The court affirmed a financial creditor's statutory rights to initiate CIRP based on default, regardless of the acquisition of liability claims by a third party, which must comply with established statutory frameworks.

ORDER

[PER: SANJIV DUTT, MEMBER (TECHNICAL)]

1. BACKGROUND

1.1 This C.P. (IB) No.1260/MB/2022 (Main Application) is filed by Axis Trustee Services Limited [acting in its capacity as Debenture Trustee for and on behalf of Franklin Templeton Asset Management (India) Private Limited], the Financial Creditor, on 21.10.2022, under Section 7 of the Insolvency and Bankruptcy Code, 2016 (hereinafter referred to as “the Code”) read with Rule 4 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016 (hereinafter referred to as “the AAA Rules”) for initiating Corporate Insolvency Resolution Process (hereinafter referred to as “CIRP”) in respect of Future Ideas Company Limited, the Corporate Debtor. Franklin Templeton Asset Management (India) Private Limited is the investment manager of Templeton Mutual Fund, which is the ultimate Debenture Holder.

1.2 The Debenture Holders, namely, ‘Franklin India Short Term Income Plan’ and ‘Franklin India Opportunities Fund’ subscribed to 1,000 rated, unlisted, secured, redeemable non-convertible debentures, each with a face value of Rs.10,00,000/-, across 4 series: Series A, B, C and D, totalling Rs.100,00,00,000/- (One Hundred Crore Rupees), issued by the Corporate Debtor, in accordance with the terms and conditions of Debenture Trust-cum-Mortgage Deed (hereinafter referred to as “the DTMD”) dated 15.10.2018, for different tenures ranging from 764 days to 1828 days. The Corporate Debtor was required to redeem the debentures and pay interest as specified in the Transaction Documents. The redemption process by way of quarterly instalments was to start from 31.01.2020. However, due to a default in redemption of debentures on 30.04.2021, an Event of Default was allegedly triggered. It is alleged that despite a Notice dated 01.07.2022 demanding payment, the Corporate Debtor failed to comply. Consequently, the Financial Creditor has preferred the present Application under Section 7 of the Code seeking initiation of CIRP in respect of the Corporate Debtor.

1.3 In Part-IV of the Application, the total amount claimed to be in default is stated to be Rs.122,83,28,079 /- (One Hundred Twenty-Two Crore Eighty-Three Lakh Twenty- Eight Thousand and Seventy-Nine Rupees) as on 27.09.2022. The date of default is mentioned as 30.04.2021, when certain debentures were to be redeemed but the Corporate Debtor failed to do so.

1.4 During pendency of the Main Application, the Corporate Debtor on 29.12.2022, furnished its reply to the Main Application and also simultaneously filed two Interlocutory Applications (IAs) Nos.18/2023 and 29/2023, on the same date, challenging maintainability of the Main Application. The Corporate Debtor in the said IAs prayed for setting aside of the Main Application on the grounds that the debt of the Financial Creditor was hit by Section 10A of the Code and further that the Financial Creditor was no longer a creditor of the Corporate Debtor and had no right to enforce any debt/liabilities against the Corporate Debtor as the liabilities had been acquired by Rivaaz Trade Ventures Pvt. Ltd. (hereinafter referred to as “RTVPL”) and, thus, the Financial Creditor could exercise its rights only against RTVPL. Thereafter, on 05.09.2024, the Corporate Debtor filed another IA No.4417/2024, for the limited purpose of objecting to the tendering of a document styled as ‘Report on the Audit of the Financial Statements of Franklin Templeton for Financial Year 2023- 24’ (hereinafter referred to as “the Auditor’s Report”) by the Financial Creditor in another connected matter, namely, Axis Trustee Services Private Limited Vs. Rivaaz Trade Ventures Private Limited bearing C.P. No.1286 of 2023.

1.5 All the aforementioned IAs are inter-connected with the Main Application and were heard together and a