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TMI Blog2018 (9) TMI 944X X X X Extracts X X X X X X X X Extracts X X X X ..... s also under challenge before the company court as well as before the magistrate Court. The above said factors proves that the applicant filed this application without clean hand and suppressing material facts and hence it appears to me that this application is not maintainable because of the order of status quo is in force. This point is answered accordingly. As per Section 7(3) of the I & B Code, 2016 the burden is heavy on the side of the financial creditor to prove the existence of a default. In a case of this nature a financial creditor can succeed only if he proves the existence of a default. In order to initiate Corporate Insolvency Resolution Process a financial creditor has to satisfy the ingredients to be proved under sub-section (3) of Section 7 of the I & B Code, 2016 Proof of existence of default from the record of information utility or such other record or evidence of default as may be specified shall be produced by the applicant. Evidence other than the information utility can also be produced in a case of this nature. But here in this case proof of default not at all produced on the side of the financial creditor. That being so the applicant herein in this ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... corporate debtor, through an informal arbitral award dated 22nd January, 2016. A copy of the said Award is annexed as Annexure I: Exhibit H. The corporate debtor being defaulted in repayment of the loan amount, the application is liable to be admitted. 3. The respondent/corporate debtor filed reply affidavit contending in brief is the following:- (a) That the amount claimed is not due and hence not a debt as defined u/s. 3(11) of the I B Code and there is no default as defined u/s. 3(12) of the I B Code because the purported amount of claim has not become due or payable to satisfy the requirement of Section 7(1) of the I B Code. Therefore, the instant application is not maintainable and liable to be dismissed in limini. (b) It is contended that no loan document/financial contract was ever executed between the financial creditor and the corporate debtor and the applicant/financial creditor in the application has admitted the same. Hence, the amount claimed is currently not repayable and that it was never repayable on demand. Therefore, there is no default as defined u/s. 3(12) of the I B Code to satisfy the requirement of Section 7(1) of the Code. (c) It is also ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ectors in the applicant company and Shri Raj Singh Chopra is a director in the corporate debtor company. The above set of facts are not disputed. (b) Ld. Pr. CS appearing on behalf of the corporate debtor submits that the applicant herein in order to aggravate the family dispute which is already pending before the Hon ble High Court at Kolkata illegally removed the directors of corporate debtor from the directorship of the applicant company so as to enable him to initiate CIRP as against the corporate debtor. (c) To substantiate his said contention he has relied upon Annexure 6. Annexure 6 is a copy of the Chief Metropolitan Magistrate s order for investigation u/s. 156(3) of the Cr. P.C. dated 11/01/2017. A reference to the order it is understood that Ld. Chief Metropolitan Magistrate ordered investigation in regard to the allegations leveled in convening the Extra Ordinary General Meeting (in short, EoGM) of the applicant company without serving proper notice to its members including the directors of the corporate debtor in violation of Section 169(5) of the Companies Act, 2013. (d) So also it is understood that an application u/s. 241 of the Companies Act, 2013 alleging ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... entered into between the family members of Shri Jagat Singh Chopra, the matter does not end there and in regards the distribution of money due from each parties to the settlement and other business and commercial assets were in dispute and any amount is due to anyone of the parties can only be finalized in the said arbitration proceedings. According to him because of the status quo CIRP cannot be initiated as against the corporate debtor. (h) The Ld. counsel for the applicant submits that the applicant has proved its authority by producing the resolution and that status quo order passed by the Hon ble High Court at Calcutta does not bar the proceedings initiated under section 7 of the Code. Considering the peculiar circumstances that the applicant and corporate debtor were sister concern, that applicant and respondent are brothers, that there was a family settlements finalised into an award and that an execution of the award is pending before the Hon ble High Court at Culcutta, and the applicant is prohibited from altering the status quo with regard to the business, properties and assets in the possession of applicant company it appears to me that it is unjust and unfair to pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... money nor the applicant has had a case that the money was demanded back and thereby there is default for failure to repay. So the money allegedly claimed by the applicant is not at all a debt. Debt is also defined in the Code. It read as follows: 3(11) - debt means a liability or obligation in respect of a claim which is due from any person and includes a financial debt and operational debt; (c) Admittedly the financial creditor has not executed any agreement. Though produced copies of letters demanding interest on loan given to the corporate debtor there is no demand for return of loan amount as such. So there is no proof of default. Period of repayment is uncertain. Computation statement has been produced to show that default occurred on 10/11/2017. The loan was allegedly given to the corporate debtor on 30/03/2013. Admittedly the corporate debtor was in receipt of ₹ 5 Lakhs. So when exactly the corporate debtor s liability arises to repay that amount herein in this case, other than the computation prepared by the financial creditor, there is no other supporting proof. Therefore, no debt is found due as on the date of filing of this application. (d) As per S ..... X X X X Extracts X X X X X X X X Extracts X X X X
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