Tribunal dismisses appeal, affirming Napin Impex's right to initiate CIRP against Kirtiman Cements under Section 9 of IBC
In a significant judgment, the National Company Law Appellate Tribunal (NCLAT) has upheld the right of Napin Impex Ltd., a Del Credere Agent, to be classified as an Operational Creditor, thereby affirming its ability to initiate Corporate Insolvency Resolution Process (CIRP) against Kirtiman Cements and Packaging Industries Limited. The Tribunal dismissed the appeal filed by Jatinder Oberoi, the suspended director of the Corporate Debtor, challenging the admission of the petition under Section 9 of the Insolvency and Bankruptcy Code, 2016, by the National Company Law Tribunal (NCLT), Chandigarh Bench.
The appeal arose from the NCLT's order dated 20th February 2024, which admitted the petition filed by Napin Impex Ltd., the Operational Creditor, against Kirtiman Cements. The petitioner contended that the Del Credere Agent could not qualify as an Operational Creditor, as the invoices and supplies were made by ONGC Petro Additions Ltd. (OPAL) and not by Napin Impex Ltd. Moreover, it argued that Napin, being a mere collection agent, lacked the authority to initiate proceedings under Section 9.
However, the NCLAT, led by Justice Yogesh Khanna and Mr. Indevar Pandey, meticulously analyzed the Del Credere Agreement dated 11.04.2017 between Napin Impex Ltd. and OPAL. The Tribunal observed that the agreement placed full financial responsibility on Napin to collect payments from the Corporate Debtor and remit them to OPAL. In case of default by the Corporate Debtor, Napin was liable to make good the payment from its own funds, thus effectively assigning the operational debt to Napin.
The judgment emphasized that Napin's role under the Del Credere Agreement and the Corporate Debtor's acknowledgment of Napin as the agent for procurement and payment collection established Napin as an Operational Creditor under Section 5(20) and 5(21) of the Code. The Tribunal found that the Corporate Debtor had consistently made payments to Napin for over two years without objection, reinforcing Napin's position as the entity entitled to recover dues.
The NCLAT further dismissed the appellant's claim that Napin could not file the Section 9 petition due to the absence of GST returns and e-way bills filed by Napin. It clarified that the invoices, delivery documents, and payment records sufficiently established the operational debt, irrespective of procedural requirements under Regulation 2B of the CIRP Regulations.
In addition, the Tribunal addressed the contempt petition filed by Jatinder Oberoi against Narendra Singh Chhabra, the Resolution Professional (RP), for alleged non-compliance with judicial orders. It concluded that no contempt was made out against the RP, as he acted in good faith, sought clarifications from the Tribunal, and followed due procedures under the Code.
Ultimately, the NCLAT upheld the NCLT's admission order and dismissed the appeal and contempt petitions, reinforcing the legal standing of Del Credere Agents as Operational Creditors under the Insolvency and Bankruptcy Code.
Bottom Line:
Insolvency and Bankruptcy Code - Del Credere Agent entitled to initiate proceedings under Section 9 as Operational Creditor due to financial liability and risk assumed for buyer defaults.
Statutory provision(s): Insolvency and Bankruptcy Code, 2016 - Sections 5(20), 5(21), and 9
