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TMI Blog2018 (3) TMI 233X X X X Extracts X X X X X X X X Extracts X X X X ..... icating Authority has failed to notice the aforesaid provisions and without going to the question as to whether the application at the instance of the contesting respondents was maintainable or not has admitted the application. - Company Appeal (AT) (Insolvency) No. 142 of 2017 - - - Dated:- 9-2-2018 - Mr. S.J. Mukhopadhaya, Mr. Bansi Lal Bhat And Mr. A.I.S. Cheema For The Appellant : Shri Rakesh Kumar and Ms. Chetna Bisht, Advocate For The Respondent : Ms. Priyanka Ghowarat, Advocate JUDGMENT SUDHANSU JYOTI MUKHOPADHAYA, J. The present appeal has been preferred by the appellant, a shareholder of the Corporate Debtor against order dated 1st August, 2017 passed by the Adjudicating Authority (National Company Law Tribunal), New Delhi Bench in IB No. (IB)-229(ND)/2017 whereby and whereunder the application preferred by 1st and 2nd Respondents (hereinafter referred to as Contesting Respondents ) under Section 7 of the Insolvency and Bankruptcy Code, 2016 (hereinafter referred to as the I B Code ) has been admitted, order of moratorium has been passed and the Interim Resolution Professional has been appointed with directions as mentioned therein. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s Mr. Neeraj Bhatia and Mrs. Olga Bhatia were exclusive beneficiaries of the said loan/credit facility extended by the bank and no monetary benefit of any nature whatsoever had been derived by the contesting respondents in this respect. The Corporate Debtor requested the contesting respondents, through its Directors, to make payment of a sum of ₹ 90,00,000/- to the lender banks and seek the release of the property owned by contesting respondents, which was pledged and mortgaged by them as guarantee. A specific assurance had been given by the Directors of the Corporate Debtor to the contesting Respondents within two months. 8. According to the contesting respondents, initially a sum of ₹ 80,00,000/- had been deposited with lender s bank which was acknowledged by the Directors of the Corporate Debtor and a total sum of ₹ 1.05 Crores stood deposited by the contesting respondents towards the credit of the loan and finance facilities availed by the Corporate Debtor . Learned counsel for the contesting respondents submitted that a sum of ₹ 1.05 Crores has been paid by the contesting respondents pursuant to Contract of Guarantee. Thereby, the payment ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... than any receivables sold on nonrecourse basis; (f) any amount raised under any other transaction, including any forward sale or purchase agreement, having the commercial effect of a borrowing; (g) any derivative transaction entered into in connection with protection against or benefit from fluctuation in any rate or price and for calculating the value of any derivative transaction, only the market value of such transaction shall be taken into account; (h) any counter-indemnity obligation in respect of a guarantee, indemnity, bond, documentary letter of credit or any other instrument issued by a bank or financial institution; (i) the amount of any liability in respect of any of the guarantee or indemnity for any of the items referred to in sub-clauses (a) to (h) of this clause; 16. In Nikhil Mehta and Sons (HUF) Vs. AMR Infrastructure Ltd.─ Company Appeal (AT) (Insolvency) No. 07 of 2017 , this Appellate Tribunal while noticing sub-section (8) of Section 5 of the I B Code observed: - 17. The first question arises for consideration is as to who is a Financial Creditor . Learned Adjudicating Authority, for determination of the aforesaid is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cial Debt' as envisaged under Section 5(8) of the IBC is distinctly different than the one prevalent in England as provided in its Insolvency Act, 1986 and the 'Rules' framed thereunder. It appears that in England there is no exclusive element of disbursement of debt laced with the consideration for the time value of money. However, forward sale or purchase agreement as contemplated by Section-5 (8)(f) may or may not be regarded as a financial transaction. A forward contract to sell product at the end of a specified period is not a financial contract. It is essentially a contract for sale of specified goods. It is true that some time financial transactions seemingly restructured as sale and repurchase. Any repurchase and reverse repo transaction are sometimes used as devices for raising money. In a transaction of this nature an entity may require liquidity against an asset and the financer in return sell it back by way of a forward contract. The difference between the two prices would imply the rate of return to the financer. (See Taxman's Law Relating to IBC, 2016 by Vinod Kothari Sikha Bansal). 17. In Dr. B.V.S. Lakshmi vs. Geometrix Laser Solutions Priva ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Section 5 of the I B Code till it is shown that debt amount has been disbursed against the consideration for time value of money. 19. The amount of ₹ 29,97,000/-, is claimed to have been paid by the contesting respondents either to Captain V. K. Adukia or Captain Rajeev Chauhan or the Punjab National Bank. There is nothing on record to suggest that the amount has been disbursed in favour of Corporate Debtor against consideration for the time value of money . The contesting respondents have also failed to bring on record any evidence to suggest that the money was borrowed or raised by the Corporate Debtor under any other transactions including sale or purchase or other mode having commercial effect of borrowing. 20. In view of the aforesaid finding, we hold that the contesting respondents do not come within the meaning of Financial Creditor and the application under Section 7 at their instance was not maintainable. The Adjudicating Authority has failed to notice the aforesaid provisions and without going to the question as to whether the application at the instance of the contesting respondents was maintainable or not has admitted the application. 21. I ..... X X X X Extracts X X X X X X X X Extracts X X X X
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