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TMI Blog2019 (2) TMI 965X X X X Extracts X X X X X X X X Extracts X X X X ..... jects Private Limited (CIN No. U45400 DL2007 PTC 307791) against whom initiation of Corporate Insolvency Resolution Process has been prayed for, was incorporated on 29.03.2007 and presently has its registered office at S-2, Manish Chamber, LSC Plot No. 6, Mayur Vihar, New Delhi-110001. Since the registered office of the respondent corporate debtor is in New Delhi, this Tribunal having territorial jurisdiction over the NCT of Delhi is the Adjudicating Authority in relation to the prayer for initiation of Corporate Insolvency Resolution Process in respect of respondent corporate debtor under sub-section (1) of Section 60 of the Code. 3. It is appropriate to mention that Mr. Rajesh Malik Managing Director of the applicant company duly authorized by Board Resolution dated 14.05.2018 has preferred the present application on behalf of the applicant, M/s. Carnoustie Management India Pvt. Ltd., for initiation of Corporate Insolvency Resolution Process against the respondent corporate debtor in terms of the provisions of the Code. A copy of the relevant Board Resolution of the applicant company held on 14.05.2018 has been placed on record. 4. The applicant has proposed the name of Mr. Adi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... chever was later, the determination of which was to be at the sole option of CMIPL. 7. It is further emphasized that the audited financial statement of the respondent Corporate Debtor for the Financial year 2007-08 till 2015-16 had clearly acknowledged the debt owed by the Corporate Debtor to the Financial Creditor. The audited balance sheet for the Financial year 2015-16 has been placed on record which acknowledges the debt owned by Corporate Debtor to the Financial Creditor under the head of "Unsecured Loans - Other Loans and Advances as ICD" i.e. Rs. 34,05,50,365/- (Rupees Thirty Four Crores Five Lakh Fifty Thousand Three Hundred sixty Five Only). 8. Subsequently on 13.08.2015, a Share Purchase Agreement was signed between Mr. Sanjay Rastogi; and Corporate Debtor and Financial Creditor wherein, Financial Creditor had sold 100% shares in Corporate Debtor to Mr. Rastogi and his nominees. The Financial Creditor had disclosed all the liabilities of the Corporate Debtor in the Share Purchase Agreement and the same was acknowledged by Mr. Rastogi. It is submitted that Mr. Rastogi being the director of the Corporate Debtor at the time of acquisition had access to all the financial do ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Notice dated 28.03.2018, the Corporate Debtor is raising one or the other contentions to avoid payment of the debt. 13. It is stated in the application that the total outstanding amount due comes to Rs. 34,31,87,965/- (Rupees Thirty Four Crores Thirty One Lakh Eighty Seven Thousand Nine Hundred Sixty Five only) excluding the interest of 12% per annum. 14. It is contended that as the Corporate Debtor failed to pay the applicant Financial Creditor the admitted financial debt, the Financial Creditor prays to initiate insolvency proceedings against the Corporate Debtor. 15. Respondent company in its reply filed on 05.09.2018 has raised objection that the debt claimed in the petition was not disbursed against interest or consideration for time value of money and therefore the claim of the applicant is not a financial debt. It is contended that no interest or time period for repayment was ever prescribed on the alleged transaction. 16. In support of the contention, respondent has relied upon various Balance Sheets of the applicant company and its auditor's report. Respondent has pointed out that in the audited balance sheet of the applicant company for the year ending 31.03.2008 i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lready lodged against the applicant. It is prayed that no reliance on such photocopy can be placed in the present summary proceedings. 24. It is further pointed out that the respondent company was incorporated on 29.03.2007 and the alleged loan agreement was executed on 11.05.2007. It is alleged that as on 11.05.2007, the applicant was not even a shareholder of the respondent company and as such there was no occasion to refer respondent company as a subsidiary company in the loan agreement. It is accordingly argued that when the respondent company was not a subsidiary company of the petitioner on 11.05.2007, it is not clear how the loan agreement dated 11.05.2007 refers the respondent company as its subsidiary. 25. Learned counsel for respondent relied upon the stamp paper of the alleged loan agreement, which was dated 20.03.2007 about 9 days before the incorporation of the respondent company. It is accordingly alleged that there was no occasion on 20.03.2007 to purchase the stamp paper for a transaction by a company, which was not even in existence on that day. 26. The respondent further pointed out that if there was any default in payment of principal loan amount for so many y ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s for triggering the insolvency resolution process by three categories of persons namely: (a) Financial creditor (b) Operational creditor, and (c) Corporate debtor itself. 33. The procedure in relation to the initiation of Corporate Insolvency Resolution Process by the "Financial Creditor" is delineated under Section 7 of the Code, wherein only "Financial Creditor" / "Financial Creditors" can file an application. As per Section 7(1) of the Code an application could be maintained by a Financial Creditor either by itself or jointly with other Financial Creditors. Section 7 of the Code thus mandates that the applicant "Financial Creditor" has to prove the default. In other words, even if there is a clear default, the application under Section 7 of the Code is not maintainable in case the applicant is not a financial creditor. Therefore, in order to maintain the present application filed under Section 7 of the Code for initiation of Corporate Insolvency Resolution Process in respect of respondent corporate debtor, the present applicant has to satisfy that he comes within the definition of "Financial Creditor". 34. The expressions "Financial Creditor" and "Financial debt" have b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wing essential criteria: (i) A person to whom a 'financial debt' is owned and includes a person whom such debt has been legally assigned or transferred; (ii) The debt along with interest, if any, is disbursed against the consideration for time value of money and includes any one or more mode of disbursed as mentioned in clause (a) to Clause (i) of sub-section (8) of Section 5. 36. Mere grant of loan and admission of taking loan will ipso facto not treat the applicant as 'Financial Creditor' within the meaning of Section 5 (8) of the Code. 37. Precisely "financial debt" is a debt along with interest, if any, which is disbursed against consideration for time value of money. 38. In the present case the applicant has relied upon the loan agreement dated 11.05.2007 in support of the pleading that the loan was disbursed against consideration for time value of money. 39. Respondent has alleged that the loan agreement dated 11.05.2007 is a created one and that the sole loan agreement dated 11.05.2007 relied upon by the applicant is false and fabricated. 40. Admittedly original of the disputed loan agreement dated 11.05.2018 has not been placed on record. Normally the original loan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onerous on the part of the applicant to prove that the amount was disbursed against the consideration for time value of money. Admittedly, original loan agreement has not been produced. Expert opinions have been placed in support of the pleading that the loan agreement is a forged one. In the facts discussed above and in the absence of the original loan agreement and in the light of serious dispute and allegation of fraud; it appears that the matter requires proper trial and investigation. Admission of the application under the Code has serious civil consequences. Heavy onus lies on the applicant to prove the claim of interest component, date of default and as to when the repayment is due. Simply, relying upon the copy of a seriously disputed document would not suffice in the present summary proceedings. 47. For the reasons stated above this petition fails and the same stands dismissed as not maintainable. 48. We make it clear that any observations made in this order shall not be construed as an expression of opinion on the merit of the controversy. We have not recorded any findings on the loan agreement dated 11.05.2007 in these summary proceedings, therefore, leave the parties ..... X X X X Extracts X X X X X X X X Extracts X X X X
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