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2019 (7) TMI 1641 - Tri - Insolvency and BankruptcyMaintainability of application - initiation of CIRP - Interim stay of the meetings of the Committee of Creditors pending disposal of petition - reconstitution of Committee of Creditors - withdrawal of Resolution Plan - legally enforceable debt or not - HELD THAT - The Corporate Debtor has not been maintaining the accounts properly, for which the Applicant cannot be made liable, as the same pertains to the internal management of the Respondent/Corporate Debtor. Therefore, the absence of any entry in the Books of Account of the Corporate Debtor, about the loan taken from the Applicant, cannot be a valid ground for rejection of the claim of the Applicant, in the face of the bulk of the documentary evidence, i.e., loan confirmation letter, pro- note and Cheque including Cash Book produced by the Applicant, to substantiate his claim. All the directors of the Board had consented to the borrowings of the loan from the Applicant and the loan confirmation letter has been signed by the managing director viz., Senthil kumar, having affixed the seal of the Corporate Debtor that leaves no doubt, that he (the director) has due authority to represent the Corporate Debtor. Therefore, the plea raised by the Corporate Debtor with regard to the Board resolution for obtaining loan from the Applicant is misdirected, the same stands rejected. Legally enforceable debt or not - HELD THAT - In the case on hand, the Respondent/Corporate Debtor did not deny the signature, thus the presumption under Sec. 139 would operate. The Respondent failed to rebut the presumption by adducing any cogent or credible evidence. In addition to this a.pronote has also been executed by the managing director viz., Senthil kumar on 21-2-2017. Therefore, the Applicant has proved his case by over-whelming evidence to establish his claim based on acknowledgment/confirmation letter and pro-note, both dated 21-2-2017 and Cheque dated 12-6-2017 along with 'Cash Book' that are admissible in evidence which were issued by the Corporate Debtor towards the discharge of an existing liability and legally enforceable debt. This authority takes judicial notice that during the pendency of this Application, the Resolution Plan came to be approved by the CoC, which has been filed before this Authority under section 30(6) read with Section 31(1) of the IBC, 2016, to treat the Applicant at par with other unsecured financial creditors and make the appropriate provision for payment to which he is entitled, in consultation with the CoC and the Resolution Applicant, and file the supplementary affidavit to that effect before this authority, or to withdraw the Resolution Plan and constitute the CoC afresh to get the Resolution Plan(s) approved with suitable modifications, as may be required. Application disposed off.
Issues Involved:
1. Whether the Authorized Representative/Power Agent is legally entitled to argue on behalf of the Applicant? 2. Whether the non-filing of the income tax return by the Applicant disentitles him to claim the re-payment of the loan advanced? 3. Whether the non-compliance with FED master direction No. 6/2015-16 dated January 1, 2016 issued by the Reserve Bank of India annuls the loan transactions between the Applicant and Corporate Debtor? 4. Whether the claim of the Applicant based on acknowledgment/confirmation letter and pro-note, both dated 21-2-2017 and cheque dated 12-6-2017 is admissible in the absence of entry in the Books of Account of the Corporate Debtor? Issue-wise Analysis: 1. Authorized Representative/Power Agent's Legal Entitlement: The Respondent argued that the Authorized Representative/Power Agent could not legally argue on behalf of the Applicant unless enrolled as an advocate, citing a judgment from the Hon'ble High Court of Madras. However, the Applicant's representative referred to Section 432 of the Companies Act, 2013, and Rule 45 of the National Company Law Tribunal, Rules 2016, which allow any duly authorized person to represent a party before the Tribunal. Additionally, Section 32 of the Advocates Act, 1961, permits any person not enrolled as an advocate to appear in particular cases. The judgment cited by the Respondent did not consider these provisions, and thus, the Tribunal permitted the Authorized Representative/Power Agent to argue the case, deciding the issue in favor of the Applicant. 2. Non-filing of Income Tax Return: The Respondent contended that the Applicant's failure to disclose the loan amount in his income tax return disqualified him from claiming repayment. The Tribunal noted that while proof of tax payment might be necessary without documentary proof of a loan, the Applicant provided a loan confirmation letter, pro-note, cheque, and cash register entries. Citing a similar case from the Hon'ble High Court of Madras, the Tribunal held that the Corporate Debtor, having availed the loan, could not dispute repayment based on the Applicant's tax filings. Thus, the issue was decided in favor of the Applicant. 3. Non-compliance with RBI Directions: The Respondent argued that as a Non-resident Indian, the Applicant could not lend money in cash to an Indian company, referencing RBI Master Direction No. 6/2015-16. The Tribunal found that the Corporate Debtor's failure to comply with RBI directions could not be used to benefit from its own wrong. The Applicant provided evidence that the transactions were domestic, with no funds brought from abroad, thus not violating the Foreign Exchange Management Act. The Tribunal concluded that even if there was a violation, it would result in a penalty rather than voiding the transactions. Therefore, the issue was decided in favor of the Applicant. 4. Admissibility of Claim Based on Documents: The Respondent argued the lack of documentary evidence, such as a board resolution and proper accounting entries, to substantiate the Applicant's claim. The Applicant countered with a loan confirmation letter, pro-note, cheque, and audited cash book entries. The Tribunal noted that the Corporate Debtor's internal mismanagement could not invalidate the Applicant's claim, supported by substantial documentary evidence. The Tribunal also emphasized the statutory presumption under Section 139 of the Negotiable Instrument Act, 1881, that the cheque and pro-note were issued in discharge of a legally enforceable debt. Consequently, the issue was decided in favor of the Applicant. Conclusion: The Tribunal allowed the Applicant's claim for ?3,00,00,000 with interest at 24% per annum from the date of the loan confirmation letter and pro-note until the approval of the Resolution Plan. The Respondent's orders rejecting the claim were set aside. The Resolution Professional was directed to treat the Applicant at par with other unsecured financial creditors or to reconstitute the Committee of Creditors and approve the Resolution Plan with suitable modifications. The application was disposed of with no order as to costs.
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