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2020 (7) TMI 558 - AT - Insolvency and BankruptcyMaintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - existence of debt and dispute or not - HELD THAT - The admitted document executed between the Parties, which is latest in terms of time is the Agreement dated 1st October, 2016 and considering the contents of the same, there are no reason to disagree with the Adjudicating Authority that after the earlier MoU s parties entered in to the execution of an arrangement as seen in the Builder Buyer Agreement dated 1st October, 2016. No doubt, in the primary stage, after the MoU dated 30th May, 2013 two Buyer/Seller Agreements dated 03.06.2013 were executed but then that arrangement appears to have been given up when Parties entered into further three fresh MoU s dated 01.06.2014, 01.06.2015 and 01.06.2016 referring to earlier Cheque of loan dated 01.06.2013. In these circumstances, where record shows the latest arrangement between the Parties of Builder Buyer Agreement dated 01.10.2016 and even possession has been offered on 7th March, 2018 (Page 290), which cannot be said to be beyond the period stipulated in the Agreement, there are no reason to admit the Application under Section 7 as was filed by the Appellant. Appeal dismissed.
Issues:
1. Dismissal of Application under Section 7 of the Insolvency and Bankruptcy Code, 2016 by the Adjudicating Authority. 2. Dispute regarding the nature of the transaction between the Appellant and the Respondent. 3. Allegations of suppression of material facts in the Application under Section 7 by the Appellant. 4. Claim of settlement agreement entered into by the Director of the Respondent during the pendency of the proceeding under Section 7. Analysis: Issue 1: Dismissal of Application under Section 7 The Appellant, a Financial Creditor, filed an appeal against the Impugned Order dated 13.09.2019 passed by the Adjudicating Authority, National Company Law Tribunal, New Delhi, which dismissed the Application under Section 7 of the Insolvency and Bankruptcy Code, 2016. The Appellant claimed that a loan was given to the Respondent, and various agreements and post-dated cheques were executed as security. However, the Adjudicating Authority found that the latest agreement dated 01.10.2016 indicated a Builder Buyer arrangement, with possession offered within the stipulated time. As the Application was filed prematurely, the Adjudicating Authority dismissed it, and the Appellate Tribunal upheld the decision. Issue 2: Dispute regarding the nature of the transaction The Respondent argued that the Appellant suppressed material facts in the Application under Section 7. The Respondent claimed that an agreement dated 01.10.2016 showed a genuine transfer of property transaction, where a flat was allotted as repayment. The Respondent contended that the Appellant acknowledged this agreement but suppressed it in the insolvency application. The Adjudicating Authority considered the contents of the agreement and concluded that it represented a Builder Buyer arrangement, not a loan security. Issue 3: Allegations of suppression of material facts The Appellant countered the Respondent's claim, stating that the 01.10.2016 agreement was also for loan repayment security. However, the Tribunal noted that the document did not support this claim, and they could not go beyond its contents. The Adjudicating Authority found that no charge was created on the flats offered as security, and interest payments were made until June 2016. The Tribunal upheld this finding, emphasizing the need for a resolution of the Corporate Debtor rather than mere money recovery. Issue 4: Claim of settlement agreement The Appellant mentioned a settlement agreement entered into by the Director of the Respondent during the insolvency proceeding, offering two cheques. However, the Tribunal noted that these documents were not brought to the Adjudicating Authority's notice. Even if considered, the Tribunal found a dispute regarding the settlement and stated that it could not be acknowledged without proper record submission. The Tribunal upheld the dismissal of the Application under Section 7 based on the existing agreements and transactions between the parties. In conclusion, the Appellate Tribunal found no merit in the appeal and dismissed it without costs, upholding the Adjudicating Authority's decision to dismiss the Application under Section 7 of the Insolvency and Bankruptcy Code, 2016.
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