Sahara India Vs Nandkishor Vishnupant Despande (NCLAT Delhi)
Facts- The Appellant has remitted the principal amount of Rs. 39,95,00,000/- in various tranches commencing from April, 2018 to February, 2019 in accordance with the ‘Memorandum of Understanding’ (MOU) dated 07th March, 2017 with the Corporate Debtor (CD)/Respondent (in CIRP) for supply of future goods in the form of gold coins/Gold ornaments. The golds were supposed to be supplied by the CD any time after January, 2019. As per MoU vide para 1 reflects clearly that all such advance payments will not attract any interest. It is also stated at para 3 of the MOU that both the parties have agreed to fix the price of Gold coin/Gold ornaments at the prevailing market rate of the day when Gold coin/Gold Ornaments demanded is physically delivered to the Buyer as per the location(s) specified by the Buyer. The Seller also agrees to give 2% discount on the prevailing market price of Gold and will not charge making charges and delivery charges on the future demand by the Buyer (after January, 2019) and at the time of delivery of quantity. The Buyer has a right to assign its obligations and rights as per this MOU to its nominee(s) without taking prior consent of the Seller and the Seller shall not cause any hindrance are raise any objection in the same. The Seller gives at least 30 days’ notice showing its unwillingness to continue the understanding as reached between the parties and the buyer is ready to give a mutually agreed compensation as well as refund the excess amount, if any.
The Ld. Counsel for the Appellant has submitted that they have informed the CD vide its letter dated 04th February, 2019 to supply of 10 kg Gold coins (100 points of 100 gram each) as obligation in accordance with the MOU. Even after long wait CD didn’t supplied, accordingly, the Appellant vide its letter dated 05th March, 2019 asked the CD to refund the amount as there is too much delay. The CD informed the Appellant vide its letter dated 11th March, 2019 to convert the advance amount of the Appellant into unsecured loan with 10% p.a. rate of interest on outstanding amount till full and final payment of the same are made to them. However, the Appellant accepted the offer after communicating the notice of default to the CD in between there are other correspondence also.
‘Corporate Insolvency Resolution Process’ was initiated against CD on 13th November 2019. Accordingly, the appellant submitted its claim in Form C. Resolution Professional considered the claims of the appellant, not in the category of ‘Financial Debt’ and as a result the appellant challenged the decision.
Conclusion- The Adjudicating Authority in its impugned order has exceeded its jurisdiction while recording the finding to the effect that the Appellant herein is a related party which is beyond scope of the petition filed in the Tribunal. The Resolution Professional has not filed any application for the preferential transaction as required under Section 43(1) of the Code. Hence, apparently while going through the petition and hearing of Ld. Counsels for both the parties, it is very much clear that the Adjudicating Authority on its own has recorded it a related party which is beyond the provisions contend in the Code either explicitly or implicitly.
It reflects that the Resolution Professional, a statutory functionary, has not filed an application for initiation of proceedings under Section 43 of the Code in respect of preferential transactions and the Adjudicating Authority has passed the order, then it is supplementing it by fresh reason in through affidavit or otherwise. This is also not acceptable in the case of the Code.
FULL TEXT OF THE NCLAT JUDGMENT/ORDER
1. The present appeal has been filed by the Appellant- ‘Sahara India’ under Section 61 of the ‘Insolvency and Bankruptcy Code, 2016’ (in short ‘Code’) against the impugned order dated 07th January, 2021 passed by the ‘Adjudicating Authority’ (National Company Law Tribunal), Mumbai Bench in I.A No. 991 of 2020 in CP(IB) No. 2556/MB/2019.
2. The Appellant is a registered firm with the Registrar of Firms, Lucknow having registration number 168582 with its registered office at Sahara India Bhawan, 1, Kapoorthala Complex, Aliganj, Lucknow. The Appellant has remitted the principal amount of Rs. 39,95,00,000/- in various tranches commencing from April, 2018 to February, 2019 in accordance with the ‘Memorandum of Understanding’ (MOU) dated 07th March, 2017 with the Corporate Debtor (CD)/Respondent (in CIRP) for supply of future goods in the form of gold coins/Gold ornaments. The golds were supposed to be supplied by the CD any time after January, 2019. As per MoU (appearing at page 67 – Annexure A of the Appeal Paper book) vide para 1 reflects clearly that all such advance payments will not attract any interest. It is also stated at para 3 of the MOU that both the parties have agreed to fix the price of Gold coin/Gold ornaments at the prevailing market rate of the day when Gold coin/Gold Ornaments demanded is physically delivered to the Buyer as per the location(s) specified by the Buyer. The Seller also agrees to give 2% discount on the prevailing market price of Gold and will not charge making charges and delivery charges on the future demand by the Buyer (after January, 2019) and at the time of delivery of quantity. The Buyer has a right to assign its obligations and rights as per this MOU to its nominee(s) without taking prior consent of the Seller and the Seller shall not cause any hindrance are raise any objection in the same. The Seller gives at least 30 days’ notice showing its unwillingness to continue the understanding as reached between the parties and the buyer is ready to give a mutually agreed compensation as well as refund the excess amount, if any.
3. The Ld. Counsel for the Appellant has submitted that they have informed the CD vide its letter dated 04th February, 2019 to supply of 10 kg Gold coins (100 points of 100 gram each) as obligation in accordance with the MOU. It is also submitted by the Appellant that the CD vide its letter dated 06th February, 2019 has confirmed to supply the same once it is manufactured which will take about 3 weeks’ time due to their preoccupied manufacturing job. Since CD did not supply to them so the Appellant again asked the CD vide its letter dated 28th February, 2019 to confirm supply as they failed to do so within three weeks. The CD vide its letter dated 04th March, 2019 again communicated to the Appellant that they are pre-occupied with earlier job orders and there is a lack of factory staffs so they communicated to them that it will take 3-4 months’ time and accordingly, the Appellant vide its letter dated 05th March, 2019 asked the CD to refund the amount as there is too much delay without any hope that it will come soon and rather as a CD, you are further asking for 3- 4 months’ time whereas the Appellant’s customer are in dire need. The CD informed the Appellant vide its letter dated 11th March, 2019 to convert the advance amount of the Appellant into unsecured loan with 10% p.a. rate of interest on outstanding amount till full and final payment of the same are made to them. However, the Appellant accepted the offer after communicating the notice of default to the CD in between there are other correspondence also.
4. It is also submitted by the Ld counsel for the appellant that ‘Corporate Insolvency Resolution Process’ (CIRP) was initiated against the CD on 13th November, 2019 by the Adjudicating Authority. As a result of which the ‘Resolution Professional’ (RP) took over the control of the CD and invited public notice and claim. Accordingly, the Appellant has submitted its claim in Form-C. The RP exchanged communication with the Appellant for reconciliation of amount maintained in the books of the CD and apparently there were some difference on the interest account. The Appellant in spite of submitting all the details vide its two emails, the RP still considered the claims of the Appellant, not in the category of the ‘Financial Debt’ and as a result of the Appellant has challenged the decision of the RP before the Adjudicating Authority vide its I.A No. 991 of 2020 in CP(IB) No. 2556/MB/2019. However, even the Adjudicating Authority vide its impugned order dated 07th January, 2021 has taken a different a stand and dismissed the petition of the Appellant by comparing the facts of the Appellant’s case partially with Anuj Jain Case (Anuj jain IRP Vs. Axix bank Ltd.) 2020 8 SCC 401 and refused to classify the claim of the Appellant amounting to Rs.42,61,33,333/- as ‘Financial Debt’.
5. The Ld. Counsel for the Appellant has submitted that the Adjudicating Authority has not only rejected the claim of the Appellant but has treated the same as preferential transaction in term of Section 43(2)(a) of the Code. Considering that this has been within the two years look back period as required by the Code.
6. The Ld counsel for the Appellant has also submitted that the transactions is purely a ‘Financial Debt’ and the Adjudicating Authority cannot consider the same as ‘preference transaction’ without their being an avoidance application by the RP or the Liquidator under Section 44 of the Code. It was also submitted by the Appellant that the MOU gets substituted by the loan agreement and this amounts to novation of the earlier agreement with an entirely new agreement as per Section 62 of the Indian Contract Act, 1872. The Ld. Counsel for the Appellant also submitted that they are not in any way related party with the CD. However, they could not confirm whether this was the first transaction with the CD or there was earlier transaction also. They have also cited the various judgments as stated below:
