AI Structured Summary
Not yet generated for this judgment
Judgment
ORDER [Per se: Shri Prasanta Kumar Mohanty, Member (T)]
The Corporate Debtor is under CIRP from 26.08.2019 as per the Order of this Adjudicating Authority. It is stated by the Petitioner / Applicant that the Applicant is a partnership firm having a long business transaction with the Corporate Debtor – National Plywood Industries Ltd. The Petitioner submits that is has supplied goods to the CD reportedly worth of Rs.1.73 Crores and the amount is due and yet to be paid by the CD.
The Petitioner has prayed in this IA under Section60 (5) of IBC to direct the RP to classify its debts as Financial Creditor instead of Operational Creditor as being classified by the RP.
That the Respondent No.1 filed an application under Section 7 of the Insolvency & Bankruptcy Code, 2016 ("Code"), being CP No.(IB)/09/GB/2019, against the Corporate Guarantor and the same was admitted by this Tribunal on 26.08.2019 and the Respondent No.2 was appointed as Interim Resolution Professional.
That on 23.11.2019, the Petitioner / Applicant filed Form -C with the Respondent No.2 for a claim of Rs.60,00,000.00 (Rupees Sixty lacs only), along with proof of the claim, copy of which is annexed with the application marked as Annexure -A1. 1.4 The Applicant submits that the Respondent No.2 after receiving the claim from the Petitioner / Applicant and being satisfied with all the supporting documents as submitted, has admitted the said claim and classified the Petitioner / Applicant as a Financial Creditor. 1.5 It is submitted by the Applicant that the Respondent No.2 vide email dated 10.07.2020 intimated the Petitioner / Applicant that the claim of Rs.60,00,000.00 (Rupees Sixty lacs only), which was admitted as a Financial Loan to the CD was not for any sum lent to the CD. Accordingly, the Respondent No.2 asked the Petitioner / Applicant to re-lodge the entire claim in Form -B, as an Operational Creditor. Copy of the email dated 10.07.2020 is annexed with the application marked as Annexure- A3. 1.6 The Applicants submits that without considering the objections raised by the Petitioner / Applicant, the Respondent No.2 has arbitrarily reclassified the Petitioner / Applicant as an Operational Creditor from the Financial Creditor. A Copy of the list of Creditors dated 01.12.2019 is annexed with the application marked as Annexure-A4. 1.7 That the Petitioner / Applicant protested the said arbitrary act of the Respondent No.2 on the following grounds:
That the said arbitrary act of the Respondent No.2 was made with mala fide intention and biased in nature.
That the Respondent No.2 has also failed to record the evidence produced by the Petitioner / Applicant that the money was borrowed or raised by the Corporate Debtor under transactions including sale or purchase having commercial effect of borrowing. [A copy of the loan confirmation letter dated 26.06.2019 issued by the Corporate Debtor – NPIL is attached with the application marked as Annexure-A5].
On the other hand the Respondent No.2 here / Resolution Professional has stated in its email dated 10.07.2020 sent to the Petitioner here that-
"We have received your claims on 23.11.2019 under two heads operational creditors and financial creditors amounting to Rs.1.13 Crores and Rs.0.60 Crores respectively. We relied on the papers submitted and the company books as on the CIRP commencement date, and your claim was admitted as it was submitted.
However, on close perusal of the accounts of the Corporate debtor it has been discovered that the amount due to you was against supply of goods made by you to National Plywood Industries Limited (NPIL) and was not for any sum(s) lent by you to NPIL.
There was never any intention of MFP to "lend money" to NPIL for any period, and never had MFP advanced any financial loan to NPIL. Further there was no agreement or consideration of 'time value of money'. There was no definite period for repayment of the money, nor was repayments expected. Outstanding in NPIL books were only and only against the supply of raw materials by you.
Above all, journal entries in both MFP & NPIL books were passed on two different dates.
An amount of Rs.0.60 Cr has been transferred in NPIL's from creditors to unsecured loans merely be a book entry. This entry on the books of accounts has put you to an unfair beneficial position w. r. t. other creditors of NPIL in event of distribution of assets under Section 53 of IBC. The change in the status of your claims from the CD by mere book entries in the look up period is not acceptable as it amounts to changing the ranking of distribution to the detriment of other operational creditors in the same class of claimants.
We need to hear from you with complete details to reach us within 48 hours of the communication of this mail. Further, in absence of terms for time value of money, you are requested to re-lodge your entire claim amount totalling to Rs.1.73 crores in FORM B so that it can be considered."
In view of the above facts and circumstances, the Petitioner / Applicant herein has prayed that this Tribunal may be pleased to: -
To reclassify the Petitioner / Applicant as a Financial Creditor and accordingly amend the Information Memorandum circulated to the Resolution Applicants.
It is observed that-
The Petitioner has supplied goods to the CD worth Rs.1.73 Crores, but one letter has been issued by the Petitioner to the CD on 26.6.2019 stating as under:-
"As per our discussion, out of the total amount due to us, we are agreeable to transfer a sum of Rs.60,00,000 to a loan account and on from 1st July, 2019, the loan will bear interest @12% to be paid annually.
It is not clear on what basis Rs.60.00 lacs as part of the Sundry Creditor of the Petitioner is carved out to treat as loan and this letter has been issued on 26.06.2019 when the Application for CIRP has been filed and the Petition has been admitted by the Adjudicating Authority on 26.08.2019. The Resolution Professional has furnished Foreign Sic Report on Transaction Audit submitted by BDO INDIA LLP dated 26.08.2020 on the CD in IA No.51 of 2020 under Section 25 (j), 43, 45 and 49 read with Section 44, 48, 66 of IBC, 2016, wherein it has been pointed out that several preferential transactions etc. have been undertaken by the CD before two years of the commencement of CIRP.
Supply of goods is considered as Operational Creditor – Financial Creditor is always a Financial Creditor and Operational Creditor is always an Operational Creditor. Character of the debts cannot be changed in filing form B or Form C by anyone or by mere book entries. The views of the Resolution Professional is found to be correct.
Hence the prayer made in this IA by the Petitioner to direct the Resolution Professional to classify its Debt as Financial Creditor is hereby rejected.
IA No.52 of 2020 is disposed of with the above observations as to no cost.