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2025 Supreme(Online)(NCLT) 4794
NATIONAL COMPANY LAW TRIBUNAL
SHRI SAMEER KAKAR, MEMBER (TECHNICAL), SHRI NILESH SHARMA, MEMBER (JUDICIAL)
The Secretary of State acting through the Export Credits Guarantee Department (operating as UK Export Finance) – Appellant
Versus
Aaquaries Global Industries Limited – Respondent
C.P. (IB) No.153/MB/2025
For the Appellants/Petitioners: Sr.Counsel Mr. Zal Andhyarujina, Adv. Ms. Revati Desai, Adv. Ms. Sumiti Yadav, Adv. Mr. M. Kumar, Adv. Mr. Swaroop Nair i/b Adv. Mr. Vijay
For the Respondents: Adv. Mr. Shadaab Jan, Adv. Mr. Haaris Koradia i/b Adv. Mr. Sujit Lahoti & Associates
The court determined that the applicant failed to establish financial creditor status under Section 7 of the Insolvency and Bankruptcy Code, as the debt was operational rather than financial.
Headnote:(A) Insolvency and Bankruptcy Code, 2016 - Section 7 - Financial Creditor - Application filed by Export Credits Guarantee Department rejected as it could not establish itself as a financial creditor of Aaquaries Global Industries Limited. The nature of the transaction was operational, not financial, as no disbursement of funds by the applicant to the corporate debtor was evidenced. (Paras 6.19, 6.31)
(B) Definition of Financial Debt - The definition under Section 5(8) requires disbursal against the time value of money, which was absent in this case as the transaction was on a non-recourse basis. The applicant merely acquired rights through subrogation after the debt was settled with Bank ABC. A legal relationship establishing a financial debt was not exhibited. (Paras 6.30, 6.32)
Facts of the case:
The applicant filed an application for initiation of Corporate Insolvency Resolution Process claiming that the corporate debtor defaulted on payments due under a Bill of Exchange. The corporate debtor denied the relationship and the debt as it alleged no financing occurred.
Findings of Court:
The court found the applicant failed to prove it was a financial creditor since the alleged debt was operational and not financial in nature.
Issues: Whether the applicant qualifies as a financial creditor in relation to the corporate debtor under the Insolvency and Bankruptcy Code, 2016.
Ratio Decidendi: The court held there was no disbursal of funds, which is a necessary condition for establishing a financial debt under Section 5(8) of the Code; hence the application was not maintainable.
Result: Application rejected.
| Table of Content |
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| 1. application initiation by financial creditor. (Para 1) |
ORDER
[PER: BENCH]
1. BACKGROUND
1.1 This is an Application bearing C.P. (IB) No.153/MB/2025 filed on 01.10.2024 by The Secretary of State acting through the Export Credits Guarantee Department (operating as UK Export Finance), the Applicant (Financial Creditor) 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”) through Mr. Adam Mare Taylor, Authorised Representative of the Applicant vide Authority Letter from Head of Restructuring, Claims and Recoveries, UK Export Finance dated 15.04.2024 for initiating Corporate Insolvency Resolution Process (hereinafter referred to as “CIRP”) in respect of Aaquaries Global Industries Limited, the Corporate Debtor (CD).
1.2 The Applicant is the export credit agency of the Government of United Kingdom. 1.3 The CD is incorporated under the Companies Act, 1956 . The business of the CD is that of arranging sale and purchase transactions between a seller in one country and a purchaser in another country, without the goods ever entering the Indian territory.
1.4 The Applicant has relied on the following documents:
i. Copy of master data of the CD as available on the MCA website.
ii. Written Consent of the proposed Interim Resolution Professional as set out in Form-2.
iii. Copy of Bill of Exchange dated 06.05.2022
iv. Copy of Certificate of Protest dated 17.11.2022.
v. Copy of Claim Form submitted by Bank ABC to UK Export Finance dated 30.12.2022.
vi. Copy of Supplier Credit Finance Facility Master Guarantee Agreement dated 14.08.2016 between UK Export Finance and Bank ABC.
vii. Copy of the document confirming settlement of claims made by Bank ABC on UK Export Finance dated 01.02.2023.
viii. Copies of email correspondences regarding AGIL's request for extension of due date for payment between AGIL, UK Export Finance and The Medical Warehouse during the period from January to March 2023.
ix. Copy of letter issued by AGIL to IDFC Bank Limited dated 10.04.2023
x. Copy of Notice of Dishonour issued to AGIL dated 18.01.2024
xi. Copy of reply to Notice of Dishonour issued by counsels of AGIL dated 05.02.2024.
xii. Copy of Notice of Dishonour issued to AGIL dated 27.03.2024
xiii. NeSL Record of Default in Form-D.
2. AVERMENTS OF FINANCIAL CREDITOR
2.1 The total amount claimed to be in default by the Applicant against the CD in Part- IV of the Application is USD 7,467,622.33 (Seven Million Four Hundred and Sixty-Seven Thousand Six Hundred and Twenty-Two United State Dollars and Thirty-Three Cents) [Rs.62,67,63,516.25/- (Sixty-Two Crore Sixty-Seven Lakh Sixty-Three Thousand Five Hundred and Sixteen Rupees and Twenty-Five Paisa)] due as on 06.09.2024 inclusive of principal amount of USD 5,587,157.43 (Rs.47,83,87,334/-), other charges of [USD 3189 (Rs. 2,72,280/-)] and interest of USD 1,877,284.90 (Rs.16,07,38,145/-).
2.2 The date of default is mentioned as 04.11.2022.
2.3 A bill of exchange for an amount of USD 5,587,157.43 dated 06.05.2022, was drawn at London by The Medical Warehouse Limited ("Medical Warehouse") on, and accepted by the CD and endorsed without recourse to the order of ABC International Bank plc ("Bank ABC"), and domiciled for payment at IDFC First Bank Limited, Sanpada, Navi Mumbai- 400705. A copy of the Bill of Exchange dated 06.05.2022 is annexed as Annexure-IV.
2.4 The CD was required to make payments due under the Bill of Exchange on the due date, without any delay, demur or objections. However, the CD failed to make timely payment and therefore, dishonored the Bill of Exchange by non- payment on 04.11.2022 (being the date specified in the said Bill of Exchange). Bank ABC caused the dishonor of the Bill of Exchange to be noted and certified by a notary public, and the notary public has endorsed the Bill of Exchange as refused on 04.11.2022 by
