TaxTMI 
TaxTMI 
2025 (12) TMI 1557
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....referred to as 'Code') filed by M/s Napin lmpex Ltd., the Operational Creditor of the M/s Kirtiman Cements and Packaging Industries Limited (Corporate Debtor). The Adjudicating Authority vide the impugned order directed the initiation of the Corporate Insolvency Resolution Process (CIRP) against M/s Kirtiman Cements & Packaging Industries Limited, the Corporate Debtor (CD). Mr. Narendra Singh Chhabra was appointed as Interim Resolution Professional and he was later confirmed as Resolution Professional (RP). He is the Respondent No.1 in this appeal. 2. The Appellant Sh. Jatinder Oberoi, the suspended director of the Corporate Debtor, has preferred this appeal challenging the admission order on the grounds that the petition was entertained despite serious disputes regarding the existence and quantum of debt, fabrication and inconsistency in the documents relied upon, contradictions in the alleged dates of default, and non-fulfilment of mandatory statutory requirements under the Insolvency and Bankruptcy Code, 2016. The Corporate Debtor, represented through its Resolution Professional, Mr. Narendra Singh Chhabra, is the Respondent No.1 herein. 3. The brief facts of the case are ....
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....ting CIRP against the Corporate Debtor. The present appeal arises from the aforesaid order. Mr. Narendra Singh Chhabra was appointed as Interim Resolution Professional, who was subsequently confirmed as Resolution Professional. 4. Aggrieved by the impugned order Mr. Jatinder Oberoi, Suspended Director of the Corporate Debtor has filed this Company Appeal (AT) (Ins.) No. 536 of 2024 in which the following order was passed on 15.03.2024: "15.03.2024: The Learned Counsel for the Appellant submits that Operational Creditor had no right to initiate the proceedings under Section 9 of the IBC since the supplies was made by the company and the agreement dated 11.04.2017 the Operational Creditor had no authority to initiate Section 9 proceedings. The Learned Counsel for the Respondent refuted the submissions and submits that it was the duty of the agent to collect the amount from the Corporate Debtor and return to the company. The Corporate Debtor having not made the payment, the Operational Creditor has every right to initiate the Section 9 application. Submissions needs scrutiny. The Learned Counsel for the Respondent prays for and is allowed to file....
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..... Pursuant to the aforesaid order of Hon'ble Supreme Court of India the following order was passed by this Appellate Tribunal on 27.08.2024 which is extracted below: "27.08.2024: We have perused the order dated 09.08.2024 passed by Hon'ble Supreme Court of India in Civil Appeal No. 8156 of 2024 wherein it has been held as under: ... "If the appellant complies with the said condition to the satisfaction of the Registrar of the National Company Law Appellate Tribunal (NCLAT) within a period of three weeks from today, the order of stay granted on 15th March, 2024 by NCLAT shall stand revived. On the failure of the appellant to make compliance within three weeks, the order of stay shall not revive." It is submitted by the learned Counsel for the Appellant FDRs have since been deposited in terms of the order dated 15.03.2024, hence, the stay order dated 15.03.2024, granted by this Tribunal, stands revived. Directed accordingly. Hard copy of the Rejoinder be filed. Pleadings are complete. List the matter for arguments on 4th October, 2024." 8. Sh. Jatinder Oberoi, Erstwhile Director of CD and appellant herein filed a Contempt Petition No. 2....
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....he Corporate Debtor are continued with the assistance of erstwhile management and personnel of the Corporate Debtor under the guidance of CoC. List the matter on 10.01.2025." 10. On 10.01.2025 a final order was passed vide which the possession of the Corporate Debtor premises was ordered to be handed over to the appellant. The relevant paras 1 & 4 of the order are extracted below: "1. This order be read in continuation of order dated 4th October, 2024 and order dated 22.11.2024 passed in Contempt Case (AT) No. 25 and 26 of 2024. 4. On our query we find by 15.3.2024 the possession of the premises was taken over by the RP and guards were placed there. The CoC was also formed by then. However, the appellant submits they were the one who were running the factory even as on 15.03.2024. It is submitted in case the appellant are allowed to run the factory they shall provide weekly reports to the RP and shall also provide documents as were required by the RP and in case the RP/ CoC finds the assets are being siphoned off, they shall report the same to this Tribunal. In these circumstances let the appellants be allowed the entry to the factory premises and be a....
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.... by the Corporate Debtor directly to ONGC Petro Additions Ltd. (OPAL), clearly showing OPAL as the seller. No purchase orders were ever issued in favour of Respondent No. 2, nor has Respondent No. 2 issued any invoices to the Corporate Debtor. The price circular, determining the price of the goods, was also issued by OPAL, confirming that sales were made by OPAL to the Corporate Debtor. It is undisputed that Respondent No. 2 neither owned nor supplied the goods, nor was entitled to payment from the Corporate Debtor; it merely collected payments on behalf of OPAL and received commission as per Clauses A to D and Clause 6 of the Del Credere Agreement dated 11.04.2017. 16. It is submitted that under the Del Credere Agreement, the Respondent/Applicant is only authorized to market and distribute the goods of OPAL and has no right to initiate any legal proceedings without OPAL's specific written authorization (Clause 2 and 3). To clarify who can file a Section 9 petition, Regulation 2B of the IBBI (CIRP) Regulations, 2016 mandates that an Operational Creditor must file Form GSTR-1, GSTR-3B, and the e-way bills along with the application. These documents can only be filed by the actual....
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....covery proceedings. In contrast, in the present case, neither the invoices nor the agreement contains any such condition, and Clause 3(b) expressly prohibits Respondent No. 2 from acting as a legal representative or initiating proceedings on behalf of OPAL. Thus, the legal basis on which the NCLAT allowed the petition in that case does not exist here. 21. Ld. Counsel submits that Respondent No. 2 has never filed a Section 9 petition on behalf of the supplier, nor is there any authority letter, power of attorney, or provision in the agreement authorizing Respondent No. 2 to initiate legal proceedings on behalf of OPAL. Reliance is placed on the judgment of the Hon'ble Supreme Court in Union of India & Ors. vs. Future Gaming Solutions Pvt. Ltd. (Civil Appeal Nos. 4289-4290 of 2013), decided on 11.02.2025, wherein the Court held that merely describing a party as an "agent" does not make it an agent in law unless it acts on behalf of the principal. Where the so-called agent purchases goods from the supplier and resells them at its own profit, it is treated as a buyer; whereas if it only earns commission and does not act on behalf of the principal, it is merely an intermediary and no....
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....,25,424/- (Rupees Fifty-Four Crores Sixty-Four Lakhs Twenty-Five Thousand Four Hundred and Twenty-Four only). The category-wise details of the claims collated are as under: S. No. Particular of Creditor Amount of Claim Financial Creditors 1. State Bank of India 50,02,68,810 2. Oxyzo Financial Services Limited 1,78,75,249 Operational Creditors (Other than Workmen and Employees) 3. Surya Synpax Private Limited 2,01,851 4. Napin Impex Limited 2,27,80,965 5. SPCX Private Limited 49,89,483 Operational Creditor (Government Dues) 6. Employees State Insurance Corporation Limited 3,09,066 Total amount of claims submitted 54,64,25,424/- 28. The Ld. Counsel further submits that the CIRP Cost incurred up to 30.06.2025 stands at Rs. 47,78,491/-. Submission of Respondent No.2/ Operational Creditor 29. Ld. Counsel for Napin Impex Ltd./ Respondent No.2 states that the Appellant has challenged the order dated 20 February 2024, whereby the Hon'ble NCLT, Chandigarh, admitted the Section 9 petition filed by Respondent No. 2 for an undisputed operational debt owed by the Corporate Debtor, Kirtiman Packaging....
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....ting payment from the Corporate Debtor and sending it to OPAL. If the Corporate Debtor failed to pay, Napin had to pay OPAL from its own funds. Clause 7 clearly states that Napin guarantees the payment of the price of goods, must deposit the sale proceeds immediately, maintain daily accounts, and is liable to pay the outstanding amount (with interest) if the Corporate Debtor defaults. Therefore, Napin took full financial responsibility and became the party to whom the Corporate Debtor owed money. 35. The Respondent No.2 submits that by letter dated 04.09.2017, the Corporate Debtor unequivocally accepted Napin's role as the Del Credere Agent by requesting OPAL to register it as a customer "through our DCA Napin Impex Limited." Having availed goods and enjoyed commercial benefits under this arrangement, the Corporate Debtor is estopped from now disputing its payment obligations to Napin. 36. The Ld. Counsel submits that the Corporate Debtor itself understood Napin to be the Operational Creditor, as it regularly made payments to Napin without any protest. Hence, the present objection is merely an afterthought. Having received and utilised the goods, the Corporate Debtor now wish....
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....ble Supreme Court the Respondent did not handover possession to the appellant. This action of Resolution Professional shows blatant disregard of judicial orders amounting to contempt of court. Accordingly, the petitioner prays that the contempt proceeding be initiated against the respondent. 41. The Respondent/Resolution Professional ("RP"), Mr. Narendra Singh Chhabra, categorically denies all allegations, asserting that the Applicant has suppressed material facts, approached the Tribunal with unclean hands, and is pressuring the RP to unlawfully hand over possession despite the ongoing CIRP and absence of any judicial direction terminating the RP's mandate. The RP states the CIRP was initiated on 20.02.2024 by the NCLT, Chandigarh, appointing the Respondent as the Interim Resolution Professional. In compliance with the Code, the RP issued a public announcement, verified claims, constituted the Committee of Creditors on 12.03.2024, and took control and custody of the Corporate Debtor's assets under Sections 17 and 18 of the IBC. The suspended Director/appellant also issued an undertaking on 04.03.2024 acknowledging the RP's lawful control. Pursuant to the stay order dated 15.03.....
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.... 45. The Appellant, the suspended director of Corporate Debtor of M/s Kirtiman Cements and Packaging Industries Limited, has primarily challenged the impugned order on the grounds that Respondent/Applicant did not qualify as an Operational Creditor because the invoices, supply of goods, GST returns, and entitlement to payment all belonged to OPAL, while Respondent No. 2 functioned only as a Del Credere agent earning commission. In the absence of any supply of goods or legal authorization to initiate proceedings, the Section 9 petition was not maintainable in Law. 46. The Appellant's case is that no operational debt exists between Respondent No. 2 and the Corporate Debtor because: (i) all invoices for supply of polymer raw material were issued by OPAL; (ii) Respondent No. 2 was only a Del Credere Agent and merely collected payments on behalf of OPAL; and (iii) the Respondent was neither authorized nor entitled to initiate any proceedings under Section 9 of the Code. The Appellant further argues that the Corporate Debtor had raised several disputes before the NCLT, including alleged inconsistencies in documents, incorrect account details, and the absence of GST returns and e-....
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....sue is the Appellant's contention that OPAL, and not Napin, was the real supplier of goods, and therefore only OPAL could file a Section 9 application. Appellant also claims that there is no privity of contract between him and Respondent No.2. 51. The first document in this matter relates to request by CD to OPAL regarding supply of polymer raw materials supplied by OPAL through Napin Impex Pvt. Ltd., vide the letter dated 04.09.2017, which is extracted below: 52. The aforesaid letter dated 04.09.2017 has been addressed to M/s ONGC Petro Additions Ltd. (OPAL) by the Corporate Debtor requesting for their registration as customer of OPAL through their DCA Napin Impex Pvt. Ltd. This letter clearly indicates that the Corporate Debtor became a customer of OPAL through the Respondent No.2 after the acceptance of their request by OPAL. This has been admitted by both parties. 53. We now have a look at relevant provisions of Domestic Channel Partner Agreement for DEL CREDRE AGENT ("DCA") dated 11.04.2017. We first have a look at Clause 4 (b) of the agreement, the same is extracted below: "4. PROCEDURE (b). Company shall make available to the DCA a format of indent....
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....ommission shall be payable to the DCA on monthly basis after deduction of taxes, levies and any other statutory deduction, as applicable. 7. REALISATION a. The DCA undertakes to remit to Company the value of the Products immediately on realization. The DCA guarantees and undertakes that the buyers of the said products will fulfil their obligation to Company in respect of the sales affected. The DCA further guarantees the payment of the said price due and payable for the said Products and in the event of default by the buyers or the customers in paying the prices within the due date, the DCA undertakes to pay the same and/ or Company shall have the right to realize the price for the said Products from the cash deposit/invoke the Bank Guarantee. b. The DCA shall submit daily accounts to Company of the collections received by it under this Age Agreement. The DCA shall send/ transfer the sale proceeds collected as per the instructions of Company. c. If the sale proceeds are not received by Company within its due date from the customers, such outstanding shall be payable by the DCA together with interest and charges at such rates, as may be decided by....
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.... 'Debt', has been 'legally assigned or transferred'. 60. The 'Operational Debt' is defined in Section 5(21) of the I & B Code, 2016, and it means, a 'Claim', in respect of the provision of Goods or Services', including `employment' or a 'Debt', in respect of the 2[Payment] of dues, arising under any 'Law', for the time being in force, and payable to the 'Central Government', any 'State Government' or any 'Local Authority', it means a 'Operational Debt'. 61. It is clear from the above Clauses of the DCA Agreement that the company (OPAL) has transferred its entire responsibility for procurement of orders, supply of goods, issue of invoices and receipt of payment from the customers to the Respondent No.2/Napin Impex Ltd.. In effect the company through the DCA Agreement has transferred all the operations and related risks to the DCA. Company has also transferred the entire responsibility towards compliance with all the statutory laws/ rules/ regulations upon the DCA and company is indemnified by the DCA for losses if any arising out of such sales due to any reason. In case of delayed payments by the p....
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....he first agreement is called Domestic Channel Partner Agreement for Consignment Stocking Agent (CSA) (in short CSA agreement) and second Domestic Channel Partner Agreement for Del Credere Agent (DCA) (in short DCA Agreement). Both agreements have similar clauses which bar institution of legal proceedings on behalf of company (OPAL) by the CSA /DCA (Napin Impex Ltd.) The relevant Clauses of the respective agreements (CSA Agreement Clause 4) and (DCA Agreement clause 3) are extracted below: "CSA Agreement 4. OBLIGATIONS (d) Is expressly agreed and declared that the relationship between the Parties that CSA is just one of the Domestic Channel Partners of the Company for the Territory under the terms of this Agreement. Nothing herein shall constitute or be deemed to authorize the CSA to act as the legal representative of agent except to the extent authorized by this Agreement nor shall the CSA have the fight or authority to assume. create and/or incur any liability and/or obligation, express or implied, against, in the name of or on behalf of the Company without prior permission of the Company." "DCA Agreement 3. OBLIGATIONS (b) It is expressly....
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....arrangement makes it a tri-partite agreement between OPAL, Appellant and Respondent No.2. The conduct of parties over a period of time also proves the same. 69. In Madras Chemicals and Polymers versus Vijay Aqua Pipes Private Limited., [Company Appeal (AT) (CH) (INS) 298/2021] a coordinate Bench of this Tribunal in para 44 of the Judgment held as follows: "44. It is not out of place for this 'Tribunal', to make a pertinent mention that Agents', are not normally liable for the 'Dues', from the 'Creditors', and such 'liability' will arise, only if the 'Agent', is a 'Del Credere Agent'. Furthermore, this "Tribunal', aptly points out the decision of the Madras High Court in Jayakrishna Trading Co., rep. by Partner K.T.K. Venkatesan and Ors. v. Kandasamy Weaving Factory, rep. by Mrs. Suryam Prabha, Komarapalayam, Salem, reported in (1995) 1 Law Weekly, Page 230 at Spl. Pg.: 231, wherein, at Paragraphs 23 and 24, it is observed as under: "In other words, a Del Credere Agent is one who, in consideration of extra remuneration called del credere commission, undertakes that persons with whom he enters into contract ....
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....e grounds that in the present case Respondent No.2 was not authorized to initiate legal proceedings on behalf of OPAL does not hold any water, as we can see from the DCA Agreement that Respondent No.2 was in effect an assignee of operational debt arising out of the transactions of OPAL (Principal) with CD and such assignment arose from the DCA agreement itself. 73. The appellant has further cited the Judgment of Hon'ble Supreme Court in 'Union of India & Ors v. Future Gaming Solutions Private Limited and Anr. (Civil Appeal No. 4289-4290 of 2013)'. We note that this judgment dealt exclusively with the taxability of lottery operations and the legislative competence to impose service tax, and the observations regarding "agency" and the distinction between an agent and a buyer-for-resale were made in that limited context to determine the nature of the transaction for the purpose of taxation. The issue in the present case, however, arises under Section 9 of the Insolvency and Bankruptcy Code, 2016, where the central question is whether Respondent No. 2 (Napin Impex Ltd.) qualifies as an Operational Creditor and whether an operational debt exists between the parties. The aforesai....
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....case and legal precedents, we have no doubts in our mind that the debt in the instant matter qualifies as 'Operational Debt' and Respondent No.2 is the Operational Creditor. 76. We further note that the Respondent No.1/RP has collated the claims against the Corporate Debtor and claims of the Financial Creditors to the tune of Rs. 51.81 crore have been admitted by the RP. This includes a claim of Rs. 50.02 crores of State Bank of India. In addition there are claims of Operational Creditor including Napin Impex Ltd. for approximately Rs. 3 crores. 77. We now take up the matter relating to the Contempt Case filed by the appellant against RP for violation of orders of this Tribunal dated 15.03.2024 and 27.08.2024 and the orders of Hon'ble Supreme Court dated 09.08.2024. The contention of the appellant is that inspite of clear orders of this Tribunal and Hon'ble Supreme Court the RP did not hand over possession of the CD back to the suspended management. The RP also failed to run the Corporate Debtor as a going concern. The submission of the alleged Contemnor/RP is that immediately after orders of Hon'ble NCLT initiating the CIRP on 20.02.2024 the RP issued the public announcement....
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....rought on record and response, if any, may also be filed to such affidavit. 2. Since there is a controversy as to if the factory was already closed or that the workers and management were not visiting the factory and being incidents of theft in neighbouring factories as on the date of closer on 24.07.2024, but allegedly the RP has put locks on the factory to preserve it. 3. However, Learned counsel for Appellant submits that u/Section 25 of IBC, it was the duty of RP not only to preserve the assets of the Corporate Debtor but to continue operations of the Corporate Debtor. 4. It is submitted since the factory is closed; it is difficult to continue the business operations of the Company. In the circumstances, RP is directed to immediately unlock the factory premises to see the operations of the Corporate Debtor are continued with the assistance of erstwhile management and personnel of the Corporate Debtor under the guidance of CoC. List the matter on 10.01.2025." 81. The matter was again taken up on 10.01.2025 when the final order was passed vide which the possession of the Corporate Debtor premises was ordered to be handed over to the appellan....