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TMI Blog2019 (8) TMI 1381X X X X Extracts X X X X X X X X Extracts X X X X ..... on admitted - moratorium declared. - CP(IB) No. 46/BB/2018 - - - Dated:- 10-1-2019 - DR. ASHOK KUMAR MISHRA, MEMBER (T) AND MR RAJESWARA VITTANALA, MEMBER (J) For The Petitioner : Ms. Sunita Srinivas with Shri S. Raghunathan For The Respondent : Mr Prajnal K. and Arjun Sarathy ORDER Per : Dr. Ashok Kumar Mishra, Technical Member The Petitioner Mr. John Varghese, through his authorised Power of Attorney holder Smt. M. Jamuna Rani, has submitted an application under Section 7 of the I B Code, 2016 read with Rule -4 of the I B (AAA) Rules, 2016 seeking to initiate Corporate Insolvency Resolution Process in the matter of M/s Value Design Build Private Limited, Corporate Debtor. 2. The various submissions made by the Petitioner are as follows: a) Value DesignBuild Private Limited, the Corporate Debtor having identification number U70102KA2002PTC030953 has been incorporated on 2nd September, 2002 having its Nominal Share Capital ₹ 80,00,000/-, 8,00,000 Equity Shares of ₹ 10/- each and paid-up share Capital ₹ 75,00,000/- (7,50,000 Equity ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Petitioner Counsel and the respondent counsel on various dates. The Petitioner has also submitted on 20.02.2018 some additional documents referring to various e-mails exchanged between the Petitioner and the Managing Director of the Company who is his relative. 4. On going through the various correspondences which the Petitioner has furnished on 20.02.2018 certain e-mails which have been exchanged from the Managing Director of the Respondent Company with the Petitioner, the Respondent Company accepts that some amount was due and the Managing Director has agreed to repay the amount as mentioned in e-mail dated 31.08.2016 which is at Annexure-AB-124 of the additional documents wherein it is mentioned that the respondent Company is going to release 25 lakhs by the end of August, 2016. Similarly the Managing Director of the Respondent Company has sent e-mail on 22.07.2016 which is at Annexure-AB-122 of the additional set of documents filed by the Petitioner where he has agreed to pay different amounts on different dates as follows: (a) However taking into account our current cash flow situation we plan to make payments in the following manner: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f his functions, shall, if it appears to him that such instrument is not duly stamped, impound the same . He has also submitted that no hardship or prejudice would be caused to the Petitioner if the instant Application I.A. No. 113/15 is allowed. 7. As per the submission made by Respondent the Petitioner who is a foreign national, who was seeking for a viable investment opportunity within India, specifically to keep his funds. He has also mentioned in the objection that the Petitioner had expressed a specific intention to invest in one such real estate project of the Respondent, and sought for his brother s help (Respondent), when he understood that his brother is engaged in development of apartments and high end villas within Bangalore. 8. As per Respondent objection dated 24.04.2018 the Petitioner disbursed amounts to the Respondent in the following manner for purchase of an apartment in one of his projects, and not a loan amount rather money advanced for purchase of apartment. SL. No. Date Amount Disbursed for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by stating there can be no financial debt due from the Respondent in existence since it would be in violation of the foreign Exchange Management Act, 1999 and the Rules and Regulations framed thereunder, and therefore, barred under law. 13. (a) As per Respondent objection: The Foreign Exchange Management (Deposit) Regulations, 2016 issue under Regulation 6 (c) permits only the following activities to be undertaken in an Indian bank account, as extracted from the Foreign Exchange Management (Deposit) Regulations, 2016 as below: (C) Non-Resident (Ordinary) Rupee (NRO) Account (i) Any person resident outside India may open NRO account in Indian Rupee with Authorized Dealers and authorized banks for the purpose of putting through bona fide transactions in rupees subject to the conditions specified in Schedule 3 to the Deposit Regulations. (ii) The account can be maintained in any form e.g savings, current, recurring or fixed deposit (iii) Balances in the NRO account cannot be repatriated abroad except for current income of the accountholder and up to USD 1 million per financial year by NRIs and PIOs, su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o Section 6(3) of the FEMA 1999, the RBI has formulated the Foreign Exchange Management (Permissible Capital Accounts Transactions) Regulations, 2000. In terms of Regulation 3(2) any person may sell or draw foreign exchange to or from an authorised person for a capital account transaction specified in the Schedules of the said Regulation, 2000. It is submitted that one of the permissible capital account transactions under Schedule I which deals with persons resident in India is Foreign currency loans raised in India and abroad by a person resident in India (e) Regulation 6(1) of the FEMA (Borrowing or Lending in Foreign Exchange) Regulations, 2000 specifies that a loan maybe obtained from a person other than an authorised lender, subject to obtaining prior permission of the RBI and subject to the purposes specified in the Schedule to the FEMA, (borrowing and Lending in Foreign Exchange) Regulations, 2000. (f) In Schedule 1, 2 and 3 of the Schedule to the FEMA (Borrowing or Lending in Foreign Exchange) Regulations, 2000 specify the conditionalities upon which a company, such as the Respondent can borrow money from abroad and from whom they can borr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ional cases in which a man will be relieved of the consequences of an illegal contract into which he has entered-cases to which the maxim does not apply. They fall into three Classes (a) where the illegal purpose has not yet been substantially carried into effect before it is sought to recover money paid or goods delivered in furtherance of it; (b) where the plaintiff is not in pari delicto with the defendant; (c) where the plaintiff does not have to rely on the illegality to make out this claim (k) It is further submitted that the Respondent has acceded to the fact that the Petitioner has parked moneys; amounting to ₹ 2,33,78,962 and CHF 50,000 towards advance towards purchase of apartment. However, the components and interests and tenure are not permissible under law, and therefore, there is no financial debt constituted in terms of Section 5(20) of the Insolvency and Bankruptcy Code, 2016. It is submitted that consequentially, the instant insolvency petition has to be dismissed. (1) The Respondent deny all the allegations made hereunder by the Petitioner (i) The Respondent is due to the Petitioner an amount of ₹ 5 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd has become insolvent. E-mails dated 31.01.2013, 30.12.2013. 01.10.2015 and 24.11.2015 sent by Mr.Koshy Varghese, the Managing Director to the Petitioner clearly indicate the admission of liability. 20. A legal notice dated 16.05.2017 had been sent to the Corporate Debtor to pay the dues within a period of 21 days has been received by the Corporate Debtor on 19.05.2017 has also been enclosed along with the Petition. 21. In response to the legal notice dated 16.05.2017 a belated reply has been sent by the Counsel for Corporate Debtor on 28.06.2017 in which there was a clear admission of the sum disbursed by the Petitioner, whereas by raising untenable and frivolous defences the Petitioner s claim has been totally denied. 22. Mr. Koshy Varghese, Managing Director and the Respondent Company, from the beginning have plotted against the Petitioner to swindle or defraud and deprive the Petitioner of his hard earned money. Initially the amount was advanced solely on the basis of innumerable representations made by Mr. Koshy Varghese, Managing Director and the Respondent Company, which subsequently turned out to be utter false and now raised f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under the term advance from customer and subsequently removed from the same accounts, the Respondent is only guilty of manipulation of their own accounts. Having accepted the sum as advance and accounted for the same and investment in real estate business is a direct conflict with investment, onus rest on Respondent s shoulder and the Petitioner is in no way be fastened with any liability. The Respondent being a borrowing Company and its borrower and its Promoter were completely responsible and the burden falls on the Respondent to ensure that the laws of the land were adequately complied with. 28. Petitioner reiterates that the contention of the Respondent that the Loan Agreement had been inadequately stamped cannot be agreed to, as the loan agreement is prepared by the Respondent themselves. Petitioner is always ready and willing to pay additional stamp duty if any to cure the said defects as alleged by the Respondent. 29. Petitioner further submits with regard to the issue signature of both the parties are not affixed on each page of the loan agreement is untenable, as signature of both the Petitioner and Respondent is affixed properly at the las ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 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-clause (a) to (h) of this clause 32. The Petitioner has also cited case law which reads as follows: Hon ble Supreme Court in Chilakuri Gangulappa v. Revenue Divisional Officer, Madanapalle [2001] 4 SCC 197 held as under: 13. In the present case, an argument is raised that the instrument is not actually an agreement of sale as envisaged in the Schedule to the Stamp Act (subject to amendment made by the State of Andhra Pradesh) but it is only a deed of compromise entered into by two disputing persons. We refrain from expressing any opinion on the said plea as it is open to the parties to raise their contentions regarding th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e disputed that he is not a Financial Creditor as also by going through the audited balance sheet as on 31.03.2016 duly submitted by the Advocate for the Petitioner in respect of the Respondent Company the health of the Company does not seems to be very good as Reserve and surplus is only ₹ 34,53,140/- (Rupees Thirty Four Lakhs Fifty Three thousand One Hundred Forty Only) with the Company. The Respondent Company started since 2002 and it is carrying lot of current and non-current liability and is blocked in current assets i.e. inventories, Trade Receivables. All these circumstances suggest, that it is fit case to be admitted, under Section 7 of Insolvency Bankruptcy Code for Corporate Insolvency Resolution Process to be initiated. 35. On perusal of the Application, we found that the instant Application is filed strictly in accordance with law, and Shri Ravi Shankar Devarakonda with Registration No.lBBI/IPA- 001/IP-p00095/2017-18/10195 is a qualified Resolution Professional and not facing any disciplinary proceedings as per the declaration filed by him. Therefore, it is a fit case to admit to initiate Corporate Insolvency Resolution Process with all consequent ..... X X X X Extracts X X X X X X X X Extracts X X X X
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