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2024 (2) TMI 1026 - AT - Insolvency and BankruptcyMaintainability of section 7 application - Seeking initiation of Corporate Insolvency Resolution Process (CIRP) against the Corporate Debtor - threshold limit involved in in application - exclusion of amount of commission on sale in computation of debt amount. Principal stand of the Appellant is that though their claim of outstanding dues amounting Rs. 1, 11, 63, 151/- qua the Respondent is duly reflected on the NeSL data the Adjudicating Authority erroneously held the default amount to be less than the prescribed threshold limit - HELD THAT - At a time when the principal outstanding amount; the applicable rate of interest and date of default in both the Section 7 applications remained constant and the duration of Agreement was only one year the interest calculations should have remained confined to one year only. The reason for calculating the interest amount for a different time-period in the present Section 7 application prima-facie appears unjustified and irrational - the findings of the Adjudicating Authority that the interest calculation in the present Section 7 application has been unduly inflated and enhanced by the Appellant with the ulterior motive of crossing the threshold limit agreed upon. Whether commission on sale amount which has been excluded by the Adjudicating Authority should have been included in the computation of debt amount? - HELD THAT - It is a well settled proposition of law that any debt to be treated as financial debt there must take place disbursal of money and the disbursal must be against consideration for time value of money and also includes anything which is equivalent to the money that has been loaned as long as commercial effect of borrowing or profit is discernible. There are no good reason to disagree with the findings referred in the impugned order that commission on sale amount neither falls in the menu of transactions delineated at sub clauses (a) to (i) of Section 5(8) of the IBC nor does it fall in the category of being a disbursal having time value of money. The commission on sale does not carry the implications of commercial effect of borrowing either. Thus the Adjudicating Authority did not commit any error in coming to the conclusion that the amount of outstanding financial debt is only Rs. 78, 40, 000/- and that this amount does not meet the threshold limit of Rs. 1 crore as stipulated under Section 4 of the IBC - the Appellant having failed to meet the threshold limit in the earlier Section 7 application has now tried to overcome this impediment by inflating the claim amount by resorting to a calculation methodology which lacks rational basis. This is a clear case where the Appellant has reagitated the same issue which had been already dismissed by the Adjudicating Authority on an earlier occasion simply to cross the threshold bar. This amounts to misuse of the provisions of IBC to resolve a contractual dispute. There are no merit in the appeal - appeal dismissed.
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