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TMI Blog2019 (11) TMI 685X X X X Extracts X X X X X X X X Extracts X X X X ..... tion dismissed. - IB-1159/PB/2019 - - - Dated:- 9-8-2019 - RTD M.M. KUMAR, PRESIDENT AND DR. V.K. SUBBURAJ, TECHNICAL MEMBER For The Respondent : Mr Sanjay Agnihotri ORDER Dr. V. K. Subburaj, Member. 1. This is an application filed by the M/s. Divyansh Pratham Infracon Pvt. Ltd. ( the Applicant ) seeking to initiate Corporate Insolvency Resolution Process ( CIRP ) of the M/s. Dwarika Infocom Pvt. Ltd. ( Rl ), Edge Infrastructure Pvt. Ltd. ( R2 ), GSR Farms Pvt. Ltd. ( R3 ) and Edge Dwarika JV( R4 ) ( Respondents ) under Section 7 of the Insolvency and Bankruptcy Code, 2016 ( the Code ) for the alleged default on the part of the Respondents in repaying the loan amount of ₹ 2,74,85,017/- along with the interest @ 24% per annum. The details of the transactions leading to the filing of this case as averred by the Applicant are as follows: i. R4 is the joint venture formed by Rl, R2 and R3 with its registered office at 2, Park End, 3rd Floor, Vikas Marg, New Delhi-110092. ii. Rl on behalf of the joint venture consortium portrayed to the Applicant that they have exc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . viii. Vide mails dated 16.01.2015 and 28.01.2015, Rl also shared the proposed price list of the multi-storey housing project with the Applicant. ix. However, after the initial payments were made by the Applicant towards the project and the launch of the project, Rl represented to the Applicant that the necessary finances for development and construction of the project could not be arranged by the Respondents. The Respondents kept assuring that they were making all efforts for necessary compliances and to arrange the necessary finances, which would not take much time. x. Sometime in March-April, 2016, to the utter surprise of the Applicant the Respondents informed the Applicant, contrary to initial representations and assurances of their financial strength and capacity, that due to paucity of funds for initiation of construction and stamp duty for registration of the consortium MoU, the Respondents had decided to discontinue with the original project, i.e. constructing multi-storey group housing development and instead, they would like to modify it to development of plots. Shortly thereafter, on 16.06.2016, an e-mail was sent by R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the said legal notice. However, in the said reply, Rl has falsely and evasively, sought to avoid the payment of admitted financial debt. The other Respondents have also in their reply dt. 15.04.2019. made mere evasive denials, tantamount to admission of the financial debt, with no specific averments being made in response to the legal notice dt. 28.02.2019 by the Applicant. 2. Rl has filed the following reply: i. As per the MoU dated 29.03.2014 DIPL had to make payment of a sum of ₹ 9,00,00,000/- to Rl as Entering Cost which was to be an up-front, non-refundable and non-adjustable amount. The payment of the Entering Cost of ₹ 9,00,00,000/-was to be made by 01.08.2014. It was agreed that payment of the Entering Cost of ₹ 9,00,00,000/- was to be a pre-condition for the entry of DIPL into the project for providing 50% share in the expenses; a development and construction of land in consideration of 50% share in the developer share of the project, i.e. 50% of the 63% of the fully constructed area on the land. The payment of the Entering Cost was agreed to be up-front, non-refundable and non-adjustable. It was also agreed that i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rs from 2016 to 2019 in its application wherein it never raised any demand for repayment of its alleged loan with interest of at least 24% p.a. v. In so far as the balance sheet of Rl is concerned, the reflection as unsecured loan is only because of accounting practice, and the same does not mean that payment made was actually a loan or borrowing. Further, the Applicant itself had written to the tax authorities stating that the payments made to Rl was not a loan. The loans taken are shown as NIL under Term Loans in the Balance Sheet filed by the Applicant in the Income Tax Return. It can also be seen under point 2.30 Contingent Liability of the balance sheet says that There is no claim against the company, which is to be acknowledged as debt. It is clear from the above discussions that the mere fact that the Entry Fee has been placed under the long-term borrowings does not accrue any right of refund or interest to the Applicant. There was no agreement for any financial loan or borrowing or any interest and there is no financial debt. vi. It is also pertinent to mention here the balance sheet of the Applicant for F.Y. 2014-15 where they th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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