JUDGEMENT

(04.07.2023) NARESH SALECHA, MEMBER (TECHNICAL) 1. The present appeal has been filed under Section 61 of the Insolvency & Bankruptcy Code, 2016 (in short ‘Code’) against the ‘impugned order’ dated 03.03.2023 in CP (IB) 464 (MB)/2021 passed by the ‘Adjudicating Authority’ (National Company Law Tribunal, Mumbai Bench, - IV), whereby the ‘Adjudicating Authority’, admitted Section 7 application of Netafim Agricultural Financing Agency Pvt. Ltd. (in short ‘NAFA’) i.e., ‘Respondent No. 1’/ the ‘Financial Creditor’ against the Shraddha Energy & Infraprojects Pvt. Ltd./ the ‘Corporate Debtor’. 2. Aggrieved by the same, the ‘Appellant’ has preferred the present appeal.

3. Heard the Counsel for Parties and perused the records made available including cited judgments.

4. Learned Counsel for the Appellant stated that the ‘Corporate Debtor’ is engaged in the business of production of sugar from sugarcane crops grown by its registered farmers in its common area. Learned Counsel for the Appellant further stated that on 03.10.2013, the ‘Respondent No. 1’ which is Non-Banking Financial Company (in short ‘NBFC’) entered into a tripartite agreement with the ‘Corporate Debtor’ along with Netafim Irrigation (India) Pvt. Ltd. (in short ‘NIIPL’) which is a sister concern of ‘Respondent No. 1’ engaged in the manufacture and supply of irrigation equipment/ systems. Learned Counsel for the Appellant stated that in Company Appeal (AT) (Insolvency) No. 338 of 2023 Page 3 | 17 terms of the said tripartite agreement, the ‘Corporate Debtor’ hired NIIPL for supply and installation of drip irrigation systems in the registered/ recommended farms which would supply the sugar to the ‘Corporate Debtor’.

5. Learned Counsel for the Appellant submitted that the relevant clause of the tripartite agreement describes the relationship along with the rights and obligations of the parties. Learned Counsel for the Appellant stated that during the period 2013-14, the ‘Respondent No. 1’ disbursed loan amount to 995 farmers based on the Tripartite Agreement dated 03.10.2013 and one separate ‘Deed of Guarantee’ entered between the ‘Corporate Debtor’ and ‘Respondent No.1’ on 03.10.2013. Learned Counsel for the Appellant further stated that the ‘Corporate Debtor’ was only a ‘Guarantor’ and not the ‘Principal Borrowers’ who in the present case were the 995 farmers to whom the drip irrigation systems were supplied with the help of funds provided by the ‘Respondent No. 1’ to such farmers. Learned Counsel for the Appellant submitted that on 07.04.2021, the ‘Respondent No. 1’ issued a legal notice invoking the ‘Deed of Guarantee’ dated 03.10.2013 and called upon the ‘Corporate Debtor’ to clear the outstanding dues of the farmers who had defaulted in making payment for the alleged debt. The said notice was replied by the ‘Appellant’ on behalf of the ‘Corporate Debtor’ on 16.04.2021 denying any outstanding payment to be made by the ‘Corporate Debtor’ to the ‘Respondent No. 1’. 6. Learned Counsel for the Appellant submitted that as prevalent practice in sugar industry, the sugar factory on behalf of all such farmers Company Appeal (AT) (Insolvency) No. 338 of 2023 Page 4 | 17 approached the ‘Financial Creditor’ for loan and in the present case also the loans were given to such farmers by the ‘Respondent No. 1’ who unfortunately could not pay on time due to draught conditions etc., Learned Counsel for the Appellant further submitted that the ‘Respondent No. 1’ had filed application under Section 7 of the Code before the ‘Adjudicating Authority’ for alleged default amount of Rs. 5,41,34,813/-. 7. Learned Counsel for the Appellant emphasised that the ‘Respondent No. 1’ failed to initiate suitable action on time against the ‘Principal Borrowers’ i.e., the farmers in terms of the agreement which stipulated that in case of the default committed by the farmers, the ‘Respondent No. 1’ had six month’s time to take action against the ‘Corporate Debtor’ which