TaxTMI 
TaxTMI 
2021 (11) TMI 283
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.... Creditor) at paragraph 5 to 10 had observed the following: - "5. we have perused the Receivables Purchase Factoring Agreement dated 12.12.2018, Irrevocable undertaking for recourse on Corporate Debtor, dated 12.12.2018. 6. On perusal of the Demand Promissory Note dated 12.12.2018 granted by the Corporate Debtor in favour of the Petitioner, it is established that the Respondent admits to the financial debt of USD 400000 or rupee equivalent along with interest from such date of demand at aggregate rate of (5.7 + 4.0) % per annum or such other rate, and at such rest (monthly or otherwise). 7. At this point it is relevant to note that the Hon'ble Supreme Court in the case of Mobilox Innovations Private Limited v. Kirusa Software Private Limited has inter alia held that the I & B Code, 2016 is not intended to be a substitute to a recovery forum and cannot be used to jeopardise the financial health, or an otherwise solvent company by pushing it into insolvency. It is also pertinent to mention that the Hon'ble Supreme Court in the case of K.Kishan v. Vijay Nirman Company Private Limited clarified that the Petitioners cannot use IBC either prematurely or for extraneous consideration....
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....shing it into insolvency, which would be against the objects of the Code." and disposed of the petition without costs by directing the Respondent/Corporate Debtor to repay the balance date or the amount as settled with the petitioner within a period of six months failing which the petitioner would be at liberty to file a fresh petition for admission. Appellant's Submissions 3. Challenging the impugned order dated 28.05.2021 in C.P.(IB) No. 61/BB/2020 passed by the 'Adjudicating Authority' ('National Company Law Tribunal'), Bengaluru Bench, the Learned Counsel for the Appellant contends that the impugned order is invalid and an illegal one because of the fact that the 'Adjudicating Authority' after accepting the fact that there was a 'debt' due and payable to the Appellant / Financial Creditor by the Respondent / Corporate Debtor, by virtue of the reason that the said debt was defaulted by the Respondent / Corporate Debtor, had no basis to defer the initiation of CIRP' against it. 4. According to the Learned Counsel for the Appellant, the 'Adjudicating Authority' had no jurisdiction to evaluate the financial health of the 'Corporate Debtor' for the purpose of admitting 'Corporat....
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....or any part or instalment of the amount of debt has become due and payable and is not paid by the debtor or the corporate debtor, as the case may be. Circumstances for Admission of Application 13. It is relevantly pointed out that the 'Adjudicating Authority' is not a 'Court of Law' and that 'CIRP' is not a litigation. As a matter of fact, if the 'Adjudicating Authority' is subjectively satisfied as to the existence of default and arrive at a conclusion that the application is a complete one and further that no disciplinary proceedings are pending against the proposed 'Resolution Professional' it is incumbent upon it to admit the application. In reality, no other 'yardstick' is required to look into any other requirement for admission of the application. 14. It cannot be gainsaid that an initiation of CIRP does not amount to recovery proceedings and that the 'Adjudicating Authority' at the time of determination as to whether to admit or reject an application u/s 7 of the 'I&B' Code is not to take into account the reasons for the Corporate Debtor's default. Appraisal 15. In the application filed by the Appellant / Financial Creditor to initiate CIRP (u/s 7 of the I&B Code) read....
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....icularly described in Invoice Schedule (Exhibit 7). 2. AMOUNT CLAIMED TO BE IN DEFAULT AND THE DATE ON WHICH THE DEFAULT OCCURRED (ATTACH THE WORKINGS FOR COMPUTATION OF AMOUNT AND DAYS OF DEFAULT IN TABULAR FORM) As per the clause 2 & 3 of the Undertaking of Corporate Debtor read with clause 4.5(f) of the RPA, upon happening of any Commercial Dispute, Corporate Debtor is required to pay the Outstanding Receivables to Financial Creditor within 3 days from the date of demand and Financial Creditor has full recourse on Corporate Debtor with respect to such Outstanding Receivables. Accordingly, upon receiving the email from Aquarius USA Inc. dated 12/09/2019 clearly establishing Commercial Dispute amongst Corporate Debtor and Aquarius USA, Inc., Financial Creditor exercised recourse on Corporate Debtor by raising official demand vide its letter dated October 14, 2019("Demand'') for repayment of Outstanding Receivables (Financial debt) under the overdue Invoices. A true copy of email dated 12/09/2019 sent by Aquarius USA Inc. to Financial Creditor is annexed herewith as Exhibit 9. A true copy of the demand made by the Financial Creditor dated October 14, 2019 against the Corporate D....
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....ng for Recourse against Corporate Debtor dated December 12th, 2018 (annexed as Exhibit 6): (iii) Invoice Schedule containing the outstanding dues payable to Financial Creditor (annexed as Exhibit 7). (iv) Request cum assignment deed by Corporate Debtor along with copies of Invoices (annexed as Exhibit 8): (v) Demand made by the Financial Creditor dated October 14, 2019 against the Corporate Debtor (Annexed as Exhibit 10): 17. The clear cut stand of the Appellant / Financial Creditor is that it had granted an export finance facility to Respondent / Concord Creations India(Pvt.) Ltd. (Corporate Debtor) as per (i) the Receivables Purchase Factoring Agreement (RPA) dated 12.12.2018 duly authorised by the Corporate Debtor through its Board Resolution dated 12.12.2018 (ii) An irrevocable Undertaking for Recourse against Corporate Debtor 12.12.2018 (Undertaking) and in addition to the above documents, the Corporate Debtor had also provided a Demand Promissory Note in favour of Financial Creditor which was dated 12.12.2018. 18. The plea of the Appellant is that under the terms of 'Receivables Purchase Factoring Agreement' read with Undertaking, the Corporate De....
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..... However, even after repeated reminders issued to the Corporate Debtor, in regard to the non-payment of Invoices on repayment due date, the Corporate Debtor had failed to reply to the Demand Notice or repay the Financial Debt. 23. The Learned Counsel for the Appellant / Financial Creditor/ Applicant points out that since the Corporate Debtor had defaulted in its payment obligations to the Financial Creditor and is in default of its admitted liability to pay as per the terms of 'Receivables Purchasing Agreement' read with Undertaking and the Demand, the 'CIRP' be initiated against it in accordance with Section 7 of the 'I&B' Code, 2016. 24. It is quite evident from the 'Notice of Default cum Demand' dated 14.10.2019 addressed to the Respondent by the authorised signatory of the Appellant 'Outstanding Receivables' on the due date of USD 37,585.00 together with interests, default interest, overdue fees and all other charges were claimed till the date of actual payment, to be paid by the Respondent / Concord Creations (India) Pvt. Ltd. within three days from the date of this letter. 25. In the instant case, because of the fact that the advances made by the Appellant / Financial Cre....