2019 (2) TMI 1987 - Tri - Insolvency and Bankruptcy

Seeking direction to accept the claim of the Applicant as submitted - seeking direction to Respondent to consider the Applicant as a financial creditor for the purposes of the resolution plan approved by the committee of creditors and presented to this Tribunal under section 31 of IBC - HELD THAT - It is pertinent to note that the applicant has duly annexed TDS certificates along with his fresh claim form clearly showing that the Corporate Debtor had paid TDS on the interest amounts paid by it to the Applicant from time to time, as directed by the Hon ble NCLAT. The Ledger account of the Applicant in the books of the Corporate Debtor clearly shows that the Corporate Debtor has paid an interest amounting to ₹12,16,666/- on the business loan advanced by the Applicant to the Corporate debtor. Hence, the claim of the Applicant is duly corroborated by Corporate debtor s own books of accounts. Furthermore, the mere fact that there was no express agreement or understanding as to Financial Debt between the Applicant and the Corporate debtor, does not lead to the conclusion that the loan granted by the Applicant is in the nature of Quasi-Capital. The Respondent expressly admits that the amounts advanced was for the purpose of a future gain. Merely because the erstwhile directors of the Corporate debtor had refunded some amount of the Applicant does not deny the fact that the amount granted was for time value of money and interest has also been duly paid on such amount. The claim of the applicant fall in the definition of Financial Debt as per section 5(8) of the Code. The Respondent is hereby directed to consider the claim of the Applicant as a Financial Debt and treat him a Financial Creditor for the purposes of further proceedings of CIRP - Application allowed.

Summary

Issues:
1. Rejection of financial creditor's claim by the respondent.
2. Dispute over the nature of the amount advanced by the applicant to the corporate debtor.
3. Interpretation of the role and responsibilities of a resolution professional (RP) in verifying claims during insolvency proceedings.

Analysis:
1. The judgment pertains to a Miscellaneous Application filed under section 60(5)(c) of the Insolvency and Bankruptcy Code (IBC) by a financial creditor seeking relief after the rejection of their claim by the respondent. The applicant, also a major shareholder and board member of the corporate debtor, had provided funding without an express loan agreement. The respondent rejected the claim, leading to a series of legal challenges and appeals.

2. The dispute centered around whether the amounts advanced by the applicant to the corporate debtor constituted a financial debt or quasi-capital. Despite the absence of a formal loan agreement, the applicant had received interest payments, TDS certificates, and had his claims corroborated by the corporate debtor's own books of accounts. The respondent contended that the amounts were quasi-capital, not a loan. However, the judgment emphasized that the purpose of the funds and the interest payments indicated a financial debt relationship.

3. The judgment delved into the role of a resolution professional (RP) in verifying claims during insolvency proceedings. It highlighted the RP's limited scope to verify claims based on regulations 13 and 14 of the IBC. The RP's role was not to adjudicate disputes between parties but to confirm the accuracy of claims. The judgment emphasized that the RP's task was to ensure the veracity of claims, not to determine the rights and liabilities of parties.

4. Ultimately, the tribunal allowed the Miscellaneous Application, directing the respondent to consider the applicant's claim as a financial debt under section 5(8) of the Code. The applicant was deemed a financial creditor for further proceedings in the Corporate Insolvency Resolution Process. The Intervention Application was disposed of accordingly, bringing the matter to a close and recording the decision for the records.