B.S.V. Prakash Kumar, Member - (1.) It is a company petition filed u/s. 9 of Insolvency and Bankruptcy Code 2016 (IB Code) by operational creditors viz. DF Deutsche For fait AG (called as Deutsche) & Misr Bank Europe GmbH (called as Misr Bank) against a corporate debtor company viz. Uttam Galva Steels Limited (referred as Uttam - whose financial statements have already slipped into brackets) stating that Uttam defaulted in making payment of USD 16,542,886.33 (inclusive of interest till 28-02-2017) equivalent to Rs.110,40,30,876.44 towards 20,000 tons of prime steel billets supplied by a Germany Company namely AIC Handels GmbH (called as AIC). This debt was initially assigned to Deutsche by entering into a discount agreement by AIC, thereafter Deutsche, in turn, subsequently assigned part of this debt to Misr Bank by Deutsche. When Uttam failed to pay off the amount despite statutory notice u/s. 8 of IB Code has been received by it on 03.03.2017, after completion of 10 days from the date of receipt of notice by Uttam, Deutsche and Misr Bank, on 14th March 2017, filed this company petition u/s. 9 of IB Code for initiation of Insolvency Resolution Process by declaring Moratorium with consequential directions as set out under sections 13, 14, 15, and 16 of IB Code. Brief background of this litigation:
(2.) The corporate debtor (Uttam) is in steel rolls manufacturing dealing with export and import business in relation to steel, in furtherance of it, on 16th August 2013, Uttam entered into a Sales Contract (Annexure-4) with AIC for purchase of 20,000 metric tons of Prime Steel Billets at the rate of $540 per MT, which would come to $ 10,800,000 (+/- 10% depending on the exact quantity supplied) agreeing that shipment of the goods be in the month of September 2013 and the agreed money should be payable in 180 days from the Bill of Lading(Annexure-6) date. It is further agreed that payment to be made in effective USD by two Bills of Exchange each with face value of USD 5,400,000 (+/- 10%) to the order of seller i.e., AIC drawn on and accepted by Uttam, maturing on the payment date, payable at a payment domicile acceptable to AIC in Mumbai, it is also said that it would be governed and construed in accordance with English Law and if any dispute in between, it is by arbitration in accordance with Swiss Rules of International Arbitration of the Swiss chambers of commerce by further saying that AIC is entitled to pursue payment obligation of Uttam in the form of inter alia bills of exchange before any competent court where a specially abbreviated form of legal procedure exists.
(3.) As per the sale contract, AIC on 16th September 2013 shipped 19,976 MT of Prime Steel Billets. A Bill of Lading dated 16th September 2013 came to be issued, then on 18th September 2013, AIC issued an invoice (Annexure-5) for a sum of USD 10,787,040 for the billets in quantity of 19, 976, 40 MT supplied to Uttam at a rate of USD 540 per MT. A reference was made to two Bills of Exchange dated 18.9.2013 drawn by AIC on Uttam, one (Annexure-7) for USD 5,387,040 and another (Annexure-8) for USD 5,400,000 to pay on 15th March 2014 (maturity date after 180 days) against these two Bills of Exchange and Uttam unconditionally accepted the Bills.;