India – A Del Credere Agent Is Not An Operational Creditor Under The Code.

In the present case, Alturas Trading Corp (Alturas), a del credere agent, filed an application to initiate corporate insolvency resolution process (CIRP) of VRMX Concrete India Pvt. Ltd. (VRMX). An agreement was entered into between Alturas and Bharat Cement Corporation Pvt. Ltd. (Principal) appointing Alturas as a del credere agent. In commercial parlance, a del credere agent is a person who is engaged by the principal to assist in supply of goods or services by contacting potential buyers on behalf of the principal. The difference between an agent and a del credere agent is that a del credere agent guarantees to make payment to the principal if the buyer fails to make payment before the due date, while an ordinary agent does not guarantee recovery of dues. In the present case, Alturas would be entitled to certain commission only upon realization of the sale proceeds from VRMX to Principal. As VRMX had defaulted in payment to Principal, Alturas had to compensate the Principal. It was on the basis of such compensation amount that Alturas sought to initiate CIRP of VRMX.
 

NCLT noted from the agreement between Alturas and the Principal that there was no nexus between VRMX and Alturas. Though goods were supplied, invoices were raised by the Principal and not by Alturas itself, which was merely a del credere agent, NCLT opined that there was no operational debt which was due and payable by VRMX to Alturas. Accordingly, NCLT held that the application by Alturas was not maintainable and dismissed the same.
 

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