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2025 Supreme(Online)(NCLT) 1159
NATIONAL COMPANY LAW TRIBUNAL
SMT. BIDISHA BANERJEE, SHRI. D. ARVIND, JJ
M/s Tropical Ventures Company Limited – Appellant
Versus
Incab Industries Limited – Respondent
C.P. (I.B.) No. 1684/KB/2018
For the Appellants/Petitioners: Mr. Abhinav Vashist, Sr. Adv., Mr. Shaunak Mitra, Adv., Mr. Siddharth Marrkar, Adv., Dr. Abhishek Singhvi, Sr. Adv., Mr. Orijit Chatterjee, Adv., Ms. Swati Dalmia, Adv., Mr. Kevic Setalvad, Sr. Adv., Mr. Abhijit Sinha, Sr. Adv., Mr. Prantik Garai, Adv., Ms. Ameya Kulkarni, Adv., Ms. Aasia Hasan, Adv.
For the Respondents: Mr. Mayank Saha, Adv. of 2022, Mr. Pathik Chowdhury, Adv., Mr. Akhilesh Kr. Shrivastava, Adv., Mr. Akash Sharma, Adv., Mr. Prince Verma, Adv.
Related party status is determined by control and influence as outlined in the Insolvency and Bankruptcy Code, affecting creditor classifications.
Headnote:(A) Insolvency and Bankruptcy Code, 2016 - Sections 5(24), 21(2) - Determination of related party status - The applicant contested its designation as a related party, while the respondent argued otherwise based on control and influence - Court clarified definitions and applied relevant statutory interpretations. (Paras 36, 37, 44)
(B) Claims Processing - The legal standing of guarantees and debts - Issues arose regarding the treatment of HSBC's debt and guarantee obligations - The court determined admissibility and subrogation rights. (Paras 41, 48)
Facts of the case:
The applicant sought relief against designation as a related party concerning guarantees and debts claimed from HSBC and others, emphasizing ownership structures and significant influence. (Paras 2-8)
Findings of Court:
The applicant holds significant influence over the corporate debtor, thus deemed a related party under IBC provisions, and claims regarding unsecured debt were determined erroneous due to lack of substantiated agreements. (Paras 44, 48)
Issues: Whether the applicant is a related party under IBC and the nature of the claim related to HSBC as secured or unsecured were primary questions addressed. (Paras 35, 36)
Ratio Decidendi: The court held that the applicant's control over entities constituted related party status as defined in the IBC, rejecting claims of being merely a financial creditor based on statutory definitions. (Paras 36, 44)
Result: The application is dismissed, impacting the status of the claim related to HSBC.
| Table of Content |
|---|
| 1. debt assignment and corporate structure. (Para 2 , 5 , 6 , 8) |
| 2. challenging related party status and definitions. (Para 14 , 16 , 21 , 25 , 31) |
| 3. interpretation of related parties under ibc. (Para 35 , 36 , 44) |
| 4. assessment of claims: secured vs unsecured. (Para 41 , 48) |
ORDER
Per: D. Arvind, Member (Technical):
1. The Court congregated through hybrid mode.
2. Heard Ld. Counsels for the parties.
3. This is an application preferred by M/s. Tropical Ventures Company Limited (hereinafter referred as “Applicant”) against the Resolution Professional Mr. Pankaj Kumar Tibrewal, resolution professional of Incab Industries Limited (hereinafter referred as “Respondent”) seeking following reliefs:
“a) To set aside the direction dated 17.11.2021 communicated by the resolution professional to the extent of the applicant being declared as a related party.
b) Pass an Order declaring the applicant as not a related party.
c) Pass an Order to set aside the direction issued by the resolution professional to the extent of the HSBC Guarantee being considered as an unsecured loan.
d) Pass an Order declaring that the claim of the applicant basis the HSBC guarantee is not an unsecured loan.
e) Pass an Order declaring that the date of conversion rate from USD to Rupees ought to be as on 06.08.2019 i.e. the commencement of CIRP of the corporate debtor.”
Factual Matrix:
4. The applicant is a company incorporated under the laws of Mauritius and is the assignee of debt due by Incab Industries Limited to Leader Universal Holdings Berhad and the debt has been assigned under a deed of assignment dated 18.03.2007 by Leader Universal Holdings Berhad, in favour of the applicant.
5. The corporate debtor Incab Industries Limited had been suffering from economic crisis since the year 1991. Because of the financial difficulties the corporate debtor was unable to make further payment obligations in respect of the loans and working capital facilities granted to the corporate debtor by various lenders.
6. The corporate debtor had availed loans as detailed below which has nexus to the Assignor:
i. ICICI had extended a corporate loan of INR 10,00,000,000/- (Indian Rupees Ten Crores only) to the Corporate Debtor vide the corporate loan agreement dated 10th August 1998 executed between ICICI and the Corporate Debtor (“ICICI Facility”);
ii. Hongkong and Shanghai Banking Corporate Ltd. (“HSBC” had extended overdraft/other facilities amounting to USD 3.85 Million equivalent to INR 15,35,00,000/- (Indian Rupees Fifteen Crores Thirty-Five Lakhs only) to the Corporate Debtor (“HSBC Facility”) dated 18th May 1998; and
iii. Citi Bank N.A., Calcutta (“Citibank”) had extended a loan of INR 68,00,00,000/- (Indian Rupees Sixty-Eight Crores only) to the Corporate Debtor vide the loan agreement dated 1st September 1997 and thereafter, vide the First Supplemental Agreement dated 22nd June 1998 executed between the Corporate Debtor and Citibank, the loan sanctioned by Citibank was modified (“Citibank Facility”).
7. To revive and improve the failing operations of the Corporate Debtor, Leader Universal Holdings Berhad (“Leader Berhad”) was brought in by the lenders of the corporate debtor, as sponsorer to revive the corporate debtor. Terms and conditions were recorded under the memorandum of understanding dated 04.12.1996, executed between Leader Universal Holdings Berhad (LUH), ICICI Limited as lead institution ANZ Grindlays Bank Limited, as the lead bank and the corporate debtor. Under the MoU LUH had undertaken to revive the corporate debtor, sought certain waivers from lenders and under took to make sure corporate debtor pays various lenders their dues. Copy of the MoU is in Annexure “B” to the application.
8. LUH had extended following guarantee in relation to ICICI, HSBC and Citibank debts on behalf of the corporate debtor:
i. Dead of guarantee dated 26th February 1999, executed between Leader Berhad and ICICI (“ICICI Guarantee”);
ii. Hold Cover Guarantee No. HLD970540DAL given by Lead
