Assignee of Financial Creditor also Financial Creditor u/s 5 (7) of IBC: NCLT [Read Order]
Assignee of financial creditor also financial creditor u/s 5 (7) of IBC, rules NCLT
NCLT – IBC – Financial Creditor – u/s 5 (7) of IBC – National Company Law Tribunal – NCLT kolkata
NCLT – IBC – Financial Creditor – u/s 5 (7) of IBC – National Company Law Tribunal – NCLT kolkata
The Kolkata Bench of the National Company Law Tribunal ( NCLT ) held that the assignee of the financial creditor is also financial creditor under Section 5 (7) of the Insolvency and Bankruptcy Code, 2016 (IBC).
The Petition under Section 7 of the Insolvency and Bankruptcy Code, 2016 (IBC) by Assets Care & Reconstruction Enterprise Limited hereinafter referred to as “Operational Creditor” seeking to initiate Corporate Insolvency Resolution Process (“CIRP”) against Ankit Metal & Power Limited , hereinafter referred to as “Corporate Debtor”.
The Corporate Debtor failed to adhere to the terms and conditions agreed upon for availing certain facilities. The Corporate Debtor defaulted in payments, and also failed to regularize various accounts of credits. Consequently, as per Banking Rules and Regulations and RBI guidelines, the account of the Corporate Debtor was classified as Non-Performing Asset by the Lender Banks on various dates.
The Corporate Debtor had defaulted in repayment of the default amount under the said Facilities despite several opportunities being provided repayment. The Corporate for Debtor continues to be under the default in repayment of its dues towards the Financial Creditor. The Financial Creditor is thus entitled, by virtue of the provisions of the said Facilities and other facility documents as mentioned herein above, to initiate legal proceedings for the entire amount which has fallen due from the Corporate Debtor.
The main contentions raised by the Corporate Debtor in the Reply- Affidavit and the sur-rejoinder is that the Petitioner is not a Financial Creditor within the meaning of section 5(7) of the IBC and the Petitioner is acting as a front for undisclosed beneficiaries of different trusts and the acquisition of the purported debt of the respondent by the Petitioner has been funded by the said beneficiaries in violation of the provisions of the Prohibition of Benami Property Transactions Act, 1988; c. The Assignment agreements are not sufficiently stamped.
A Two-Member Bench comprising Balraj Joshi, Technical Member and Rohit Kapoor, Judicial Member observed that “As such, in light of a conjoint reading of section 5 and & 7 of the SARFAESI Act, it is clear that the transfer of the debt of the Corporate Debtor to the Petitioner herein by way of execution of the assignment deeds annexed to the petition as Annexures G, H, I, J of the petition is in consonance with the provisions of the SARFAESI Act, 2002. The financial assets i.e the debt of the Corporate Debtor has been legally acquired by the Petitioner herein.”
“There remains no ambiguity that the ARC being the assignee of a Financial Creditor is also a Financial Creditor within the scope of Section 5 (7) of IBC, 2016 and is thus competent to file the present case under Section 7 of IBC, 2016. The plea of Corporate Debtor is, therefore, rejected in view of the position stated above” the Tribunal noted.
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