corporate debtor executed separate share pledge agreement dated 27.08.2013 in favour of the applicant as the guarantee/surety to offer said sum and the pledged their two crore shares of face value of Rs. 10/- each with the applicant. 2.2 It....
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.... length. Both of them relied on number of rulings and orders of various NCLT Benches and the orders of the Hon'ble NCLAT. I would consider those rulings/ orders at proper stage. They also filed on record written notes of argument. 6. Ld. Sr. Counsel Mr. Banerjee for the Financial Creditor submitted that there is no dispute about the existence of the debt and its default by the corporate debtor. By the award dated 16.08.2016, the corporate debtor was directed to pay the specified sum of money alongwith the interest. Definition of financial debtor in section 5(8) of IBC is too wide. The amount was paid as an advance. That transaction was having commercial effect of borrowings. As per section 5(8) clause (f), amount claimed by them is a financial debt and this application under section 7 of IBC is maintainable. Ld. Sr. Counsel further submitted that the corporate debtor challenged the award by way of appeal. Appeal is dismissed and the award reached its finality. The amount awarded carries the interest. Hence, it is the financial debt. 7. As against this, Ld. Sr. Counsel for the corporate debtor, Mr. Joy Saha submitted that the corporate debtor was the guarantor to the origi....
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....i) whether the amount claimed by the applicant/financial creditor on the basis of award dated 16.08.2016 is the "financial debt" or the "operational debt"? (ii) My answer to the above point is that it is the financial debt. 10. As noted earlier, most of the facts are not in dispute. On the basis of admitted facts, I have to ascertain the nature of the debt. There are two separate and distinct agreements entered in between the applicant, Gujarat NRE Code Ltd. and the Corporate Debtor. First agreement is coal purchase agreement dated 27.08.2013. Under this agreement, Gujarat NRE Coke Ltd. agreed to sell the applicant 50000 mt. Coal. Para -C in that agreement is very relevant for consideration of controversy. It states that, "Seller is in urgent requirement of funds for its working capital and has offered to sell 50000 MT of product to the buyer and the buyer has agreed to purchase the product on the terms and conditions contained in this Agreement. The Seller has also requested the Buyer to make immediate payment of Rs. 24,75,00,000 (Rs.Twenty Four Crores Seventy Five Lacs Only) towards advance against the Product to be delivered by the Seller to the Buyer which shall be ....
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.... is not narrowed down but by way of explanation, its scope is widened. To support my this view, I rely on ruling of the Apex Court in case of [B.Trading Company v. State of Uttar Pradesh [1993] Supplementary (3) SCC 361(1)], wherein it was held that, "It is well settled rule of interpretation that whether the legislature uses words "means" and "includes", such definition is to be given a wider meaning and is not exhaustive or restricted to the terms contained therein for included in such definition." 14. Ld. Sr. Counsel for the Corporate Debtor relied on order of Hon'ble NCLAT in case of Neeraj Bhatia, Director of Summit Aviation (P.) Ltd. v. Summit Aviation (P.) Ltd. [(2018) 1 IBJ(JP) 228 (NCLAT)]. Ld. Sr. Counsel pointed out the head note of the order wherein it is mentioned that," Where there nothing on record to suggest that the amount had been disbursed in favour of Corporate Debtor against consideration for the time value of money and that money was borrowed or raised by the Corporate Debtor under any transaction or mode having commercial effect of borrowing, the contesting respondents could not come within the meaning of "Financial Creditor" and the application under ....
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....#39; due to him which has been disbursed against the 'consideration for the time value of money'." 17. In this case, the applicant made an advance payment of money to Gujarat NRE Coke Ltd. They were to supply the coal. The Corporate Debtor is the Guarantor of Gujarat NRE Coke Limited for the advance money accepted by them from the applicant. The corporate debtor agreed to pay back the advance together with interest @30% per annum. That transaction is having commercial effect and it clearly falls in definition of 'financial debt' as stated under section 5(8) (clause-f) of I&B Code. 18. While arguing on behalf of the corporate debtor, the Ld. Sr. Counsel submitted that only because interest is charged is not enough and decisive factor to hold that amount claimed is the financial debt. He submitted that in the case of operational debt also, the interest is being charged. He relied on the order dated 10.04.2017 passed by the Ld. Adjudicating Authority at Mumbai in the case of DF Deutsche Forfait AG (supra). 19. I have gone through that order. What the Ld. Adjudicating Authority held therein is that at times, interest can be charged and payable on operational de....
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.... and payable which includes non-payment of even part thereof or an instalment amount. For the meaning of "debt", we have to go to Section 3(11), which in turn tells us that a debt means a liability of obligation in respect of a "claim" and for the meaning of "claim", we have to go back to Section 3(6) which defines "claim" to mean a right to payment even if it is disputed. The code gets triggered the moment default is of rupees one lack or more (Section 4)...." 22. It is submitted by the Ld. Sr. Counsel that applicant has submitted the claim to the Liquidator in C.P. No.182/KB/2017 as the operational creditor. They cannot now describe them as a financial creditor. I hold that it is immaterial for me to take into consideration as to what submission the applicant made in other proceeding about their status as the creditor. Considering the facts herein, I hold that they are the financial creditors of the Corporate Debtor herein. 23. It is also brought to my notice that the applicant has filed execution proceeding in the Court at Dharwar in the state of Karnataka. It is submitted that they cannot file this proceeding as it is amounting to forum shopping. The corporate debtor reli....
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....olvency Resolution Process and call for the submission of claims under Sec. 15. The public announcement referred to in clause (b) of sub-section (1) of Insolvency & Bankruptcy Code, 2016 shall be made immediately. (iii) Moratorium under Sec. 14 of the Insolvency & Bankruptcy Code, 2016 prohibits the following: (a) The institution of suits or continuation of pending suits or proceedings against the corporate debtor including execution of any judgement, decree or order in any court of law, tribunal, arbitration panel or other authority; (b) Transferring, encumbering, alienating or disposing of by the corporate debtor 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 corporate debtor in respect of its property including any action under the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (54 of 2002); (d) The recovery of any property by an owner or lessor where such property is occupied by or in possession of the corporate debtor. (iv) The supply of essential goods or services ....