2018 (6) TMI 1061 - AT - Insolvency and Bankruptcy

Corporate insolvency process - default to pay the amount in terms of the agreement - Held that - There is a period of default prescribed therein which stipulates that if defaults continues for a period of 90 days, the first party shall discharge his obligation towards the second party by discharging his rights/interest/share in M/s. Mega Soft Infrastructure (P) Ltd. The aforesaid terms of agreement clearly shows that the 1st respondent disbursed the amount against the time value of money and the corporate debtor has defaulted to pay the amount in terms of the agreement. As the appellant submitted that the amount has been repaid but such submission being not based on record cannot be accepted. 1st respondent has enclosed the copies of the cheques to show that a sum of ₹ 1,34,00,988/- were paid in favour of the corporate debtor . This fact has not been disputed by the corporate debtor . The case of the appellant being covered by the decision of this Appellate Tribunal in Nikhil Mehta & sons vs. A.M.R. Infrastructure 2017 (8) TMI 1017 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, NEW DELHI

Summary

Issues:
1. Whether the respondent qualifies as a 'financial creditor' under the Insolvency and Bankruptcy Code, 2016.
2. Interpretation and enforcement of the Agreement dated 26th June, 2014 between the parties.
3. Repayment of the disbursed amount by the corporate debtor.
4. Applicability of the decision in "Nikhil Mehta & sons vs. A.M.R. Infrastructure - Company Appeal (AT) (Insolvency) No. 07 of 2017" to the present case.

Issue 1:
The respondent filed an application under Section 7 of the Insolvency and Bankruptcy Code, 2016, seeking initiation of the 'Corporate Insolvency Resolution Process' against the corporate debtor. The Adjudicating Authority admitted the application, leading to the present appeal. The appellant argued that the respondent does not qualify as a 'financial creditor' as per the relevant provisions of the Code, while the Adjudicating Authority determined otherwise based on the record.

Issue 2:
The crux of the matter lies in the interpretation and enforcement of the Agreement dated 26th June, 2014, between the financial creditor (respondent) and the corporate debtor. The agreement detailed the terms of a financial transaction amounting to ?1,34,00,988/-, specifying interest rates, default provisions, and the consequences of non-payment. The agreement clearly established the financial nature of the transaction and the obligations of the corporate debtor.

Issue 3:
Regarding the repayment of the disbursed amount, the appellant claimed that the amount had been repaid, but the respondent presented evidence to the contrary. The respondent provided copies of the cheques totaling ?1,34,00,988/- that were paid to the corporate debtor, a fact undisputed by the corporate debtor. This discrepancy raised questions about the repayment status and the validity of the appellant's claim.

Issue 4:
The appellant sought to rely on the decision in "Nikhil Mehta & sons vs. A.M.R. Infrastructure - Company Appeal (AT) (Insolvency) No. 07 of 2017" to support their case. However, the Appellate Tribunal found no grounds for interference against the impugned order, especially since the resolution process had concluded, and the resolution plan had been approved by the Adjudicating Authority. Consequently, the appeal was dismissed without costs, indicating the finality of the resolution process and the lack of merit in the appellant's contentions.

This judgment delves into the complexities of determining financial creditor status, analyzing contractual agreements, assessing repayment claims, and applying precedent to insolvency proceedings. The detailed examination of the Agreement, repayment evidence, and legal interpretations showcases the meticulous approach taken by the Appellate Tribunal in resolving the issues raised by the parties. Ultimately, the dismissal of the appeal underscores the importance of upholding the integrity of insolvency processes and adhering to established legal principles in such matters.