2022 (10) TMI 573 - AT - Insolvency and Bankruptcy

Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Creditors - order of attachment - Financial Debt or not - existence of debt and dispute or not - HELD THAT - M/s Dove Infrastructure Private Limited is to set up I.T. Park does not make the disbursement made by Appellant to M/s ABW Infrastructure Ltd. as a Financial Debt against the Corporate Debtor. The disbursement against time value of money is against M/s ABW Infrastructure Ltd. and not against the Corporate Debtor. The order of District Magistrate attached the property under Section 4 of Haryana Protection of Interest of Depositors in the Financial Establishment Act, 2013. Order of attachment and observations as made in the order for recovery does not make the claim of Appellant as Financial Debt. Section 7 Application filed by the Appellant has been rightly rejected by the Adjudicating Authority. The impugned order does not warrant any interference - appeal dismissed.

Summary

Issues:
1. Rejection of Section 7 Application by the Adjudicating Authority based on an MOU.
2. Interpretation of the MOU between the Appellant and M/s ABW Infrastructure Ltd.
3. Analysis of the District Magistrate's order attaching assets for recovery.

Analysis:
The judgment revolves around the rejection of a Section 7 Application by the Adjudicating Authority, which was filed by the Appellant claiming a Financial Debt based on an MOU with M/s ABW Infrastructure Ltd. The Appellant contended that the Corporate Debtor was obligated to make payments as per the MOU, citing Clause (A) as crucial evidence. However, the Adjudicating Authority observed that the Corporate Debtor was not a party to the MOU and there was no proof of funds being transferred to the Corporate Debtor. The Tribunal concurred with this assessment, emphasizing that the disbursement was made to M/s ABW Infrastructure Ltd. and not to the Corporate Debtor, thus not constituting a Financial Debt against the latter.

Regarding the interpretation of the MOU, the Tribunal highlighted a specific clause outlining the development of an IT Park by M/s Dove Infrastructure Private Limited, which did not establish a direct financial obligation on the part of the Corporate Debtor. The judgment emphasized that the disbursement was tied to M/s ABW Infrastructure Ltd. and did not qualify as a Financial Debt against the Corporate Debtor. Additionally, the Tribunal addressed the District Magistrate's order attaching assets under the Haryana Protection of Interest of Depositors in the Financial Establishment Act, 2013. It clarified that the order and subsequent observations did not align with the Appellant's claim of a Financial Debt, further supporting the rejection of the Section 7 Application.

In conclusion, the Tribunal upheld the Adjudicating Authority's decision to reject the Section 7 Application, stating that the impugned order did not merit intervention. The Appeal was consequently dismissed, affirming that the claim did not meet the criteria for a Financial Debt against the Corporate Debtor as per the MOU and relevant legal provisions.