TaxTMI 
TaxTMI 
2023 (8) TMI 1304
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.... 2. Earlier, the 'Adjudicating Authority' ('National Company Law Tribunal', Division Bench - I, Chennai), while passing the 'impugned order', dated 11.01.2021, in IBA / 1166 / 2019 (Filed by the 'Petitioner / Financial Creditor'), under Section 7 of the I & B Code, 2016, read with Rule 4 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016, at Paragraph Nos. 13 & 14, had observed the following: 13. "It is to be seen herein that there is no financial contract which is seen on record in order to establish that the relationship between the Financial Creditor and the Corporate Debtor herein in order for the Applicant to qualify as a 'Financial Creditor'. 14. Further as already stated the alleged Financial Creditor herein has filed present Application in terms of the powers given under Clause 15 Del Credere Agency Agreement wherein the powers have been delegated to the Agent which is the Financial Creditor herein to initiate legal proceedings in case of a default made by the party. However, as already stated in the said Clause 15 it clearly manifests the fact that if the Agent shall be able to initiate against the legal proceedings, only....
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....vident in Clause 7 of the Agreement. In the event of 'Person / Party', instructed or recommended by the Appellant, failing to pay the Sum(s), to whom supplies were made by the Principal, the Appellant has to pay such amounts to the 'Principal'. 7. The Learned Counsel for the Appellant / Petitioner, points out that the 'Appellant', had recommended the 'Respondent / Corporate Debtor', for supplies of PVC Suspension Resin, and on the basis of the recommendations, the 'Principal', had effected supplies to the 'Respondent / Corporate Debtor, who had not made payment. However, the 'Respondent / Corporate Debtor', had made payments, by way of 'interest', to the 'Appellant'. In reality, the 'Respondent / Corporate Debtor', through email dated 15.03.2019, had acknowledged its 'Liability', to pay the amount. 8. The stand of the Appellant is that, it issued 'Recall Notice', on 24.07.2019, demanding a Sum of Rs.1,23,14,186/-, which remained 'Outstanding', as 20.07.2019, within 7 days from the 'date of receipt of the said Notice'. Because of the fact that there was no response, to the said 'Recall Notice', the 'Appellant / Petitioner', had filed the main Petition in IBA / 1166 / 2019 (On ....
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.... Details evidencing payment Page No. 1 33 19.09.2014 1302/- 12.03.2015 Cheque No.961737 558 2 34 19.09.2014 13216/- 12.03.2015 Cheque No.961737 559 3 40 14.11.2014 8322/- 12.03.2015 Cheque No.961737 563 4 47 26.11.2014 163143.80 12.03.2015 Cheque No.961737 564 5 55 22.12.2014 2836/- 12.03.2015 Cheque No.961737 566 16. It is the contention of the Learned Counsel for the Appellant / Petitioner that the aforesaid 'Debit Notes', and the 'Corresponding Payments', would demonstrate that the 'Corporate Debtor', had acknowledged the fact that (i) The Amount is payable by it, to the 'Appellant' (ii) Interest was serviced, for the delayed payments and that the 'entire transaction' (between the Appellant and Respondent), has the effect of 'Commercial Borrowing', and as such, the 'Appellant', has a 'Financial Debt', due from the 'Corporate Debtor'. 17. According to the Appellant....
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....come imperative, if the context of the Act is sufficient to shew that it was not merely employed for the purpose of adding to the natural significance of the words or expressions defined. It may be equivalent to 'mean and include', and in that case it may afford an exhaustive explanation of the meaning which, for the purposes of the Act, must invariably be attached to these words or expressions." 48. This Court in the case of Associated Indem Mechanical (P) Ltd. vs. W.B. Small Industries Development Corpn. Ltd.23 while construing the definition of the term "premises" as provided under Section 2(c) of the W.B. Government Premises (Tenancy Regulation) Act, 1976, observed thus: (SCC pp. 614-15, para 13) "13. ........The definition of 'premises' in Section 2(c) uses the word "includes" at two places. It is well settled that the word "include" is generally used in interpretation clauses in order to enlarge the meaning of the words or phrases occurring in the body of the statute; and when it is so used those words or phrases must be construed as comprehending, not only such things, as they signify according to their natural import, but also those things which the interp....
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.... enactment." 18. Section 2(1)(m) which enumerates four categories, namely, (i) a firm whether registered or not; (ii) a Hindu Undivided Family; (iii) a cooperative society; and (iv) every other association of persons whether registered under the Societies Registration Act, 1860 (21 of 1860) or not while defining "person" cannot be held to be restrictive and confined to these four categories as it is not said in terms that "person" shall mean one or other of the things which are enumerated, but that it shall "include" them. 19. The General Clauses Act, 1897 in Section 3(42) defines "person": "3. (42) 'person' shall include any company or association or body of individuals, whether incorporated or not;" 20. Section 3 of the 1986 Act upon which reliance is placed by learned counsel for KPTC provides that the provisions of the Act are in addition to and not in derogation of any other law for the time being in force. This provision instead of helping the contention of KPTC would rather suggest that the access to the remedy provided to (sic under) the Act of 1986 is an addition to the provisions of any other....
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....erabad Bench, in IA No. 397 of 2019 in CP (IB) No. 315 / 7 / HDB / 2018, between Gowra Petrochem Pvt. Ltd. v. Ashok Polymers Ltd., wherein, at Paragraphs 20 & 21, it is observed as under: 20. "RP and IRP present. They filed a memo dated 04.06.2019 stating that all the expenses of CIRP are paid to the IRP & RP by the COC of the Ashok Polymers Limited and there are no pending CIRP expenses to be paid. 21. This Tribunal by exercising powers under Section 12A of the Code R/W regulations 30A of IBC (Corporate Insolvency Resolution Process) Regulations 2016, approved the application for withdrawal." 21. The Learned Counsel for the Appellant / Petitioner, adverts to the Order dated 19.02.2019 in CP (IB) No. 315 / 7 / HDB / 2018, wherein, at Paragraphs 14 & 15, it is observed as under: 14. "The only contention raised by Corporate Debtor that it had paid money covered by the invoices for which there is no proof. The second contention is that Petitioner is not a Financial Creditor which is also not correct as documentary evident support that Petitioner is a Financial Creditor and money was paid on behalf of Corporate Debtor to M/s. RIL for supply of goods and cr....
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....al creditor', meaning 'any person to whom a financial debt is owed and includes a person to whom such debt has been legally assigned or transferred to'. Financial Debt: 29. Section 5 (8) of the 'Code', defines 'financial debt', meaning 'a debt alongwith interest, if any, which is disbursed against the consideration for the time value of money and includes- (a) money borrowed against the payment of interest; (b) any amount raised by acceptance under any acceptance credit facility or its de-materialised equivalent; (c) any amount raised pursuant to any note purchase facility or the issue of bonds, notes, debentures, loan stock or any similar instrument; (d) the amount of any liability in respect of any lease or hire purchase contract which is deemed as a finance or capital lease under the Indian Accounting Standards or such other accounting standards as may be prescribed; (e) receivables sold or discounted other than any receivables sold on non-recourse basis; (f) any amount raised under any other transaction, including any forward sale or purchase agreement, having the commercial effect of a borrowing; 1 [Explanati....
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.... City of Chennai and its Suburbs, Tamil Nadu, and Customers, nominated by 'Chemplast', on a 'non-exclusive basis'. 33. In fact, the Clause 5 of the 'Agreement', enjoins that "the Company shall effect supplies of the Said Products only to the party/ies recommended / instructed by the 'Agent', in writing. The Company shall raise the Invoice/s in the name/s of the said party/ies and send the same to the Agent for collection / realising payments." 34. In fact, the Clause 7 of the 'Agreement', enjoins that "the Agent, shall be personally liable to the Company for payments towards sale of the Said Products to party/ies instructed/recommended by the Agent. The Agent hereby agrees to submit to the Company an unconditional and irrevocable Bank Guarantee / Cash deposit for a sum of Rs.40,00,000/- (Rupees Forty Lakhs only) towards Security Deposit. The Bank Guarantee so deposited with the company under this Agreement shall be initially valid for a period of eighteen months from the date of execution of this Agreement. The Agent further agrees to provide the Company with additional Bank Guarantees, for such value and validity period, as may be intimated by the company from time to time."....
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....at the perusal of the Invoice, raised by M/s. Chemplast Sanmar Limited, raised on the 'Respondent', will reveal that the payment, in respect of the 'Invoices', shall be made in favour of the 'Appellant' (a 'Proprietorship Concern'), and that, the 'Appellant', had paid the 'Amounts', detailed in the attached Annexure to M/s. Chemplast Sanmar Limited, in terms of the Invoice, the Amount, needs to be paid, within 10 days from the 'Date of Invoice', and in the event of failure, the same carried 'Interest at 21% per annum', but the Appellant restricts the same to 18% per annum. 40. In effect the 'Legal Notice', dated 24.07.2019 of the Appellant, mentions that the 'Respondent', is liable to pay a sum of Rs.1,23,14,186.94/- in respect of the Supplies made by M/s. Chemplast Sanmar Limited', on Appellant's instructions. 41. In the 'Legal Notice', dated 24.07.2019, issued by the Appellant's side to the Respondent, indicates that the 'Respondent', through Email dated 15.03.2019, had acknowledged a Sum of Rs.90.84 Lakhs, which was payable by the 'Respondent', as on 15.03.2019. 42. In reality, the Respondent, was called upon by the Legal Notice dated 24.07.2019 (issued on behalf of the....
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.... Das Ganpati Rai v. Gulab Khan, reported in AIR 1963, Pat 407. 47. It is to be pointed out that Clause 8 of the 'Del Credere Agency Agreement', dated 04.04.2017, between M/s. Chemplast Sanmar Limited and the Madras Chemicals & Polymers (Firm) - Appellant / Petitioner, proceeds to the effect "the Agent shall make their own arrangements, at their own cost, for collecting payments from the parties to whom the Company has effected / despatched supplies based on the recommendations / instructions of the Agent. Payment shall be effected by way of Cheque/s or Demand Draft/s drawn in favour of the Company, payable at Chennai". 48. Further, Clause 12 of the 'Del Credere Agency Agreement', dated 04.04.2017, between the 'Parties' enjoins that "Notwithstanding this Agreement, the Company is entitled to sell or distribute either directly or indirectly the Said Products in the City of Chennai and its suburbs, Tamil Nadu." 49. It is clear from Clause 3 of the 'Del Credere Agency Agreement' dated 04.04.2017 that the Company shall pay to the Agent, Commission, as intimated by the Company from time to time, against the sale of the said Products to the 'Parties', recommended / instructed by ....
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....w Tribunal', and the 'Debt Recovery Tribunal', as the 'Adjudicating Authorities', for 'Corporate Persons', and 'Firms', and 'Individuals', respectively, for 'Resolution' of 'Insolvency', 'Liquidation' and 'Bankruptcy'. 54. The Invoice No.0100784974 dated 22.06.2017 in the name of M/s. Chemplast Sanmar Limited, mentions the Customer's name as M/s. Vijay Aqua Pipes (P) Ltd, and in Delivery / Consignee's Column, it is mentioned as Vijay Aqua Pipes (P) Ltd., Tiruvallur. 55. In the aforesaid Invoice dated 22.06.2017, it is unequivocally mentioned that 'Payment', in respect of this 'Invoice', should be made only in favour of Agent 'Madras Chemicals & Polymers' ('Appellant / Petitioner'). The Invoice value is mentioned as Rs1,337,915/- and the 'rate of interest', was mentioned as 21% per annum, would be charged, if payment was not made on or before 'due date'. 56. In the instant case on hand, one can deduce safely and securely that the 'Appellant / Financial Creditor / Petitioner', as per 'Invoice', is enjoined to 'receive Money for and on behalf of M/s. Chemplast Sanmar Limited' ('Principal Company'). It cannot be gainsaid that 'no amount', was 'disbursed', to the 'Corporate Deb....
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....ce', dated 24.07.2019, to the 'Respondent / Corporate Debtor', and not issued a 'Legal Notice', demanding payment under Sub-section 1 of Section 8 of the 'Code'. 62. Section 9 (1) of the 'Code', mentions that 'after the expiry of period of ten days, from the 'date of delivery of the notice' or 'invoice', demanding 'payment', under Sub-section 1 of Section 8 of the 'Code'. If the 'Operational Creditor', had not receive 'payment', from the 'Corporate Debtor' or 'Notice' of the 'Dispute', under Sub-section 2 of Section 8, the 'Operational Creditor', may file an 'Application', before the 'Adjudicating Authority', for initiating a 'Corporate Insolvency Resolution Process'. 63. Admittedly, in respect of the occurrence of a 'Default', a 'Demand Notice', as per Section 8 (1) was not given to the 'Corporate Debtor'. Section 8 (2) of the 'Code', specifies a period of ten days of the receipt of the 'Demand Notice' or 'copy of Invoice', mentioned in Section 8 (1) of the 'Code'. The 'Legal Notice', dated 24.07.2019 of the Appellant / Petitioner's, only mentions 'within 7 days of receipt of this Notice', etc. As a matter of fact, the 'Legal Notice', dated 24.07.2019 of the 'Appellant....