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TMI Blog2018 (8) TMI 591X X X X Extracts X X X X X X X X Extracts X X X X ..... hey being M/s. Shreyans Realtors Pvt. Ltd. hereinafter referred to as "FC1" and M/s. Otis Developers (hereinafter referred to as "FC2"), have preferred this application seeking initiation of Corporate Insolvency Resolution Process (in short "CIRP") against M/s. Saroj Realtors and Developers Pvt. Ltd., hereinafter referred to as the "CD" alleging default in repayment of debt, which the FCs had reportedly provided to the CD in 2013. 4. The FC1 is a Private Limited Company incorporated on 28th October, 2004 and was given identification number which is U70101 AS2004PTC007563. The registered office of the FC1 is situated at 4th floor, Avantika Nilay, Ulubari Bazar Road, Near DTO Office, Guwahati, Kamrup, Assam. The FC2 was incorporated on 1st April, 2008 as a Partnership Firm and its registered office is situated at 4th floor, Avantika Nilay, Ulubari Bazar Road, Near DTO Office, Guwahati, Kamrup, Assam and was given identification number which is RF/KAM(M)/173/Y/192 of 2017-18. 5. The corporate debtor ("CD") is a Limited Company which was incorporated on 12-04-2006 and was given identification number which is 270101AS2006PTC008107. According to the averments, made in the application, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on dated 27-05-2013. Rather, CD adopted a Board resolution on 29-03-2014 to deny and dispute its securing such loans from the FCs and also refused to repay the loan in accordance with the repayment schedules, incorporated in the resolutions, aforementioned. Therefore, the defaults in repayment of those loans occurred on 01-04-2014. 10. Since the CD had taken loans from the FC1 on 16-05-2013 and from FC2 on 27-05-2013 on certain terms and conditions and since the CD refused to repay such loans as per arrangement made earlier as is evident from the resolution adopted by CD on 29-03-2014, therefore, there were clear defaults in repayment of the loans aforesaid on 1st April, 2014. The financial statements, pertaining to the FCs, annexed with the application as Annexure -l(i) to Annexure-l(xii) --- argues the FCS--- fortify more and more the claim of FCs qua payment of loans to the CD as well as the defaults that occurred in repayment of said loans. 11. In their application, the FCs had named one Mr. Amit Pareek, CS as being Insolvency Resolution Professional (in short "IRP") against whom no proceeding whatsoever is stated to be pending. More importantly, Mr. Pareek had already given ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Being so, this proceeding is required to be dismissed on this score also. 16. To support such a contention, it has been stated that in 2013, the CD had been experiencing some acute financial difficulties. Therefore, the company through its director Mr. Abhishek Choudhary approached the FCs seeking financial assistance to tide over such financial troubles and as agreed to by the parties thereto, they entered into two Memoranda of Understandings, (MOUs). One of such MOU was entered into on 24th day of May 2013 and same was in between Mr. Abhishek Choudhary on one side and Smt Shital Jain and Sri Jitendra Kumar Jain, her brother-in-law, on the other side. 17. The MOU which was entered into between the parties aforesaid on 24-05-2013 would be referred to as MOUl.The relevant part of MOU1 is reproduced below: "SRI Avishek Choudhury son of Late K. Mondol resident of Arati Plaza, 3D, Chandmari, Guwahati -781003, Herein after referred to is the First Party (which expression shall mean and include their heirs, executors administrators, legal representatives and assigns) of the ONE PART. (1) SMTI. SHITAL JAIN wife of Shri Rajesh Kumar Jain, by profession business and 2) SHRI JITENDRA ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the record arises the same shall be borne by Shri Avishek Choudhury and that Shri Jitendra Kumar Jain and Smti Shital Jain shall in no way be responsible for the same. 5/12. That both the parties have agreed that 5% of the profit before arriving at the Net Profits of the Borbari Project of the Company shall be invested outside the business of the Company which will be meant for Social purposes and obligation relating to Education and Healthcare as part of Corporate Social Responsibility of the Company. 6/13. That the company shall pay 350 lakhs to Shri Banajit Talukdar, outgoing director of the company as Rs. 30 lacs before his resignation, Rs. 300 lacs in 18 equal monthly instalments and balance Rs. 20 lacs on completion of 20 months. 6/14. After allocation of above 5% of Profit of Borbari Project and 2 Flats as above, balance Net profit will be shared between the First Party and the Second Party in the equal ratio. 7/19. That though the Second Party is primarily concerned for the Borbari Project of the Company, they may continue in the company in future even after completion of the Borbari Projects in all respects and after clearing all the dues of the Second Party includ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h, Guwahati- 781 009 in the district of Kamrup (M), Assam, b. MRS. BOBBY PINKY DHEKIAL, D/O Sri Tarun Kumar Dhekial, aged about 35 years, resident of House No.19, Bishnudeb Goswami Path, Bharalumukh, Guwahati 781 009 in the district of Kamrup (M), Assam and c. MR. TARUN KUMAR DHEKIAL, S/O Late Karuna Kanta Dhekial aged about 62 years, resident of Gyan Kanika Apartments, Flat No.3C, Basisthapur, 3rd Bye Lane, Beltola, Guwahati-28 (Assam) (which expression shall unless repugnant to the context or meaning thereof, shall mean and include their heirs, successors, executors, administrators and assigns) of the SECOND PART. AND 3.a. SMT. SHITAL JAIN, W/O Sri Rajesh Jain, resident of 3rd Floor, Avantika Nilay, Ulubari Bazar Road, Ulubari, Guwahati - 781 007, in the district of Kamrup (M), Assam ad b. SRI JITENDRA KUMAR JAIN, S/O Sri Bimal Kumar Jain, in the district of Kamrup (M), Assam both being incoming Director/ Investor of M/s. Saroj Realtors and Developers Pvt. Ltd. (which expressing shall unless repugnant to the context or meaning thereof, shall mean and include his heirs, successors, executors, administrators and assigns) of the THIRD PART. AND 1. MRS. MEENA KUMARI DAS, W/O Mr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n favour of Assam Gramin Vikash Bank as a Collateral Security for the loan taken by SRDL for its Six Mile project shall have to be released without any encumbrances in favour of Mrs. Meena Kumari Das, The Company shall take all necessary steps towards release of the mortgage ad finalize the same within a period of one year from the date of execution of this MOU. 4/19 That on payment of the aforesaid sum of Rs. 30 lacs and on execution of the aforesaid Agreements to Sale of Flats, the Second Party shall have to simultaneously resign from their respective Directorship as the case may be and relinquish their respective shareholdings in the company as the case may be in the manner as provided in this MOU. However, the 3rd Party shall join SRDL as director before the resignation of Second Party and Form 32 of Third Party be submitted immediately before the Registrar of Companies. The Third Party hereby confirms their intention to invest in SRD> as provided in this MOU. The First Party shall take all necessary steps for making the required changes in the records of the Registrar of Companies at Shillong and the bankers of SRDL as per procedures of law within a stipulated period of 45 ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... terest on the money so credited to the CD, CD retained such money in interest free unsecured account which was to be repaid as per convenience of the CD. 25. In that connection, CD adopted a Board resolution on 29-03-2013. For ready reference, said Board resolution is also reproduced below: - CERTIFIED EXTRACT COPY OF THE MINUTES OF THE BOARD MEETING HELD AT THE REGISTERED OFFICE OF THE COMPANY AT 2ND FLOOR, HOUSE N0.115, SARAT PLAZA, RAJGARH ROAD, GUWAHATI 781 007 (ASSAM) ON 29(tm) MARCH, 2014 AT 11.05 AMD (Cotd.) Sri Avishek Choudhury has informed the Board that some collections are into the Companies Bank Account directly from some parties related to Sri Jitendra Kumar Jain and has been kept under Interest Free Loan A/C beause as per the MOU dated 4th June, 2013, the funds were supposed to come from Sri Jitendra Kumar Jain and Mrs. Shital Jain only and not from any other party. He also informed the Board that the money has mainly been utilised for payment to Sri Banajit Talukdar on behalf of outgoing directors Sri Banajit Talukdar and Sri Tarun Kumar Dhekial and shareholder Mrs. Bobby Pinky Dhekial. Following resolution was taken: "RESOLVED THAT in view of the tendering o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ection 5(8) of the Code of 2016 had ever been due from the CD to the FCs. Being so, the present proceeding is required to be rejected on this count alone. 29. But then, the resolution dated 16-05-2013 and resolution dated 27-05-2013 came under sharp criticism from the side of the CD for some other grounds as well. First, it was contended that the contract which was projected through the resolution dated 16-05-2013 was between the CD and FC1 whereas the contract which was projected through the resolution dated 27-05-2013 was between the CD and FC2. Since the CD is admittedly a lifeless juristic person, it can act only through a body of human beings which is commonly called as the Board of Directors. 30. Since the company is a juristic person, law allows a company to sue for wrong done to it. Similarly a company can also be sued for the wrong which are committed by the officers/employees of the company, however, during the course of employment. Since the company acts through its Board of Directors, before suing a company for the alleged wrong committed by it, it needs to be established that the act- alleged to be illegal/wrong-- was committed under the authority of the company. In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... object, and are not hereby expressly declared to be void. Nothing herein contained shall affect any law in force in India, and not hereby expressly repealed, by which any contract is required to be made in writing or in the presence of witnesses, or any law relating to the registration of documents. "13. "Consent" defined -Two or more person said to consent when they agree upon the same thing in the same sense "14. "Free consent" defined - Consent is said to be free when it is not caused by - (1) coercion, as defined in section 15, or (2) undue influence, as defined in section 16, or (3) fraud, as defined in section 17, or (4) misrepresentation, as defined in section 18, or (5) mistake, subject to the provisions of sections 20, 21 and 22. Consent is said to be so caused when it would not have been given but for the existence of such coercion, undue influence, fraud, misrepresentation, or mistake." 35. Referring to Annexure-B and B-1, Mr. G Chaudhary , he learned counsel for the CD has again contended that the purported contract in the resolution dated 16-05-2013 and in resolution dated 27-05-2013 reveal that the CD accepted money, specified therein, presumably o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... risk, the FCs never initiated any proceeding against the CD seeking recovery of the money, stated in Annexure-B and B-1, together with interest accrued thereon. Such conduct on the part of the FCs, being found highly contradictory to normal behaviour, would make the authenticity of the contracts in Annexure-B and B-1 more and more doubtful. On all those scores, the CD urges this Authority to reject the present application. 40. Responding to allegations aforesaid, the FCs strenuously denied the allegation that the FCs herein are, in fact, second party in MoU-1 and third party in MoU-2. Rather they are independent entities who granted loans to the CD, on being properly approached by it. Therefore, the legality or otherwise of the claims made in the present application are to be tested -not on the basis of the materials in the MoU-1 and MoU-2---but----on the materials, available on record in the proceeding under consideration. 41. It has been submitted that the contract, so disclosed by the resolution dated 16-05-2013 and the contract as disclosed in resolution dated 27-05-2013, reveal that those contracts are complete in all respects which meet all the conditions incorporated in va ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ings which is commonly called as the Board of Directors. Further, being a juristic person, it also needs to act in. accordance with the charters which bring the company into being as well as the prescriptions of law and Rules framed thereunder. 46. Since the company is a juristic person and since it can work only through a body of human beings, called as Board of Directors, all the acts done in the name of the company must be backed by decisions, taken by it in accordance with the prescriptions in MoA and AoA, Law, Rules, framed under the Law. Such acts are generally done by the Board in its meeting convened and conducted in accordance with the prescription in Section 173/174 of the Companies Act of 2013. However, it is sometimes possible to give post facto approval to the act(s), done without its consent. 47. Therefore, any act, done by a Director of a company, which does not have seal of approval of the Board cannot be said to be act(s), done by the company. Such act(s), if not ratified by the Board subsequently, would always be regarded as act(s), done by such director in his individual capacity. In such a scenario, the act(s), done by the Director of a company in his personal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d the CD in the contracts which were allegedly entered into between the FCs and CD on 16-05-2013 and 27-05-2013, such purported contracts are required to be rejected for yet another reason as well. The laws laid down in Section 10 to Section 15 of the Contract Act proclaim that an agreement cannot get graduated to a valid contract unless certain conditions stated therein stand fulfilled. Such conditions are already alluded to herein before. 53. When one reads the aforesaid provisions of law in between the lines, he would find that the word "thing", so used in section 13 of the Contract Act must obviously be taken as widely as possible, though it seems most appropriate where the contract has to be with corporal property. The word, "same thing "must be understood as the whole content of the agreement, whether it consists wholly or in part of the delivery of material objects or payment or other executed act or promise. But then, no effective contract can come into existence unless the parties are ad item on all the essential terms of the transaction. 54. In our instant case, the FCs claim that FC1 granted an unsecured Loan of Rs. 31,66,000/-(Rupees thirty one lacs Sixty Six Thousand ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... D kept such money in its account as unsecured non-interest bearing for reasons more than one. But basic of those reasons being -(i) such loans were credited to account of the CD by the parties who are related to Sri Jitendra Kumar Jain and/or Mrs. Shital Jain who the CD had no apparent connection with and (ii) such loans were credited to the account of CD by the parties aforesaid without the asking of the CD. Such revelations which emerge from the Resolution dated 29-03-2012 make a further dent to the claim of FCs that the CD obtained loans from them on the dates aforementioned on the terms and conditions specified in Annexure B and B-1. 59. However, the resolution dated 29-03-2014 reveals more and more skeletons in the cupboard supporting the claim of the CD that it had never secured any loan from the FCs. In the connection, it may be stated that under the resolution dated 29-03-2014, the CD had virtually denied having taken any loan from the FCs at any point of time. In simple words, said resolution nearly shattered the very base of the resolution dated 16-05-2013 as well as 27-05-2013. What is, however, important to note is that such facts came to the knowledge of FCs as back a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... show that the CD had actually received the amounts, so stated in the Annexure B and B-1, and that too, only under the terms and conditions, the bank statements, which are evidently in the nature of corroborative evidence only, could not do the role of resurrecting the case of the FCs. In such a situation, I have no difficulty, whatsoever in rejecting the argument, from the side of FC which structured taking bank statements as its fulcrum. 65. Consequently, the claims of FCs that the FC1 had granted the CD a loan to the tune of Rs. 31,66,000/-on the basis of resolution dated 16-05-2013 and the FC-2 had also granted it a loan to the tune of Rs. 72,32,000/- on the basis of resolution, dated 27-05-2013 on the terms and condition enumerated in the Annexure-B and B-2 and that the CD failed to repay such loans in accordance with terms and conditions, being found untenable in view of materials available on record, are rejected. 66. Resultantly, this proceeding is found devoid of merit and same is accordingly dismissed. 67. Before parting with the record, I want to make it clear that the observations, made and decisions, taken herein before are made or taken in the context of the present ..... X X X X Extracts X X X X X X X X Extracts X X X X
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