2019 (3) TMI 1911 - Tri - Insolvency and Bankruptcy

Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Creditors or not - existence of debt and dispute or not - HELD THAT - When the facts of this case are analysed the financial debt claimed does not fit into any of the clauses mentioned under section 5(8) of the Code - It is unclear why the Petitioner was keeping quiet for three years without asking for the principal or interest when 40 lacs is advanced to the Corporate Debtor as a financial debt except the only Demand Notice dated 25.09.2018. No document was produced in support of the loan showing this amount as a financial debt except saying that there is an oral agreement. Since the Petitioner has failed to prove the basic requirement that the amount advanced is a financial debt as provided under the Code the other contentions raised by the parties are not gone into detail. Petition dismissed.

Summary

Issues:
- Whether the amount claimed by the Petitioner constitutes a financial debt under the Insolvency and Bankruptcy Code, 2016.
- Whether the Petitioner is a financial creditor within the parameters of the Code.

Analysis:
1. The Petitioner sought Corporate Insolvency Resolution Process of the Corporate Debtor due to default in repayment of a financial loan. Initially claimed a higher amount but later amended to the principal sum of ?40,00,000.
2. The Petitioner transferred funds to the Corporate Debtor without a written agreement but claimed it was a loan repayable with interest.
3. The Corporate Debtor disputed the claim, stating the amount was part payment for a solar project commission, not a financial debt.
4. Both parties exchanged replies, rejoinders, and sur-rejoinders, presenting their arguments and evidence.
5. The Corporate Debtor raised several contentions, including lack of financial creditor status for the Petitioner and time-barred claim.
6. The Tribunal analyzed the definition of Financial Debt under Section 5(8) of the Code and found the claimed debt did not fit any category.
7. Lack of documentation supporting the loan as a financial debt and absence of interest charges weakened the Petitioner's case.
8. The Corporate Debtor's assertion of the payment being an equity contribution for the solar project was supported by ledger entries and earlier correspondence.
9. Due to the failure to establish the amount as a financial debt, the Tribunal dismissed the petition, granting liberty to the Petitioner to pursue other legal avenues.

This detailed analysis of the judgment highlights the key arguments, evidence presented, and the Tribunal's reasoning behind dismissing the petition based on the lack of proof of the claimed amount as a financial debt under the Insolvency and Bankruptcy Code.