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TMI Blog2019 (8) TMI 972X X X X Extracts X X X X X X X X Extracts X X X X ..... Golakh Parida to approach the Applicant for grant of the loan as claimed. It is also not understandable as to why the MoU, which is a promise to advance loan and render services to the Corporate Debtor, provides that even if the entire Stock of Iron Ore could not be liquidated still the Applicant will be entitled for the share of ₹ 3.60 Crores. It is noted that huge amount is stated to have been advanced to the corporate debtor in cash, which is in violation of Section 269SS of the Income-tax Act, 1961. In the case on hand the Applicant /financial creditor had submitted Form C and Affidavit alone to the Resolution Professional through electronic mode and all other documents were submitted by hard copy, which is in contravention to the requirements of Form- A Therefore, the claims filed by the Applicant/financial creditor before the Resolution Professional have rightly been rejected, as it is well settled proposition of law that if a statute provides for a thing to be done in a particular manner, then it has to he done in that manner and in no other manner . Thus, the documents placed on record and the submissions made by the applicant through her counsel, do no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ate Ltd., filed CP/39/(IB)/CB/2018 under Section 7 of the I B Code, 2016 wherein, this Authority vide its Order dated 12.03.2018 admitted the Application, CIR Process was initiated and the Respondent viz., Mr. Vasudevan was appointed as Interim Resolution Professional, who subsequently has been confirmed by the Committee of Creditors (CoC) as Resolution Professional. 4. Thereafter, the Resolution Professional issued Public Announcement calling for submission of the claims by the creditors with respect to the debts due from the Corporate Debtor. 5. The amount claimed in Form C as a Financial Creditor dated 27th March, 2018 was for a sum of ₹ 4,04,54,000/- comprising of ₹ 1,50,00,000/- payable as principal and remaining ₹ 2,54,54,000/- payable as interest thereon (hereinafter referred to as Financial Claim No.l ). The amount claimed in Form B as an Operational Creditor dated 27th March, 2018, was a sum of ₹ 11,15,48,000/- comprising of ₹ 7,60,00,000/- payable as principal and remaining ₹ 3,55,48,000/- payable as interest thereon (hereinafter referred to as Operational Claim ). But it is submitted by the App ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nsequently included her in the CoC. 12. The Applicant states that the documents filed by the Applicant in support of the Financial Claim No.2, are as follows:- i. MoU dated 05.10.2015 ii. Board Resolution iii. Cash Voucher iv. Bank Statement of Sujathaa Mehta v. Interest Computation. 13. As per the MoU dated 05.10.2015, it was agreed between the Applicant and the Corporate Debtor that a sum of ₹ 4,00,00,000/- was being advanced for financial assistance by the Applicant and the same was repayable along with commission/interest, determined at ₹ 60/- MTS upon the sale of iron ore, for extraction of which, the financial assistance is given. As per the MoU, the sum of ₹ 3,60,00,000/- is the sum payable upon the sale of iron ore, shall otherwise also be payable, in case the liquidation of iron ore does not happen, thereby making it clear that a sum of ₹ 3,60,00,000/- was payable as interest, for time value of money, for the ₹ 4,00,00,000/- given as financial assistance by the Applicant. 14. The Applicant states, as the payments ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ock . As per clause 4, you still retain the right of ₹ 60/ - per MTS even if the stocks are not liquidated. You have not explained to me on the efforts you have planned/taken to liquidate the stocks. As from 2012 onwards iron ore cannot be sold by any other means other than through e-auction by the Monitoring Committee appointed by the Hon ble Supreme Court. There is no justification given by you in relation to the MOU more specific to Clauses (2), (3) and (4) which contravenes the order of the Supreme Court. Since, Iron Ore cannot be sold by any other means other than e-auction, monitored by the Monitoring Committee, such an agreement with these kinds of arrangement is void ab initio. ii. There is a mismatch in the loan amount (cash portion) between the loan agreements (₹ 3,10,00,000) and the cash vouchers (₹ 3,00,00,000). iii. Witness No.1 has not attested in the Loan Agreements, he has simply written his name and address. iv. Interest amount on the loan is not offered as Income in the Income-tax Returns. v. The cash transaction was not reflected in the books of the Corporate Debtor and its util ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d by the Resolution Professional for rejecting the claim is that interest amount on the loan is not offered as income in the Income-tax Returns. The very insistence on Income-tax Returns in cash transactions is irrelevant, as the same are not mentioned as relevant documentary evidence for proof of a financial debt. Thus, this reason stated by the RP should also be rejected, in limine. * The 5th reason that the concluding parts of the Loan Agreements appear to be an Agreement between a purchaser and vendor is stated to be vague and unclear. From a perusal of all the loan agreements, the dealings appear to be between the lender and the borrower . * The 6th reason cited by the Resolution Professional for rejecting the claim of the Applicant is that the cash transaction was not reflected in the books of the Corporate Debtor and its utilisation not known. The Applicant has stated that inclusion or non-inclusion of the debts owed by the Corporate Debtor to the Applicant, in the books of the Corporate Debtor is beyond the control of the Applicant. With regard to the utilization of funds, the internal affairs of the Corporate Debtor alone would have det ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that a sum of ₹ 4,00,00,000/- was being advanced for financial assistance by the Applicant and the same was repayable along with financial charges, determined at ₹ 60/MTS upon the sale of iron ore, for extraction of which, the financial assistance is given. As per the MoU, the sum of ₹ 3,60,00,000/- which is the sum payable upon the sale of iron ore, shall otherwise also be payable, in case the liquidation of iron ore does not happen, thereby making it clear that a sum of ₹ 3,60,00,000/- was payable as interest, for time value of money, for ₹ 4,00,00,000/- given as financial assistance by the Applicant. Therefore, the reason for rejection of the claim of the Applicant is unsustainable in law and deserved to be rejected. * The 2nd reason cited by the Resolution Professional is that there is a mismatch to an extent of ₹ 10,00,000/- in the loan amount between the loan agreements and the cash vouchers. The rejection of the entire sum, without even raising a question regarding the remaining ₹ 1000000/-, appears to be unfair, against the principles of natural justice and wholly erroneous in the eyes of law. 20. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... olution Professional vide his e-mail communication has not admitted the claims of the Applicant viz. Sujathaa Mehta. The Applicant had filed MA.394/IB/2018 before this Authority seeking inter alia for admission of her claims dated 27.03.2018 and 22.06.2018, and this Authority vide order dated 05.09.2018 directed the Resolution Professional to collate and verify the claims of the Applicant on or before 20.09.2018. 23. The Resolution Professional had verified and scrutinized the claims of the Applicant viz., Sujathaa Mehta along with the documents and found various discrepancies which attracted the provisions of IBC, 2016 relating to Fraudulent Transactions and the claim was rejected vide e-mail dated 20.09.2018. 24. The Respondent/Resolution Professional states that there are various claims received by the Respondent which are identically alleged to have been cash transactions, for which there is no evidence in the Corporate Debtor s books and records. The Respondent No.2 in MA/491/2018 viz., Mr.Golakh Parida, a Chartered Accountant allegedly organised the said cash transactions being the Internal Auditor of the Corporate Debtor. It is not known as to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted by Golakh Parida in collusion with authorized signatory of the Corporate Debtor. 29. The Resolution Professional states that all the loan agreements have a clause which states that Loan shall be disbursed within a period of 15 working days from the date of execution of this Agreement . However, the loans were disbursed on the date of the agreement itself. Loan Agreements state that the Corporate Debtor has issued Post Dated Cheques as Security but the same has not been produced along with the claim documents. In all the loan agreements the witnesses are same and the recitals are verbatim except for change in the agreement date and loan amount. The statement of account of the Corporate Debtor as appearing in the books of the Applicant was signed by Sidharth Mehta, husband of the Applicant, which appears collusive in nature. 30. The Resolution Professional states that M/s. P D Enterprises has filed an Application under Section 9 of the Arbitration and Conciliation Act, 1996 in AA.No.7/2014 on the file of the Bellary Court and obtained an injunction against the Corporate Debtor from in manner operating the mining operation in IA.No.II on 14.05.2014 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e to the directions of this Hon ble Tribunal given in MA/8/IB/2018. 33. The Resolution Professional states that in the 2nd meeting of the CoC held on 02.06.2018, Golakh Parida made a statement that what will happen to the creditors he had created in the books. The statement has been recorded in the minutes of the meeting. The said statement made by Golakh Parida would amount to clear admission that he has manipulated all the accounts of the Corporate Debtor and made fraudulent entries. 34. From the pleadings of the parties the issue that arises for consideration is as follows: Whether the claims of the Applicant based on the cash transactions are admissible in the absence of any entry in the Books of Account of the Corporate Debtor? 35. The Applicant has supported the claims filed before the Resolution Professional with (i) the Agreement dated 05.12.2013 for an amount of ₹ 60 Lakhs along with interest, (ii) the Agreement dated 01.01.2014 for an amount of ₹ 90 Lakhs along with interest and (iii) MoU dated 05.10.2015 for an amount of ₹ 7.60 Crores along with interest. The Applicant has also plac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... both the agreements that the loan will be disbursed within 15 days from the date of execution of the agreement, whereas the purported Vouchers for the amounts of ₹ 60 Lakhs and ₹ 90 Lakhs are bearing the same date on which the respective agreements were executed. The recitals of the agreements show that the Applicant agreed to provide the loan. In other words, it did not provide that the loan has been granted. Moreover, the Applicant claims that the loan has been paid in cash. There is nothing on record to suggest that the Books of Account of the Corporate Debtor are containing any of the entries in relation to the loan alleged to have been advanced to the Corporate Debtor. The purported Cash Vouchers dated 05.12.2013, 01.01.2014, which are not having any number, for an amount of ₹ 60 Lakhs and ₹ 90 Lakhs do not disclose that from whom the money has been received. For the sake of convenience, the image of one of the vouchers is given as below:- It is noted that all the five purported vouchers placed on record are verbatim. Further, a promissory note placed on record for an amount 1.5 crores did neither contain date nor wit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... irectors to borrow the loan up to ₹ 10 Crores maximum to meet the working capital needs of the Corporate Debtor vide Board Resolution passed on 09.07.2010. But, the transactions involving the advancement of the loan happened during 2013-2014, after a gap of three years and the fact that the MoU dated 05.10.2015 has been signed by the Managing Director viz., Sriram Vedam with the Applicant, it is not known as to whether during 2013-2014, Mr. Philip Edmund VanHaltren was holding the mandates for signing the agreements with the applicant which are in the nature of promises only to advance the loan. 42. As per the agreements dated 05.12.2013 and 01.01.2014, the time period for re-payment of loan was 24 months and as per the MoU dated 05.10.2015, the loan was to be repaid on or before 31.03.2016 and the CIR Process was initiated against the Corporate Debtor on 12.03.2018. There is nothing on record to suggest that the Applicant has ever issued a notice to the Corporate Debtor or initiated arbitral proceedings as mentioned in the Loan Agreements and the MoU, or even filed any Civil Suit for recovery on the basis of the Promissory Note amounting to ₹ 1.5 Crores. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (iv) an order of a court or tribunal that has adjudicated upon the non-payment of a debt, if any. 45. In the case on hand the Applicant /financial creditor had submitted Form C and Affidavit alone to the Resolution Professional through electronic mode and all other documents were submitted by hard copy, which is in contravention to the requirements of Form- A Therefore, the claims filed by the Applicant/financial creditor before the Resolution Professional have rightly been rejected, as it is well settled proposition of law that if a statute provides for a thing to be done in a particular manner, then it has to he done in that manner and in no other manner . This view is fortified with the ruling of the Apex Court given in Chandra Kishore Jha v. Mahavir Parsad AIR 1999 SC 3558. 46. Further, in this case, except for an amount of ₹ 90 Lakhs which was paid through banking transaction and admitted by the Resolution Professional, the requirements for existence of debt due to the Applicant/financial creditor as provided under Regulation 8 of Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) ..... X X X X Extracts X X X X X X X X Extracts X X X X
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