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2023 (7) TMI 155 - AT - Insolvency and BankruptcyStatus of the appellant - Shareholder or Credit of the Corporate Debtor - Transfer of shares or not - collation of claims - whether the Adjudicating Authority was justified in observing that the Appellant herein is a Shareholder of the Corporate Debtor Company? - HELD THAT - This Tribunal is of the view that the ledger account is to be read with the statements in the balance sheets and the Financial Statements, together with the Auditor s Report filed with the RoC. It is settled Law that these aforenoted Financial Statements filed with the RoC have greater evidentiary value than that of a ledger statement which is an internal document. As regarding the Submission of the Learned Company Secretary that the RP had adjudicated the Claim, this Tribunal is of the considered view that in the facts of the present case, the RP has rightly rejected the claim of the Appellant based on the documentary evidence on hand. The duty of the RP is to collect and collate the claims and a mere rejection of the Claim by the RP cannot be construed to be an Adjudicatory function, keeping in view Regulation 13 of the CIRP Regulations 2016 - The Loan Agreement dated 27/12/2019 is also on the same date as that of the MoU which is said to have been revoked/cancelled by the Appellant. It is significant to mention that this Loan Agreement is silent about the MoU dated 02/08/2019. There is no evidence on record in terms of Statements of Accounts or Auditor s Report that the claim amount of Rs. 15,72,18,489/- has been disbursed pursuant to this Loan Agreement. The contention of the Learned Company Secretary appearing for the Appellant that the Register of Members was never produced before the Adjudicating Authority and therefore no steps could have been taken under Section 59 of the Act, is untenable as they themselves are relying on the letter dated 22/02/2020 in support of their argument that they had come to know that their amount was converted into Equity despite not having signed any Share Transfer Deed, then there are no substantial reasons for not having taken any effective steps under Section 59 of the Act. This Tribunal is of the earnest view that there are no substantial grounds to interfere with the order of the Adjudicating Authority - Appeal dismissed.
Issues Involved:
1. Whether the claim of the Applicant is required to be admitted in the capacity as a Financial Creditor. 2. Whether the shares were duly transferred to the Appellant. 3. Whether the Resolution Professional (RP) acted beyond his duties. 4. Whether the documentary evidence supports the Appellant's claim. Summary: Issue 1: Financial Creditor Status The National Company Law Tribunal (NCLT), Chennai, dismissed the Application of M/s SMS Foundation and Investment LLP, observing that the Applicant's claim should not be admitted as a Financial Creditor. The Loan Agreement dated 27.12.2019 converted Rs.16.00 Crores into a loan with 15% interest. Despite disbursing Rs. 12,94,04,499/- to the Corporate Debtor, the Applicant's partners were listed as shareholders in the Corporate Debtor's books. The Applicant did not take steps under Section 59 of the Companies Act, 2013, for rectification. The ledger showed a balance payable as 'NIL' as of 31.03.2020, leading to the conclusion that the Applicant was a shareholder. Issue 2: Transfer of Shares The Appellant argued that shares were never duly transferred under the law, citing the absence of signed Share Transfer Deeds, unpaid Stamp Duty, and no Transfer entry on the Share Certificate. The Tribunal noted that the original Share Certificates were in the Appellant's possession, with endorsements dated 17/12/2019. MGT-7 confirmed the transfer of 18,60,000 shares to the Appellant's partners. The Tribunal found no evidence of a Board Meeting revoking the MoU dated 02/08/2019, and the amounts infused were considered an investment to be converted into equity. Issue 3: Role of Resolution Professional (RP) The Appellant claimed that the RP acted 'ultra vires' by adjudicating claims, but the Tribunal held that the RP had rightly rejected the claim based on documentary evidence. The RP's duty to verify claims under Regulation 13 of the CIRP Regulations 2016 does not constitute an adjudicatory function. Issue 4: Documentary Evidence The Tribunal emphasized the greater evidentiary value of Financial Statements filed with the RoC over internal documents like ledger statements. The Loan Agreement dated 27/12/2019 did not mention the MoU dated 02/08/2019. The Tribunal found no evidence in the Auditor's Report or Books of Accounts reflecting the claim amount as an outstanding loan. The Appellant's failure to take steps under Section 59 of the Act, despite knowing about the share transfer, weakened their position. Conclusion: The Tribunal dismissed the appeal, affirming that the documentary evidence established the Appellant's status as a shareholder and not a Financial Creditor. The order of the Adjudicating Authority was upheld, and the appeal was dismissed with no costs. Connected pending Interlocutory Applications were closed.
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