M.K. Shrawat, Member - (1.) The Petitioner in the capacity of "Financial Creditor" has submitted Form No.l on 07.08.2017 to initiate Corporate Insolvency Resolution Process under section 7 of the Insolvency & Bankruptcy Code 2016; Read with Rule 4 of the Insolvency & Bankruptcy (Application to Adjudicating Authority) Rules, 2016) for an outstanding financial Debt of Rs. 4,34,79,673/- (Principal) and interest thereon Rs. 4,48,03,622/-, totalling Rs. 8,82,83,295/- to be recovered from alleged Corporate Debtor M/s. Mohan Aromatics Pvt. Ltd., Mumbai.
(2.) At the outset our attention has been drawn on an Order passed by this Bench of NCLT, Mumbai in the case of this very Petitioner under the same title bearing TCP NO.281/I&BP/NCLT/MB/MAH/2017 dated 27.06.2017. However, in the capacity of Operational Creditor on one hand as Petitioner, and on the other hand the same Respondent as Corporate Debtor, wherein on receiving a Praecipe of 27.06.2017 it was held as under :- "ORDER Heard on : 27.06.2017 Pronounced on: 27.06.2017 1. The Learned Representatives of both the sides are present. the Praecipe of 27th June 2017 it is stated that: The above Company Petition was originally hied in the Hon'ble Bombay High Court. Soon after filing the same, the matter was transferred to this Hon'ble Tribunal. The Petitioner inadvertently could not attach the correct statutory notice to the above Company Petition. Instead of amending the above Company Petition and Form No. 5 in the matter, the Petitioner wishes to withdraw the above Company Petition and initiate the fresh proceedings by issuing fresh notice and by filing fresh Petition before this Hon'bie Tribunal. It is therefore, prayed that the above Company Petition maybe allowed to be withdrawn with liberty to initiate fresh Insolvency proceedings against the above Corporate Debtor." 3. The copy is served to the Learned Counsel of the Respondent alleged debtor. 4. On hearing the Learned Counsel for the Petitioner, prima facie, it appears that the Petitioner can be allowed to withdraw the Petition with the liberty to initiate the proceedings, if deem fit, under the I&BP Code, 2016. 5. The Petition is hereby dismissed as withdrawn. To be consigned to Records." 2.1 In view of the above, the Petitioner had filed a fresh Petition {supra) in the capacity of a Financial Creditor now subjud/cefor adjudication. On receiving this fresh Petition under section 7 of The Code the Respondent Debtor has placed three issues, can be summarised as under :- a. That there was no "privity of contract" between the alleged Creditor and Debtor because the Respondent Debtor is only a witness to the impugned agreements ? b. That the Petitioner is not clear about its stand whether a "Financial Creditor" or an "Operational Creditor" because of the admitted position that earlier a Petition was filed under section 8/9 of the Insolvency Code which was "withdrawn". The Petitioner is not entitled to file a fresh Petition on the same cause of action and the principle of res judicata applies ? c. That the fresh Petition filed in the capacity of "Financial Creditor" is incorrect because the Debt in question is not a "Financial Debt" as defined under the Code?
(3.) To answer these three questions, it is necessary to examine the facts of the case. The Applicant is a "Partnership Firm" engaged in the business of trading of general merchandize either in local market or in foreign market. The Respondent and another concern M/s. Allure International approached the Applicant to help them to purchase the fabrics from supplier by opening Letter of Credit in favour of the supplier of the goods in order to guarantee the payment of the goods supplied within 180 days of the receipt of the Invoice. It was assured to the Applicant that both the concerns shall be a guarantor to each other's transaction of purchase of goods. For the said facilitation services, the applicant was offered to pay facilitation cost @ 4% of the CIF value of the goods covered under L/C. It was further offered to pay additional facilitation cost of 2% per month of the full value of L/C amount. In addition to this, further offered to pay interest @ 3% per month on any amount paid by the Applicant on behalf of the Respondent. The Partners of the Debtor stood as guarantors. For number of transactions several L/C agreements were signed by the parties. Pursuance to the Agreement "Letter of Credit" was opened in favour of the Bank of the Suppliers by issuing Irrevocable Letters of Authority. Copies of the Irrevocable Letters of Authority are placed on record. M/s. Mohan Aromatics Pvt. Ltd, then furnished the details of the goods which they proposed to purchase from their Suppliers, by furnishing the Proforma Invoices which contained the details of the goods. On the basis of these details given in the Proforma Invoices, the Letters of Credits forms and Applications were prepared for the opening and establishing of the Letter of credit in favour of the Bank of the Suppliers. On the basis of the documents and authority from M/s. Mohan Aromatics, the Applicant had opened Letter of Credit in Union Bank of India in favour of the Bank of the Supplier of goods i.e. State Bank of India and the details of several L/C opened and the facility amount is mentioned in the compilation. The proof of delivery of goods is also on record. As per the terms of the Agreement the Respondent remitted the Margin Money and the Import Facilitation Cost. The Margin Money was thus debited to the account of the Applicant. The compilation consisted the details of the Margin Money received from M/s. Mohan Aromatics against each L/C. In short, against 12 L/C total Margin Money deposited was Rs. 47,36,000/- and the balance remained in the L/C after deducting Margin Money Rs. 2,28,76,336/-. As per the terms M/s. Mohan Aromatics was under obligation to pay the remaining value of L/C with all charges to the Applicant within 175 days of receipt of delivery of Challan. After receipt of the delivery proof from the Bank the Applicant requested M/s. Mohan Aromatics and their financial guarantor M/s. Allure International to make the payment of L/C amount with charges. Initially, the Debtors have failed to make the payment hence requested for more time to make the payment as a consequence, the Applicant had to pay the entire L/C amount with Bank Charges. According to the Applicant, there is no "dispute" that the liability against the Bank was discharged; the L/C accounts were fully satisfied, opened with Union Bank of India, Rather, Union Bank of India issued a "No Due Certificate" dated 17.03.2016. A statement showing total amount of Rs. 2,76,39,602/- paid to Union Bank of India along with presentation memo-cum-advice of cost under L/C is annexed in the compilation. There is "no dispute" that the said amount was paid to the Bank by the Petitioner. It is pleaded that M/s. Mohan Aromatics Pvt. Ltd. by their letter dated 23.01.2015 admitted their liability to pay the amount as per the various Debt notes amounting to Rs. 1,92,81,165.51/- against the Commencing from LC No.31840ILC0003814, which amounts the Applicant / FC has paid to their Banker on behalf of M/s. Mohan Aromatics Pvt. Ltd. In the said letter M/s. Mohan Aromatics Pvt. Ltd. has also admitted that further amount of Rs.39,85,000/- approximately was also due and I payable by of Feb 2015 and that M/s. Mohan Aromatics Pvt. Ltd. further assured that at least this amount would be paid without default, but even then they failed to honour this commitment. They had also agreed that to pay at least Rs.5,00,000/- per month commencing from Feb 2015 onwards towards repayment of their outstanding, dues. Even this amount was not paid regularly and they altogether stopped the payment and evaded all contractual obligations and commitments. According to the two Statements of Account provided by the Respondent, the Debt amount is duly confirmed for the period of 1st April, 2014 to 31st March, 2015 for Rs. 2,28,66,745/- and for the period 1st April 2015 to 1st September 2015 for Rs. 2,20,20,443/-. In the Balance Sheet of M/s. Mohan Aromatics drawn as on 31st March 2015 the Liability was shown as Trade Payable', as alleged by the Petitioner. 3.1 On accepting the Liability, the Respondent had issued certain cheques in favour of the Petitioner to discharge the Liability totalling Rs. 2,29,36,000/-, however, dishonoured. As a consequence, Demand Notices were issued but the Debtor had neither paid the amount nor replied to the said legal Notices. Demand Notices are annexed. Likewise, M/s. Allure International, Guarantor, had also issued cheques for discharging the Liability in favour of the Petitioner of the same amount of Rs. 2,29,36,000/- but all dishonoured. Demand Notices were issued to the Guarantor but there was no reply and there was no payment. The Applicant / FCs states that under the said L/C the State Bank of India of the Supplier of goods, demanded a total sum of Rs. 2,76,39,602.40/- from the Union Bank of India of the Applicant / FC. The Applicant / FC having not received this amount from the defendants, they paid this amount of Rs. 2,76,39,602.40/- to their Bank. The Applicant / FCs had to pay a total of Rs. 4,03,132.60/- towards the costs and charges levied by their Bank. The Applicant / FCs for their service of opening L/C, and facilitating the finance, they have charged the 4% facilitation costs which comes to fl 1,83,938.00. The total principal amount thus receivable from the Defendants works out to Rs. 2,92,26,673.00/-. The Applicant / FC states that after adjusting the Margin money of Rs. 47,36,000.00/- and further on account of payment of Rs. 27,20,229.00/-, the net balance principal amount receivable from the defendants worked out to Rs. 2,17,70,444.00/-. 3.2 From the side of the Respondent Debtor objections have been raised and pleaded that the Proceedings filed on the basis of the dishonoured Cheques and Demand Notices are misconceived because against the said Cause of Action remedy had already been exhausted by approaching the Civil Court by filing proceedings under section 138 of Negotiable Instruments Act. This fact had been concealed by the Petitioner and nowhere disclosed that the Debtor had been sued before a Magistrate. Learned Counsel of the Respondent Debtor had also pleaded that M/s. Mohan Aromatics had only witnessed the Agreements as a Guarantor of M/s. Allure International, hence no Petition is 'maintainable' against the Respondent. The Debt amount claimed is also under "dispute" and the alleged Debtor is not liable to pay the interest. It is vehemently pleaded that there was no "privity of contract" between the Petitioner and the Respondent. Earlier for same Cause of Action a Petition (TCP 281/2017) was filed but being defective it was withdrawn and dismissed by this very Court hence the Petitioner should not be allowed to again file a fresh Petition on the same Cause of Action which had already been adjudicated upon. A legal question has been raised that the alleged facility was in respect of supply of goods hence the nature of Debt, if any, falls under the category of "Operational Debt". Hence the claim of "Financial Debt" is against the provisions of the I&B Code. FINDINGS;