2020 (5) TMI 423 - Tri - Insolvency and Bankruptcy

Maintainability of application - Applicant claiming himself to be the Financial Creditor has claimed to have paid an amount to the Corporate Debtor against the purchase of the land of the Corporate Debtor as earnest money - HELD THAT - On perusal of the record, it is found that there is no agreement, as such, with regard to the sale and purchase between the Corporate Debtor and Applicant. In support of the contention, the Applicant has annexed E-receipt of transfer of funds as well as few counterfoil showing transfer of the amount in the account of Corporate Debtor viz. Digjam Ltd. Apart from these documents, no other document(s) is/are annexed, where from it can be deduced, that the amounts are paid against the agreement for the sale and purchase of land of Corporate Debtor. It is well settled that the offer and acceptance must be based or founded on three components - certainty, commitment and communication. If any one of the three components is lacking either in the offer or in the acceptance, there cannot be a valid contract - Applicant in this case totally failed to produce any document(s) in support of his claim which would make the Applicant even entitled in the category of other stakeholder Even if it is assumed for the time that the alleged letter dated 14-9-2018 of the Applicant is received by the Corporate Debtor, then even law does not cast a duty on the person to whom a proposal is made to reply to that proposal and hence acceptance cannot be inferred from the silence of the offeree and as a general rule, a proposal is not accepted by mere silence on the part of the offeree. The Applicant is claiming himself in the category of clause (f) of sub-section 8 of section 5 which speaks about any amount raised under any other transaction, including any forward sell or purchase agreement, having the commercial effect of borrowing - In the instant matter, the Applicant has failed to produce any documents/purchase agreement to substantiate his claim and/or show his bona fide as 'financial debt' so as to stand in the footing of Financial Creditor. The Applicant in the application pleaded that the amount is paid as earnest money. Basically, earnest money serves two purposes it remains as security or earnest money for performance of the contract of sale but it becomes part of payment of the purchase money immediately on fulfilment of the contract, which is found absent in this case because of want of documents, such as, Contract Agreement for sale and purchase. Admittedly, there is no contract between the Applicant and Corporate Debtor. Application dismissed.

Summary

Issues:
1. Application under section 60(5) of the Insolvency and Bankruptcy Code, 2016.
2. Adjudication of claim under sub-section 8(f) of Section 6 of the Insolvency and Bankruptcy Code, 2016.
3. Ratification of list of creditors and membership in Committee of Creditors for CIRP proceedings.
4. Interpretation of financial claim under Section 5(8)(f) of the Insolvency and Bankruptcy Code, 2016.

Analysis:
1. The Applicant claimed to have paid a substantial amount towards the purchase of land of the Corporate Debtor but failed to provide concrete evidence of a valid agreement for the sale and purchase. The absence of a clear agreement between the parties raised doubts regarding the nature of the transaction and the validity of the claim.

2. The conditions outlined in the offer made by the Applicant regarding the purchase of land indicated contingent terms that needed to be fulfilled for the agreement to materialize. Without evidence of acceptance or fulfillment of these conditions by the Corporate Debtor, the transfer of funds appeared to be a voluntary action by the Applicant, lacking contractual validity.

3. The Tribunal emphasized the importance of a valid contract based on acceptance and finalization of terms between parties. In this case, the lack of conclusive evidence of acceptance or a formal agreement undermined the claim of the Applicant as a Financial Creditor, as per the definitions provided in the Insolvency and Bankruptcy Code, 2016.

4. The Tribunal highlighted that the Applicant's failure to produce substantial documentation supporting the claim as a Financial Creditor, especially under Section 5(8)(f) of the Code, weakened the credibility of the claim. The absence of a clear financial transaction or agreement hindered the Applicant's position as a creditor entitled to financial claims under the Code.

5. The Tribunal concluded that the Applicant's claim lacked merit due to insufficient evidence of a valid contract, acceptance, or fulfillment of conditions for the purchase of land from the Corporate Debtor. The unilateral nature of the transaction and the absence of concrete documentation led to the dismissal of the application under section 60(5) of the Insolvency and Bankruptcy Code, 2016.