Kawaljeet Singh Bhatia Erstwhile ... vs Drip Capital Inc on 14 October, 2025

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National Company Law Appellate Tribunal

Kawaljeet Singh Bhatia Erstwhile ... vs Drip Capital Inc on 14 October, 2025

This appeal by a suspended director of the corporate debtor, Eco Gold Nutri & Organics LLP has been filed, challenging the order dated 17.06.2025 passed by the adjudicating authority (National Company Law Tribunal (NCLT), Special Bench at Indore) admitting Section 7 application filed by the financial creditor Drip Capital INC.

2. Brief facts of the case giving rise to the appeal are:

i. The corporate debtor Eco Gold Nutri & Organics LLP is engaged in the business of the Soyabean, its factory being situated in district Indore, Madhya Pradesh. The corporate debtor had engaged in export of its product.

ii. The respondent Drip Capital INC is a company registered at United States of America, has been providing export financing.

iii. The corporate debtor and financial creditor (hereinafter referred to as 'Factor') entered into Receivable Purchase Factoring Agreement dated 04.04.2019 for availing factoring facilities by corporate debtor from respondent.

iv. Receivable under the invoices issued by corporate debtor to different entities were to be purchased by factor and factor was to pay the corporate debtor and receive the payment from debtors. v. On the same day, on which date Receivable Purchase/Factoring Agreement dated 04.04.2019 was entered between the parties. Indemnity agreement was also entered on 04.04.2019. Letter dated 04.04.2019 was issued by the corporate debtor to the Drip Capital "ref. irrevocable undertaking for which recourse factoring of receivable". vi. Another Agreement referred as Collateral Management Agreement was entered between parties on 04.04.2019. On 04.04.2019, corporate debtor also instituted in favour of the financial creditor a demand promissory note, unconditionally undertook and promise to pay against the order of demand sum not existing US dollar 14,00,000/- or local currency equivalent together with interest from the rate of demand. Comp. App. (AT) (Ins.) No. 1291 of 2025 2 of 27 vii. Corporate debtor issued six invoices on CapRock Grain between 14.02.2023 to 02.05.2023 vide separate purchase request from Deed of Assignment. Corporate debtor assigned in favour of the financial creditor all six invoices which were payable by CapRock Grain (account holder to the financial creditor).

viii. Corporate debtor also deposited the original bill of landing with financial creditor. The financial creditor paid an aggregate amount of US $ 8,42,52,000 to corporate debtor towards assignment of six invoices. The said invoices were payable by CapRock Grain to the financial creditor. CapRock Grain failed to pay the financial creditor on respective invoices due dates which were between 24.05.2023 to 07.06.2023.

ix. On 20.06.2023, corporate debtor assured the financial creditor that payment towards the outstanding amount shall be made. Corporate debtor sought release of bill of landing. On 20.06.2023 corporate debtor executed a deed of undertaking in favour of the financial creditor, acknowledging its liability to pay the entire outstanding amount, in case the debtor (account holder) failed to pay entire outstanding amount. x. Corporate debtor made a part payment of US $ 4,74,920/- in favour of the financial creditor. Account holder failed to pay the outstanding. Financial creditor sent emails communication to the corporate debtor demanding the payment of balance outstanding amount. Comp. App. (AT) (Ins.) No. 1291 of 2025 3 of 27 xi. Financial creditor on 23.08.2023 issued notice of default to the corporate debtor calling upon the corporate debtor to pay amount of 4,14,193/- US $ being aggregate unpaid outstanding. xii. Corporate debtor further wrote on 15.09.2023, demanding outstanding amount of 4,15,246/- US $. Corporate debtor emails were sent by the financial creditor to the corporate debtor demanding the payments including the email dated 08.01.2024.

xiii. Outstanding payment having not been made the financial creator filed Section 7 application before the NCLT, Special Bench at Indore on 11.04.2024 claiming a default of US $ 4,29,104/-. Corporate debtor also filed a claim before the Export Credit Guarantee Corporation of India (ECGC) which rejected the claim of corporate debtor on 26.07.2024.

xiv. Reply to Section 7 application was filed by the corporate debtor on 20.01.2025 to which rejoinder was also filed by the financial creditor. xv. Adjudicating Authority by the impugned order 17.06.2025, admitted Section 7 application. Adjudicating authority after hearing the parties framed four issues for consideration which is noticed in paragraph 26 of the impugned order, which are as follows:

"26. We have heard Ld. Counsel for the Financial Creditor as well as Ld. Counsel for the Corporate Debtor and perused the material available on record. The following issues arise for determination: -

(a) Whether the debt claimed by the Financial Creditor constitutes a Financial Debt under Section 5(8)(e) of the Insolvency and Bankruptcy Code, 2016?

Comp. App. (AT) (Ins.) No. 1291 of 2025 4 of 27

(b). Whether a Default has occurred by the Corporate Debtor, entitling the Financial Creditor to initiate the Corporate Insolvency Resolution Process under Section 7 of IB Code?

(c). Whether the petition is maintainable in light of the Corporate Debtor's objections regarding non- recourse factoring, arbitration, and RBI guidelines?

(d). Whether the Financial Creditor has complied with procedural requirements under the Insolvency and Bankruptcy Code, 2016?"

xvi. Adjudicating authority on first issue held that debt claimed by the financial creditor, constituted a financial debt within meaning of Section 5(8)(e) of the IBC Code. On second issue, adjudicating authority held that default has been established by the corporate debtor of failure to pay the outstanding amount after partial payment of US $ 4,17,674.00/-. It was held that the corporate debtor is an assigner with recourse liability. Recourse nature is established by the Agreement between the parties. Fourth issue was also answered, holding that petition filed under Section 7(2) complies the condition under Section 7(5)(a) and deserves to be admitted.

xvii. Adjudicating authority by impugned order admitted Section 7 application and appointed Anand Mohan Pandya as insolvency professional, aggrieved by which order, this appeal has been filed. The financial creditor had filed a Caveat and has appeared and was heard on 15.09.2025.

3. We have heard learned sr. counsel, Mr. Puneet Jain appearing for the appellant and learned counsel Mr. Chandrashekhar A. Chakalabbi and Mr. Jatin Kumar appearing for the respondents.

Comp. App. (AT) (Ins.) No. 1291 of 2025

5 of 27

4. Learned counsel for the appellant submits that Master Agreement 04.04.2019 applies to all transactions following within the debtor's limit as defined under the Master Agreement read with Schedule 2. The debtor limit has not been prescribed in Schedule 2, hence all transactions without limitation would be covered under the Master Agreement which contains factoring arrangement without recourse hence the transaction cannot be classified as financial debt defined under Section 5(8)(e) of the IBC. Relying on clause 7.1 of the Master Receivable Purchase Factoring Agreement, it is submitted that by virtue of 7.1 factoring arrangement is a non-recourse basis. Adjudicating authority did not correctly interpreted clause 7.1. It is submitted that on date of filing of the application i.e., 11.04.2024, clause 7.1 of the Master Agreement was already triggered and arrangement was thus on a non- recourse basis. Clause 7.2 could arrive on in event of happening of a remedy event. None of the clauses of remedy event have happened in the present case and clause 7.2 does not applies. The irrevocable undertaking has also recourse term dated 04.04.2019 relied by the financial creditor, do not apply in the facts of the present case. It is submitted that undertaking specifically provided that it would apply to "all purchase receivables of any approved debtor", acceding the respected debtors limit on the date of such purchases by the factor. Submission is that in Schedule 2 there was no debtor limit specified hence, provision of recourse terms are inapplicable. Non-recourse debt is excluded under clause (e) of Section 5(8) of the IBC, hence the application filed by the financial creditor was not maintainable. Undertaking dated 20.06.2023 was executed only to assist the financial creditor in Comp. App. (AT) (Ins.) No. 1291 of 2025 6 of 27 disposing of the asset which were laying with the US Port and Customs Authority. Deed of undertaking was thus executed upon release of bill of landing to provide comfort and ensure realisation against the same. The undertaking 20.06.2023 does not supersede the terms of the Master Agreement, all realisation against bill of landing have already been paid to the respondent. Relying on RBI guidelines, it is contended that guidelines have been issued for the benefit of MSME, which provide that factoring arrangement with MSME could only be on non-recourse basis. It is submitted that due to the above ground also Section 7 application need to be rejected.

5. Learned counsel for the respondent refuting the submissions of the counsel for the appellant submits that on same day dated 04.04.2019, on which date the Agreement between the parties, namely Receivable Purchase/Factoring Arrangement was entered, a separate irrevocable undertaking was issued by corporate debtor of the recourse factoring of receivables. Undertaking clearly prove that factoring was with recourse basis and the irrevocable undertaking on 04.04.2019 clearly provided that in event there is any contradiction between provisions of recourse terms and the Master Agreement, provision of the recourse term was to prevail. It is submitted that in Schedule 2 no limit was prescribed for non- recourse factoring. The invoices which were paid by the financial creditor were all on recourse basis and cannot be said to be covered under the non-recourse basis. It is submitted that the debtor failed to make the payment of six invoices. Corporate debtor never took stand with the purchase of receivables were on non-recourse basis, rather corporate debtor undertook to clear the entire Comp. App. (AT) (Ins.) No. 1291 of 2025 7 of 27 outstanding and has also made partial payment. The invoices which were assigned and paid by the financial creditor were with collaterals. Bill of landings were given to the financial creditor as collateral hence, it was clearly on recourse basis and the submission of the appellant, corporate debtor that factoring was on non-recovered basis is wholly incorrect. Even in the reply, which was given by the corporate debtor to the emails demanding payment at no point of time, corporate debtor took the plea that factoring was on non- recourse basis. Corporate debtor always accepted his liability, which clearly proves that both the parties were fully conscious that factoring was on recourse basis, and there is a liability of the corporate debtor to clear the outstanding which has not been paid by the debtor. It is submitted that applications filed by financial creditor against several other entities arising out of a similar Receivable Purchase Factoring Agreement has been admitted by adjudicating Authority. It is submitted that adjudicating authority after considering all relevant factors have rightly admitted Section 7 application, which need no interference in the present case.

6. We have heard learned counsel for the parties and perused the records.

7. The only issue which has been canvassed before us in support of the appeal is that Receivable Purchase/Factoring by the respondent of six invoices between 14.02.2023 to 17.03.2023 were on non-recourse basis, hence it was not a financial debt within meaning of Section 5(8)(e) of the IBC and there being no financial debt between the parties Section 7 application could not have been admitted. The issue thus to be considered and answered in this appeal is as to whether the six invoices which was issued by the Comp. App. (AT) (Ins.) No. 1291 of 2025 8 of 27 corporate debtor to M/s. CapRock Grain, which were discounted by the respondent and paid to the corporate debtor whether on recourse basis or non-recourse basis. Definition of financial debt as contained in Section 5(8)(e) is as follows:

"5. Definitions.-

(8) "financial debt" means a debt alongwith interest, if any, which is disbursed against the consideration for the time value of money and includes--

(e) receivables sold or discounted other than any receivables sold on non-recourse basis"

8. Financial debt within meaning of IBC is thus only those receivables sold or discounted which are on recourse basis. Any receivable sold or discounted on non-recourse basis is out of the purview of the IBC and is not a financial debt.

9. Learned counsel for the appellant has referred to the various clauses of Receivables Purchase/Factoring Agreement dated 04.04.2019 in support of his submission. We need to notice the relevant clauses of the Agreement which is referred as Master Agreement. Clause 1 is the definition clause. Definition clause defines debtor limit which is as follows:

"Debtor Limit means, for a Debtor, the maximum amount (expressed in the Base Currency) of Outstanding Receivables owing by that Debtor to Factor, as specified in Schedule 2."

Insolvent is defined in following words:

"Insolvent means in respect of a person:

(a) an order is made or a petition is presented or a resolution is passed for the administration, winding-up or dissolution of that person;

Comp. App. (AT) (Ins.) No. 1291 of 2025 9 of 27

(b) a receiver, liquidator, administrator or other official or creditor's representative is appointed in respect of that person or any assets of that person;

(d) that person ceases or threatens to cease to carry on all or a substantial part of its business;

(e) the holder of any Encumbrance takes possession of the whole or (in Factor's opinion) any material part of the property or assets of that person;

(f) that person enters into a compromise or arrangement with, or assignment for the benefit of any of its members or creditors;

(g) a voluntary or involuntary reference is made for relief under the applicable insolvency laws in any jurisdiction;

(h) a creditors' committee is formed for the sole purpose of liquidation;

(i) person assets are sold under an execution or attachment, or a writ of execution is returned unsatisfied; or

(j) any analogous event occurs in any jurisdiction."

10. The expression remedy event is as follows:

"Remedy Event means any one of the following events occurs in connection with a Purchased Receivable (whether or not within the control of the Client):

(a) the Client is in breach of any of its representations, warranties or obligations in a Facility Document which relate to that Purchased Receivable;

(b) a fraud, illegality or unauthorised act is committed or permitted by the Client, any Affiliate or any director, proprietor, partner, individual, employee, contractor or agent of the Client or its Affiliate;

(c) Factor is not paid in full or Factor is required to reimburse any person for moneys received by it from any person as a result of a Commercial Dispute (whether or not subsequently settled) or because of any injunction, stop order or other court order (whether or not subsequently discharged);

Comp. App. (AT) (Ins.) No. 1291 of 2025 10 of 27

(d) if any Credit Note is issued after the Purchase Date or any deduction is made by the Debtor in the amount evidenced as payable in the Invoice due to Credit Note issued by the Client which was not informed to Factor in writing;

(e) Factor determines that it is or is likely to become unlawful in any jurisdiction for Factor to perform its obligations or enforce its rights."

11. Reliance has been placed by the appellant in clause 7.1 of the Master Agreement. Clause 7 deals with non-payment by debtor. Clauses 7.1, 7.2, 7.3 & 7.4 are as follows:

"7 NON-PAYMENT BY DEBTOR 7.1 The Factor shall have no-recourse to the Client in case of Debtor's failure to pay under the Purchased Receivable due to Debtor becoming Insolvent or happening of Protracted Default. 7.2 The Client is only responsible to Factor for a Debtor's failure to pay a Purchased Receivable if a Remedy Event occurs. If this occurs, Factor may give the Client a written demand requiring it to immediately pay Factor the sum of:

(a) the amount of the relevant Purchased Receivable; and

(b) any other amount payable by the Client to Factor (including indemnities) relating to that Purchased Receivable.

7.3 The Client must inform Factor immediately that it becomes aware that a Remedy Event has occurred. 7.4 Upon the Client making irrevocable payment of the amount of demand upon happening of Remedy Event in full to the Factor, the title to the Purchase Receivables shall be reassigned to the Client."

12. Clause 7.1 provides that factor shall have no recourse to the client due to debtor becoming insolvent or happening of protracted default. When we look into clause 7.2, the liability of client i.e., in the present case corporate debtor is provided. Clauses 7.1 & 7.2 have to be read together to give meaning Comp. App. (AT) (Ins.) No. 1291 of 2025 11 of 27 and purpose and to give harmonious construction of relevant clauses. No recourse to client is provided in 7.1 due to debtor being insolvent or happening of protracted default which clause has to read along with 7.2 where responsibility of the client to factor has been provided on occurrence of a remedy event. The remedy event has been defined in the definition clause. The definition of remedy event begins to the expression "remedy event means anyone of the following events occurs in connection with the Purchase Receivables "where or not within the control of the client". One of the clauses which is clause (c) when factor is not paid in full. When we look into the facts of the present case, total six invoices which were issued by the corporate debtor to M/s. CapRock Grain amounted to US $ 8,42,520/-. In Section 7 application, Part IV details of the invoices and total amount paid by financial creditor has been mentioned in Part IV column 1, paragraph 3, which is as follows:

"PART IV PARTICULARS OF FINANCIAL DEBT 1 TOTAL 3. Thereafter, in accordance with the . AMOUNT terms of the Master Agreement, the OF DEBT Corporate Debtor issued in favour of GRANTE Financial Creditor, 'Purchase Request D cum Deed of Assignment' dated DATE(S) 24.03.2023, 04.04.2023, 14.04.2023, OF 19.04.2023, and 02.05.2023 towards DISBUR assignment of the 6 invoices on full SEMENT recourse basis. All 6 Invoices were payable by CapRock Grain and the Bill of Lading towards 6 Invoices were deposited with the Financial Creditor. The Financial Creditor paid an aggregate amount of USD 842,520.00 (USD Eight Hundred and Forty Two Thousand Five Hundred and Twenty only) to Corporate Comp. App. (AT) (Ins.) No. 1291 of 2025

12 of 27 Debtor towards assignment of the aforesaid 6 invoices as under-

Invoice No. Date of Amount in ("Invoices") Payment USD CapRock Grain EXP/40/22 10.04.20 84,420.00 -23 23 EXP/44/22 17.04.20 84,420.00 -23 23 EXP/38/22 24.03.20 168,840.00 -23 23 EXP/36/22 19.04.20 168,840.00 -23 23 EXP/37/22 04.05.20 168,000.00 -23 23 EXP/39/22 04.05.20 168,000.00 -23 23 Total Amount paid by 842,520 Financial Creditor CapRock Grain is referred to as "Account Debtor"

Each Invoice is referred to as "Invoice"

A true copy of the 'Purchase Request and Deed of Assignment' along with copies of 6 Invoices and Bill of Lading, with respect to the advances made to Corporate Debtor, are annexed herewith and marked as Annexure P/9 (Colly);

Annexure P/10 (Colly); Annexure P/11 (Colly); Annexure P/12 (Colly);

Annexure P/13 (Colly); Annexure P/14 (Colly), respectively."

13. Section 7 application itself clearly mentions that out of the total amount paid by the financial creditor, the corporate debtor had made a part payment of US $ 4,74,92,000/-, which is mentioned in para 8 of column 1 of Part IV, which is as follows:

"PART IV PARTICULARS OF FINANCIAL DEBT

1. TOTAL AMOUNT 8. Based on this Undertaking OF DEBT of the Corporate Debtor, the GRANTED Financial Creditor agreed to Comp. App. (AT) (Ins.) No. 1291 of 2025 13 of 27 DATE(S) OF release the original Bill of DISBURSEMENT Lading with respect to the goods. As per the Undertaking, the Corporate Debtor arranged a part payment of USD 474,920.00 (US Dollar Four Hundred and Seventy Four Thousand Nine Hundred and Twenty only) between 09.06.2023 to 24.07.2023 in favour of Financial Creditor."

14. Section 7 application was filed for the outstanding amount which was US $ 4,29,104/- equivalent to 3,57,52,951 Cr./- which is mentioned in Part IV column 2, paragraph 4, which is as follows:

"PART IV PARTICULARS OF FINANCIAL DEBT

2. AMOUNT 2. Accordingly, upon receiving CLAIMED TO the Default Notice dated 23rd BE IN August, 2023, the Corporate DEFAULT AND Debtor was required to pay the THE DATE ON then Default Amount within 7 WHICH THE days from the receipt of the DEFAULT said Default Notice."

OCCURRED (ATTACH THE WORKINGS FOR COMPUTATION OF AMOUNT AND DAYS OF DEFAULT TABULAR FORM)

15. It is relevant to notice that appellant itself in its appeal has pleaded part payment by corporate debtor of the total outstanding covering 6 invoices noted above.

Comp. App. (AT) (Ins.) No. 1291 of 2025 14 of 27

16. Learned counsel for the appellant submits that with recourse terms which were entered between the parties on 04.04.2019 itself contemplated recourse receivables which was exceeding the respected debtors limit on the date of such purchase. Before proceeding further, we need to notice letter dated 04.04.2019 "Ref: irrevocable undertaking for with recourse factoring of receivables written by the corporate debtor. Factoring with recourse, terms and conditions were part of the said letter. It is useful to notice letter dated 04.04.2019, which were irrevocable undertaking for with recourse factoring of receivables which is at page 178:

"Date 4 Apr 2019 To Drip Capital Inc 555 Bryant St. #356, Palo Alto, CA 94301, USA Dear Sir Ref irrevocable undertaking for with recourse factoring of Receivables We refer to the Master Receivable Purchase Factoring Agreement executed on 4 Apr 2019 along with the Purchase Facility Letter executed/to be executed from time to time and any amendments, extension, renewals granted thereto from time to time together referred to as "Master Agreement entered into between Drip Capital Inc. USA ("Factor") and Exe Gold Nutri And Organics Up (Client', we us or our'). The capitalized terms used herein but not defined shall have the same meaning as contained in the Master Agreement or Recourse Terms attached hereto. As per the terms of the Master Agreement, the Factor may purchase the Receivables of the Client from various approved Debtors, at its sole discretion, up to the respective Debtor Limit (as amended from time to Comp. App. (AT) (Ins.) No. 1291 of 2025 15 of 27 time), provided that the overall Purchase Limit is maintained. At our request and subject the attached Recourse Terms, the Factor has agreed to purchase Receivables of approved Debtors over and above the approved Debtor Limit, on full recourse to the Client.

Therefore, we, the Client, hereby expressly and irrevocably agree and undertake with the Factor that the following Purchased Receivables or Outstanding Receivables (hereinafter referred to as the "Recourse Receivables") shall be on full recourse basis to the Client and shall be governed by the recourse terms attached hereto.

1. all Purchased Receivables of any approved Debtor, exceeding the respective Debtor's Limit on the date of such purchase by the Factor, or

2. the amounts by which the aggregate of the Purchased Receivables of any Debtor exceeds the respective Debtor Limit; or

3. any Purchased Receivables for which a Collateral is provided by the Client; or

4. such other Purchased Receivables The undertakings and Recourse Terms are in addition to all the terms, conditions, representations and warranties provided under the Master Agreement. We understand that the factor has agreed to purchase our aforesaid Receivables of approved Debtor, inter alia, relying solely on the additional undertaking and Recourse Terms entered into between us and the Factor.

Attached herein is the duly agreed, acknowledged and executed Recourse Terms which are binding upon us in all respect, Yours sincerely For Eco Gold Nutri And Organics LLP"

17. The letter contained factoring with recourse terms and condition.

Clauses 1, 1.1, 1.2, 1.3, 1.4 & 1.5 which are relevant are as follows:

"1 APPLICABILITY 1.1 These Recourse Terms are entered into between the Client and Factor at the request of the Client vide Comp. App. (AT) (Ins.) No. 1291 of 2025 16 of 27 its undertaking ("Undertaking") dated on or about the date of execution of these Recourse Terms. 1.2 Reference to "Agreement" in this Recourse Terms shall jointly mean the Master Agreement, the Undertaking and these Recourse Terms including all amendments made thereto.

1.3 The Recourse Terms or their reference are applicable only with respect to Recourse Receivables as defined in the Undertaking and only to that extent are intended to be in addition to the terms and conditions of the Master Agreement and the Undertaking. The execution of these Recourse Terms shall not be construed 35 novation of this Master Agreement.

1.4 For the limited purpose of Recourse Receivables, the Recourse Terms and the Undertaking shall be read as the constituent part of the Master Agreement concluded between the Factor and the Client and all the terms of the Master Agreement shall be deemed to be incorporate in these Recourse Terms (except Clause 7.1 of the Master Agreement) as if they were always the part of these Recourse Terms.

1.5 For the purpose of these Recourse Terms, in the event of any contradictions between provisions of these Recourse Terms and the Master Agreement, provisions of the Recourse Terms shall prevail, then provisions of the Undertaking, then the provisions of the Master Agreement and then the enacting provisions of regulations governing contractual relationships of the Parties.

1.6 The Parties agree to designate these Recourse Terms and the Undertaking as the Purchase Document.

1.7 These Recourse Terms and the conditions hereunder shall come into force on the signing and execution of the same by the Client and the Factor 1.8 All other Capitalized terms not defined hereunder but defined in the Master Agreement or the Undertaking or the Purchase Documents should have the same meaning as assigned to them in the Master Agreement or Undertaking or other Purchase Document."

Comp. App. (AT) (Ins.) No. 1291 of 2025 17 of 27

18. Statement of the appellant is that upto the limit which was permissible it was non-recourse basis and only when purchase exceeded limit, it would be recourse basis. Learned counsel for the appellant relying on Schedule 2 which was referred in the Master Agreement submitted that under the Schedule 2 no debtor limit was prescribed and the said column was left blank thus purchase of unlimited amount was on non-recourse basis. Schedule 2 which was applicable with effect from 04.04.2019 is at page 175 of the paper book, which is as follows:

"To, Eco Gold Nutri And Organics LLP 337/1/2/2 A B ROAD VILLAGE DAKACHY , A,TEHSIL SANWER DISTRICT INDORE , INDORE,MADHYA PRADESH , PIN453771, ATTENTION: Ayaan Ahuja Reference: Receivable purchase factoring agreement ("Agreement") dated 4 Apr 2019 entered into between the Client and Drip Capital Inc; USA ("Factor") SCHEDULE 2: DEBTOR DETAILS - WITH EFFECT FROM 4 Apr 2019 Debtor 1:

               Debtor Name                CAD         Limit_Eco
                                          Gold_Canada
               Address                    Canada
               Maximum Funded Rate        80.0%
               Debtor Limit
               Maximum       Payment 3 days from Discharge
               Terms                 Date
               Document Route        via          Collateral
                                     Management Agent
               Interest Rate         5.25% p.a.

Factoring Commission 0.1% up to 10 days from Fee Discharge Date 0.20% up to 20 days from Discharge Date Comp. App. (AT) (Ins.) No. 1291 of 2025 18 of 27 0.30% up to 30 days from Discharge Date 0.45% up to 45 days from Discharge Date 0.60% up to 60 days from Discharge Date Charged on the net invoice value Protracted Default 120 days from invoice due date Debtor 2:

               Debtor Name                   CAD      Limit_Eco
                                             Gold_USA
               Address                       USA
               Maximum Funded Rate           80.0%
               Debtor Limit
               Maximum Payment Terms         3     days      from
                                             Discharge Date
               Document Route                via        Collateral
                                             Management Agent
               Interest Rate                 5.25% p.a.
               Factoring Commission Fee      0.1% up to 10 days
                                             from Discharge Date
                                             0.20% up to 20 days
                                             from Discharge Date
                                             0.30% up to 30 days
                                             from Discharge Date
                                             0.45% up to 45 days
                                             from Discharge Date
                                             0.60% up to 60 days
                                             from Discharge Date
                                             Charged on the net
                                             invoice value
               Protracted Default            120     days    from
                                             invoice due date
              Debtor 3
               Debtor Name                  CAD         Limit_Eco
                                            Gold_UK
               Address                      UK
               Maximum Funded Rate          80.0%
               Debtor Limit
               Maximum Payment Terms        3     days      from
                                            Discharge Date
               Document Route               via        Collateral
                                            Management Agent


Comp. App. (AT) (Ins.) No. 1291 of 2025
                                                                     19 of 27
                Interest Rate            5.25% p.a.

Factoring Commission Fee 0.1% up to 10 days from Discharge Date 0.20% up to 20 days from Discharge Date 0.30% up to 30 days from Discharge Date 0.45% up to 45 days from Discharge Date 0.60% up to 60 days from Discharge Date Charged on the net invoice value Protracted Default 120 days from invoice due date

1. The Parties agree that the Agreement shall, with effect from 4 Apr 2019 ("Effective Date") be read as modified by the terms of this letter.

2. The Client hereby expressly and irrevocably agrees and undertakes with the Factor that all Purchased Receivables of any approved Debtor, exceeding the respective Debtor's Limit on the date of such purchase by the Factor; or the amounts by which the aggregate of the Purchased Receivables of any Debtor exceeds the respective Debtor Limit; or any Purchased Receivables for which a Collateral is provided by the Client; shall be on full recourse basis to the Client.

3. The Parties agree that except as otherwise provided herein, this letter is without prejudice to the other terms and conditions of the Agreement and document executed prior to this letter. All other terms and conditions of the Agreement shall remain in full force and effect except to the extent expressly modified by this letter.

4. From the Effective Date, the Agreement shall be construed as if the contents of this letter had always been an integral part of the Agreement. In the event of a conflict between the provisions of this letter and that of the Agreement, except to the extent set out herein, the provisions of the Agreement shall prevail.

5. Nothing in this letter shall be read and construed as discharging by novation or extinguishing any liability or obligation accepted or incurred by the Client prior to this letter.

Comp. App. (AT) (Ins.) No. 1291 of 2025 20 of 27

6. The Client confirm that all representations and warranties of the Client as set forth in the Agreement continue to be true, complete and correct in all respects and the same shall continue to be so throughout the tenure of the Agreement.

7. The capitalized terms used herein but not defined shall have the meaning as contained in the Agreement

8. This is a computer-generated document. For Drip Capital Inc We accept the Terms & Conditions and the contents stated herein above.

___________________ Authorized Signatory Eco Gold Nutri And Organics LLP"

19. It is submitted in the present case the debtor being in the USA, the Debtor 2 was relevant where the column of debtor limit was left blank.

20. From the materials brought on the record, it is clear that on 04.04.2019 itself the Master Agreement was executed on the same date irrevocable undertaking for with recourse factoring of receivables was executed, which relevant clauses of irrevocable undertaking we have already extracted above which clearly provided in clause 1.5 that in event of any contradiction between the provisions of the recourse terms and the Master Agreement, the provisions of the recourse terms shall prevail.

21. Learned counsel for the appellant sought to take capital on absence of debtor limit in Schedule 2 (which column has been left blank). Master Agreement provided that upto the debtor limit it is non-recourse basis and purchase receivables shall be on recourse basis when it exceeds the debtor's limit. When the parties has not provided any debtor's limit and have left the Comp. App. (AT) (Ins.) No. 1291 of 2025 21 of 27 column of debtor limit blank, the clear intention is that no debtor limit is contemplated and the execution of the factoring with recourse terms and conditions of the same day which has been given overriding effects clearly means that factoring was on recourse basis. If any limit would have been provided then upto that limit it could be said that factoring was on non- recourse basis but when there is no limit provided no transaction is contemplated as non-recourse basis.

22. The sequence of the event and correspondence between the parties at the relevant time clearly indicate that parties were well aware that factoring with regard to 6 invoices were on recourse basis. The undertaking was immediately given when the amount become due and not paid in June 2023. A deed of undertaking was executed by corporate debtor on 20.06.2023, where the corporate debtor clearly undertook to make the payment of six invoices, with advance value as 8,42,520. Deed of undertaking dated 20.06.2023 is part of the record at page 244, which provides as follows:

"DEED OF UNDERTAKING THIS DEED OF UNDERTAKING ("Deed") is made as on 20 June 2023 ('Effective Date"), by Eco Gold Nutri and Organics LLP ('Eco Gold"), having its principal place of business at 337/1/2/2, A B Road Village Dakachy, A Tehsil, Sanwer District Indore Madhya Pradesh- 453771 IN FAVOUR OF Dip Capital Inc having its principal office at 555 Bryant St Ave #356. Palo Alto, CA 94301 (Drip Capital) a WHEREAS Drip Capital and Eco Gold Nutri and Organics LLP (Eco Gold) entered into a Receivables Purchase Factoring Agreement dated 4 April 2010 (the Agreement) At the request of Eco Gold and subject to the terms of Agreement Drip Capital purchased accounts of Eco Gold and accordingly advanced a total Comp. App. (AT) (Ins.) No. 1291 of 2025 22 of 27 aggregate amount of $842.520 (US Dollars Eight Hundred Forty Two Thousand Five Hundred and Twenty only) to Eco Gold for the invoices (as detailed in Annexure 1) raised on Caprock Land Company LLC ("Buyer') Out of the same an amount of $ $691,318(Dollars Six Hundred Ninety-One Thousand Three Hundred and Eighteen only) ("Outstanding Amount") is payable by Eco Gold to Drip Capital as on date of the Deed b WHEREAS Eco Gold also provided Orip Capital with Dills of Lading ("Old DLS") (as detailed in annexure 2) which have now been returned to Eco Gold by Drip Capital NOW, THEREFORE, in consideration of the above, Eco Gold hereby covenants undertakes represents and warrants as follows:

1. Eco Gold hereby undertakes to send the Old BLs that Drip Capital has returned to Eco Gold to the Buyer as mentioned above

2. Eco Gold in its best endeavour undertakes to pay an amount of $302 400 (US Dollars Three Hundred Two and Four Hundred Dollars only) out of the Outstanding Amount under the Old BLs to Drip Capital on or before30 July 2023

3. Eco Gold further undertakes that the remaining Outstanding Dollars Three Hundred Eighty-Eight Thousand Nine Hundred other interest, fees and charges due to Drip Capital will be paid to on or before 30th July 2023

4. Eco Gold undertakes that in case of the failure of the Buyer to make the payment of that entire Outstanding Amount along with the fees, interests and charges due to Drip Capital Eco Gold will be liable to pay the entire Outstanding Amount along with other interest fees and charges as due to Drip Capital failing which Drip Capital has the right to initiate legal proceedings against Eco Gold without any further notice, entirely at the consequences of Eco Gold

5. Drip Capital agrees that once Drip Capital receives the entire Outstanding Amount along with fees, interests and other charges, the balance amount, if any left will be paid to Eco Gold Comp. App. (AT) (Ins.) No. 1291 of 2025 23 of 27 This Deed shall be governed by the laws of India and the courts of Mumbai will have exclusive jurisdiction, without reference to conflict of laws principles and shall survive in perpetuity Eco Gold undertakes that upon signature by its authorized representative listed below, this Deed shall have been duly executed and be legally binding upon Eco Gold in all respects Any failure to enforce any provision of this Deed shall not constitute a waiver thereof or of any other provision.

This Deed may not be amended, nor any obligation waived."

23. The corporate debtor has clearly undertook to make the payment by 30.07.2023. The deed of undertaking by the corporate debtor reinforces our conclusion that corporate debtor was well aware that purchase of receivables and discounting of invoices by respondent was on recourse basis. Had the transaction was on non-recourse basis, there was no occasion for client/corporate debtor to admit its liability to make payment to the respondent. The fact of executing deed of undertaking at the relevant time clearly proves that transaction was on recourse basis, due to which the corporate debtor undertook to make the payment of invoices.

24. We thus do not find any substance in the submission of the appellant that transaction between the parties relating to 6 invoices noted above were on non-recourse basis. The contemporaneous correspondence between the parties and sequence of the event indicate that discounting of the invoices was on recourse basis. Learned counsel for the appellant has also referring to the definition of remedy event clause (c) submits that the contingency factor is not paid in full is with respect to a commercial dispute or because of any injunction stock order or other court which is not attracted in the present case. When we look into clause C there are two independent circumstances Comp. App. (AT) (Ins.) No. 1291 of 2025 24 of 27 that is factor is not paid in full or factor is required to reimburse any person for monies received by it from any person as a result of the commercial dispute. Thus, the second clause which begins afterward or is referred to commercial dispute, which has nothing to do with the first contingency i.e., "factor is not paid in full". The present is also a case where collaterals were handed over to the factor and thus transaction was with recourse basis there being collateral. It is also relevant to notice the letter dated 04.04.2019 written by the corporate debtor on "Ref: irrevocable undertaking for with recourse factoring of receivables", where the corporate debtor expressly and irrevocably agreed and undertook with the factor that purchase receivables or outstanding receivables were referred as recourse receivables shall be on full recourse basis. It is useful to extract following part of the letter which is as follows:

"...Therefore, we, the Client, hereby expressly and irrevocably agree and undertake with the Factor that the following Purchased Receivables or Outstanding Receivables (hereinafter referred to as the "Recourse Receivables") shall be on full recourse basis to the Client and shall be governed by the recourse terms attached hereto.

1. all Purchased Receivables of any approved Debtor, exceeding the respective Debtor's Limit on the date of such purchase by the Factor, or

2. the amounts by which the aggregate of the Purchased Receivables of any Debtor exceeds the respective Debtor Limit; or

3. any Purchased Receivables for which a Collateral is provided by the Client; or

4. such other Purchased Receivables The undertakings and Recourse Terms are in addition to all the terms, conditions, representations and Comp. App. (AT) (Ins.) No. 1291 of 2025

25 of 27 warranties provided under the Master Agreement. We understand that the factor has agreed to purchase our aforesaid Receivables of approved Debtor, inter alia, relying solely on the additional undertaking and Recourse Terms entered into between us and the Factor..."

25. Item No. 1 which mention all purchase receivables of any approve debtor exceeding the respected debtors limit on the date of such purchase by the factor. We have already noticed that no debtor limits were prescribed in Schedule 2 and the said column was blank. Thus, no receivables was non- recourse basis any limit being not provided. Further, we notice that Item No. 3 which mention "any purchase receivable for which a collateral is provided by the client". The present is a case where collaterals were provided by the corporate debtor to the respondent which is handing over bill of landing, which subsequently on request of the corporate debtor were again handed over by the respondent to the corporate debtor and some realisation was made by the corporate debtor thereafter. Thus, by virtue of the said letter and factoring with recourse terms and conditions noted above, the transaction covering 6 invoices were on fully recourse basis which shall be treated to be recourse receivables as per the Agreement entered between the parties and undertaking which was given by the corporate debtor on 04.04.2019.

26. We thus are fully satisfied that all documents executed between the parties on 04.04.2019, as noted above and the relevant correspondence between the parties which took place contemporaneously indicates that corporate debtor throughout conducted itself treating it the transaction to be on full recourse basis and it is only in reply to Section 7 application and submissions made before us the argument is sought to be developed that Comp. App. (AT) (Ins.) No. 1291 of 2025 26 of 27 transaction was on non-recourse basis, which submission have no legs to stand and clearly incorrect and afterthought.

27. We thus are the view that no grounds have been made out to interfere with the order passed by the adjudicating authority admitting Section 7 application. There is no merit in the appeal. Appeal is dismissed.

[Justice Ashok Bhushan] Chairperson [Barun Mitra] Member (Technical) NEW DELHI 14th October, 2025 himanshu Comp. App. (AT) (Ins.) No. 1291 of 2025 27 of 27

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National Company Law Appellate Tribunal