Ms. Apurva Jain & Ors. vs M/s. Adaptio Facility Management Private Limited

Ms. Apurva Jain & 10 others, Applicants / Financial Creditors herein have filed an Application under Section 7 of IBC, 2016, seeking to initiate Corporate Insolvency Resolution Process (CIRP) against M/s. Adaptio Facility Management Private Limited, Respondent / Corporate Debtor herein.

The details of the Financial Creditors have been narrated in part-I of the Application. Part-II contains the particulars of the Corporate Debtor M/s. Adaptio Facility Management Private Limited, having CIN: U74999TN2016PTC111722 and registered office at No. 1/12, 6^th cross street, Venkateshwara Nagar, Ramapuram, Chennai - 600089. It was incorporated on 29.07.2016.

In Part III of the application, the Financial Creditor has proposed one Mrs. Satyadevi Alamuri with Registration No: IBBI/IPA-002/IP-N00071/2017-2018/10205 as the “Interim Resolution Professional” of the Corporate Debtor.

In Part-IV of the Application, it is stated that the Financial Creditors had cumulatively advanced a total sum of Rs.1,08,83,596.95 to the Corporate Debtor as the amount which is due and payable by the Corporate Debtor.

It is stated that there are 11 financial creditors who advanced the amount to the Corporate Debtor as part of a bill discounting arrangement through an online bill discounting portal called “KredX” operated by ‘ Minions Ventures Pvt. Ltd’ through various Agreements for Transfer of Rights. The Agreement for Transfer of Rights ("Agreement') is a tripartite agreement between each of the Creditors herein, Minion Ventures Pvt. Ltd., and the Corporate Debtor and the Purchaser, i.e. the Creditor. It is stated that the Corporate Debtor provided goods and services to an enterprise and accordingly raised an invoice on the said enterprise for invoice discounting. It is stated that based on the representation from the enterprise that the said sale transactions are genuine and the invoices are genuine, the Creditor offered to pay to the seller on such discounted terms as provided on the Platform. It is stated that the Corporate Debtor receives the money due to it at a discounted price, whereas the Enterprise secures time for meeting its debts due to the Corporate Debtor. It is stated that on or before the date on which the sum of money becomes due [which, in the present case is 90 (ninety) days] ("maturity date"), the Enterprise pays the full invoice value into an escrow account maintained by KredX and against the receipt thereof, each of the Creditor receives the monies due under the agreement. It is stated that the Creditors who provided a discounted value to the Corporate Debtor, realise the returns on their loans, when the Enterprise pays the full value of the said invoice without any discounts. Thus, difference between the discounted invoice value paid by the Creditors to the Corporate Debtor and the full amount of the invoice paid by the Enterprise into the said escrow account, represents the return on investment made by the creditors.

It is stated that not only time is the essence of the agreement, but the said agreement also provides for payment of a late fee and an interest rate of 2% percent per month. Thus, the monies advanced by the Creditors fulfil the requirement of time value of money being essential to the agreement itself. The Creditors further submit that in lieu of the aforesaid invoice discounting arrangement, the Corporate Debtor also issues a cheque towards repayment of the monies due to the Creditors herein, in case there is a default on the part of the Enterprise for making the payments on the due date. It is stated that the Enterprise in view of this invoice discounting entered into a Bank Agreement Confirmation dated 11.1.2019 confirming payment into the Escrow Account maintained by KredX. However, when the deadline for repayment of the maturity amount arrived, the Enterprise failed to pay the monies due to the Creditors herein, accordingly, as per the agreement of Transfer of Rights and following the recourse method on the Corporate Debtor, the Corporate Debtor is liable to refund the consideration to the Purchaser, i.e the Creditors. It is stated that the Corporate Debtor in order to effect the restitution had provided cheques. It is stated that the cheques when presented for collection, returned by the Corporate Debtor's bankers with the endorsement "stopped by drawer". The Creditors submit that though the Corporate Debtor was served with a notice under Section 138 of the Negotiable Instruments Act, 1881, the same was neither complied with nor did the Corporate Debtor reply to the same. Thus, the Financial Debts due to the Creditors by the Corporate Debtor is undisputed and acknowledged. It is stated that the above are not only the financial debts due to the creditors borne by the said agreements, but the subsequent dishonour of the said cheques makes it abundantly clear that the Corporate Debtor is insolvent. It is stated that on a perusal of the data related to the Corporate Debtor on the Ministry of Corporate Affairs website, it is seen that the Corporate Debtor has massive liabilities and doesn't appear to have sufficient liquidity to meet its debts. Under the circumstances, it is just and necessary to admit the Corporate Debtor into the process of insolvency resolution as per the Code. Hence this Petition has been filed.

Heard the submissions made by the Learned Counsel for both the parties and perused the record.

In the present case, applicants have given loans to the Corporate Debtor as part of a bill discounting arrangement through an online bill discounting portal called “KredX” operated by ‘ Minions Ventures Pvt. Ltd’ through various Agreements for Transfer of Rights.

To prove the financial debt and default, the applicants have submitted following documents:

During the proceedings, respondents have not filed counter despite opportunities given on the hearings dated 13.02.2024, 06.06.2024 etc. On 29.07.2024, the right to file reply of the respondent was closed. It was also held that as reply has not been filed, rejoinder would not be taken into consideration.

As per the documents filed, the ‘Date of Default’ is 03.04.2023 i.e, the date on which the Corporate Debtor was due to pay the full amounts due. The present petition has been filed within limitation period.

On perusing the documents submitted by the applicants, we find the terms of funding, repayment laid out in the Agreement for Transfer of Rights. The details in the Agreement for transfer of Rights with one of the financial creditors are reproduced below:

Clause 2.5 of the agreement talks about Ownership of invoice receivables and describes that sale is on full recourse basis:

Clauses 6.1 , 6.2 and 6.3 of the agreement talk about default , deposit of cheques and restitution as under:

On perusal of the above clauses in the Transfer of Rights Agreement, we find that there is a disbursement against the consideration for time value of money and there is a clause for payment of interest. Further, the documents furnished show that it is receivables discounting with recourse basis. Thus, receivables sold under recourse basis will constitute a financial debt as per Section 5 (8)(e) of IBC Act, which is reproduced as under:

In Dr. B.V.S. Lakshmi -vs- Geomatrix Laser Solutions (P) Limited in Com Appeal (AT) (Insolvency) No.38 of 2017 vide order dated 22.12.2017, Hon'ble NCLAT held that to fall within the ambit of financial debt, the claimant must show that there is a debt along with interest, if any, which has been disbursed. Any such “disbursement” has been against the “consideration for time value of money”. It was held that a person can show that the disbursement has been made against the consideration of time value of money through any instrument.

It has been held by the Hon’ble Supreme Court in Innoventive Industries Ltd. v. ICICI Bank and another (2018) 1 SCC 407 as well as in Mobilox Innovations Pvt. Ltd. v. Kirusa Software Pvt. Ltd. (2018) 1 SCC 353 after going through the Scheme of IBC, 2016 in depth in relation to an Application under Section 7 filed by a Financial Creditor as compared to the one filed under Section 9 by an Operational Creditor, that in relation to a Section 7 Application where there is an existence of a ‘financial debt’ and the default in excess of Rs.1,00,00,000/-, this Tribunal is bound to admit the Application and as a consequence trigger the Corporate Insolvency Resolution Process (CIRP) and in relation to a Section 7 Application defence of set off or counter claim put forth by the Corporate Debtor cannot be considered as a dispute in relation to the Financial debt and default in relation to it. In the present case, it is clear that there is a default on the part of the Corporate Debtor for a sum exceeding Rs.1 Crore.

The Applicant / Financial Creditor has proved that there is a ‘debt’ and ‘default’ on the part of the Corporate Debtor and hence in term of Section 7(5) of IBC, 2016, the present application is required to be admitted and Corporate Insolvency Resolution Process as against the Corporate Debtor is required to be initiated.

Under these said circumstances, we admit this application and order for initiation of Corporate Insolvency Resolution Process against the Corporate Debtor.

The Financial Creditor has proposed the name of Ms. Satyadevi Alamuri, having Reg. No. IBBI/IPA-002/IP-N00071/2017-18/10205 e-mail Id: [email protected] as the Interim Resolution Professional (IRP) who has also filed her consent in Form – 2 at page No.369 (Annexure-42) of the Application and also upon verification from the IBBI website, it is seen that the said person holds valid Authorization for Assignment till 29.11.2024. Ms. Satyadevi Alamuri is appointed as the IRP is directed to take charge of the Corporate Debtor’s management immediately. The IRP is also directed to cause public announcement as prescribed under Section 15 of the IBC, 2016 within three days from the date the copy of this Order is received, and call for submissions of claim by the creditors in the manner as prescribed under Regulation 6 of the IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016. The IRP who is appointed shall take forward the process of Corporate Insolvency Resolution of the Corporate Debtor. The IRP appointed shall take in this regard such other and further steps as are required under the Statute, more specifically in terms of Section 15,17,18 of the Code and file his report within 20 days before this Bench. The powers of the Board of Directors of the Corporate Debtor shall stand superseded as a consequence of the initiation of the CIRP in relation to the Corporate Debtor in terms of the provisions of IBC, 2016.

As a consequence of the Application being admitted in terms of Section 7(5) of the Code, the moratorium as envisaged under the provisions of Section 14(1) and as extracted hereunder shall follow in relation to the Corporate Debtor:

However, during the pendency of the moratorium period in terms of Section 14(2) (2A) and 14(3) as extracted hereunder:

The duration of the period of moratorium shall be as provided in Section 14(4) of the Code and for ready reference reproduced as follows:

The suspended Board of Directors is directed to give complete access to Books of Accounts maintained under Section 128 of the Companies Act 2013. In case the books are maintained in the electronic mode, the suspended Board of Directors are required to share with the Resolution professional all the information regarding maintaining the backup and regarding the service provider kept under Rule 3(5) and Rule 3(6) of the Companies Account Rules, 2014 , especially the name of the service provider, the internet protocol of the Service Provider and its location and also the address of the location of Books of Accounts maintained in the cloud. In case accounting software is maintained, the IRP/RP is to check that the audit trail in the same is not disabled as required under the notification dated 24.03.2021 of Ministry of Corporate Affairs. The Rule 3(5) and Rule 3(6) of the Companies Account Rules, 2014 are reproduced as under:

Statutory Auditor of the Corporate Debtor is directed to share with the resolution professional the audit documentation and Audit Trials which they are mandated to retain pursuant to SA 230 ( Audit Documentation) prescribed by the Auditing and Assurance Standards Board ICAI.

The Financial Creditors are directed to pay a sum of Rs.5,00,000 /-(Rupees Five lakhs only ) to the Interim Resolution Professional upon the Interim Resolution Professional filing the necessary declaration form as required under the provisions of the Code to meet out the expenses to perform the functions assigned to her in accordance to Regulation 6 of Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016.

Based on the above terms, the Application stands admitted in terms of Section 7(5) of IBC, 2016 and the moratorium shall come in to effect as of this date. A copy of the Order shall be communicated to the Financial Creditor as well as to the Corporate Debtor by the Registry. In addition, a copy of the Order shall also be forwarded to IBBI for its records. Further, the Interim Resolution Professional be also furnished with copy of this Order forthwith by the Registry, who will also communicate the initiation of the CIRP in relation to the Corporate Debtor to the Registrar of Companies concerned.

Accordingly, CP/IB/207/CHE/2023 stands admitted.