National Company Law Appellate Tribunal
Kavita Anil Taneja vs Ismt Limited on 24 January, 2019
NATIONAL COMPANY LAW APPELLATE TRIBUNAL
NEW DELHI
Company Appeal (AT) (Insolvency) No. 545-546 of 2018
IN THE MATTER OF:
Kavita Anil Taneja ...Appellant
Versus
ISMT Limited ...Respondent
Present:
For Appellant : Mr. Nitin Lalwani, Mr. Shakul R. Ghatole and
Mr. Sushant Mahajan, Advocates
For Respondent : Mr. Atanu Mukherjee, Advocate
Mr. Kishore Soni, FCA
Mr. Mrinal Gunjan, ACA
ORDER
24.01.2019 The respondent -'M/s. ISMT Limited' filed an application under Section 9 of the 'Insolvency & Bankruptcy Code, 2016' (for short, the 'I&B Code') in Form 5 alleging default of debt amounting to Rs. 2,10,00,000/- . The Adjudicating Authority (National Company Law Tribunal), Mumbai Bench taking into consideration that the respondent had issued notice under Section 8(1) of the I&B Code and there being default, admitted the application by the impugned order dated 13th September, 2017.
2. The case of the appellant is that the respondent - 'M/s. ISMT Limited' does not come within the definition of the 'Operational Creditor' as it has not supplied any goods or given any services. On the other hand, according to the learned counsel for the respondent - 'M/s. ISTM Limited', which is an 'Operational Creditor' had to pay 50% as advance against security to pay to the 'corporate debtor' under the work order dated 7th January, 2012.
3. Parties have enclosed the work order dated 7th January, 2012, which relates to supply of 10,000 Metric Tons of Indonesian Thermal Coal. The work 2 order was issued by the respondent - 'M/s. ISMT Limited' in favour of the 'corporate debtor' who was to supply coal to respondent is 40 MW captive power plant and the scope of the work and obligations have also been mentioned therein, relevant portion of which reads :
Company Appeal (AT) (Insolvency) No. 545-546 of 2018 3 Company Appeal (AT) (Insolvency) No. 545-546 of 2018 4 Company Appeal (AT) (Insolvency) No. 545-546 of 2018 5
4. Section 5(20) defines 'Operational Creditor' which is r/w Section 5(21) which defines 'operational debt'. In the present case, it is clear from the work order that the amount of Rs. 2,60,000,00/- was advanced by the respondent 'M/s. ISMT Limited to the 'corporate debtor' for supply of 10,000 Metric Tons of Indonesian Thermal Coal. From the aforesaid fact, we find that the respondent had not supplied any goods nor provided any services and, therefore, it does not come within the meaning of 'operational creditor'. Learned counsel appearing on behalf of the respondent referred to a letter Company Appeal (AT) (Insolvency) No. 545-546 of 2018 6 dated 9th August, 2018 issued by the 'corporate debtor' to the 'respondent ' M/s. ISMT Ltd.' for settlement of dues, which reads as follows:
"9th August 2018 Dear Mr Pankaj Wahi, SUB : Supply of 10000 MT of Indonesia coal vide work order dated 7th Jan 2012 REF : Our Letter dated 9th March 2015 Your NCLT - case no. 1206/1b/9(MB)/2017 We thank you for the courtesy extended to us and the positive response to resolve the pending claims and all issue between us.
As the purpose of the advance against your work order could not be fulfilled due to reasons beyond the control of both the companies. It was mutually agreed to share and absorb the cost equally between the two companies. Based on the understanding it was settled that we will pay Rs.1.30 cr. It was also agreed that the amount will be gradually settled from the supply of local coal to your plant via Nagpur. Based on the understanding an amount of Rs. 50 lakhs was duly adjusted from the supply of coal to your plant. You had also retained an amount of Rs. 80 lakhs of M/s. Shyam Coal Service against the supply of coal. The total amount received by you is Rs.1.30 which was equal to the amount agreed between us. We presumed that the case was settled. We are now informed that an amount of Rs.80 lakhs is payable to M/s Shyam Coal Service and this amount cannot be treated Company Appeal (AT) (Insolvency) No. 545-546 of 2018 7 as our payment and will be treated separately from our account. Considering this position, we agree to repay the outstanding of Rs.80 lakhs to you as full and final settlement. We are willing to enter into a legally binding agreement to repay the amount of Rs. 80 lakhs in maximum 10 months. This is the upper time limit. However, we would try to settle the amount by March '19. We are also willing to support the proposal with post-dated cheque as counter guarantee to prove our bona fide intention to repay the amount.
Request you to kindly accept and approve this proposal of settlement.
Thanking you, Yours faithfully, For Fieldspares Sales & Services Pvt. Ltd. Sd/-
ANIL TANEJA"
5. In reply to the same, learned counsel for the respondent submitted that the work order was a joint venture for which the respondent also invested 50% money and 50% of the same was payable to the 'corporate debtor'. If that be so and we accept, as suggested by the learned counsel for the appellant that the respondent invested an amount for the joint ventur,e then in that case the respondent can claim as the 'financial creditor' and not as 'operational creditor'.
6. In view of that we hold that the respondent is not an 'operational creditor', and, therefore, the application under Section 9 was not maintainable. We accordingly set aside the impugned order dated 13th September, 2017 passed by the Adjudicating Authority, Mumbai Bench.
Company Appeal (AT) (Insolvency) No. 545-546 of 2018 8 However, we make it clear that if the 'corporate debtor' failed to make payment in terms of their offer or if there is any default, it will be open to the respondent to move appropriate application before the Appropriate Authority claiming it to be a 'financial creditor' as suggested by the appellant.
7. In effect, order (s) passed by Ld. Adjudicating Authority appointing 'Interim Resolution Professional', declaring moratorium, freezing of account and all other order(s) passed by Adjudicating Authority pursuant to impugned order and action taken by the 'Resolution Professional', including the advertisement published in the newspaper calling for applications, all such orders and actions are declared illegal and are set aside. The application preferred by the Respondent under Section 9 of the I&B Code is dismissed. The Adjudicating Authority will now close the proceeding. The Respondent Company is released from all the rigour of law and is allowed to function independently through its Board of Directors from immediate effect.
8. The Adjudicating Authority will fix the fee of 'Interim Resolution Professional' and the 'corporate debtor' will pay the fees for the period he has functioned. The appeal stands disposed of. However, in the facts and circumstances of the case, there shall be no order as to cost.
[Justice S.J. Mukhopadhaya] Chairperson [ Justice Bansi Lal Bhat ] Member (Judicial) /ns/uk/ Company Appeal (AT) (Insolvency) No. 545-546 of 2018