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TMI Blog2019 (12) TMI 893X X X X Extracts X X X X X X X X Extracts X X X X ..... or to settlement agreement in the year 2015 and hence the contention that the Petitioner cannot be considered as a 'Financial Creditor' or the amount claimed as a 'Financial Debt' is not acceptable. The Settlement Agreement is only a sequel to the earlier agreements under which investments were made, and in any case the Settlement Agreement treats the total amount as a 'debt' payable with interest cannot be denied by the Corporate Debtor in the capacity as a promoter/developer as both of them/all of them are jointly and severally liable for the amounts due to the Financial Creditor having signed the agreements jointly and in the circumstances the contention that no privity of contract exists as between the parties raised by the Corporate Debtor cannot also be accepted. Thus when repayment was demanded and since there has been no repayment till date, whether it be of 'debenture' or 'loan' being attendant with payment of interest or not, as agreed between the parties and the amount being disbursed against the consideration for the time value of money thereby falling within the definition of 'Financial Debt' and there is default in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ors contributions. F. That since the disputes were pending, vide letter dated 30.03.2014 called the Corporate Debtor to give its consent for conciliation, which was accepted by the Corporate Debtor and all disputes were referred to Mr. Justice K.S. Gupta (Retd.) for conciliation under section 64 of the Arbitration and Conciliation Act, 1996 as amended vide Arbitration and Conciliation (Amendment) Act, 2015. G. That the disputes pending between the parties were resolved amicably and the settlement Agreement dated 07.04.2017 was entered into between the parties. H. However the Corporate Debtor has failed to make payment to the Financial Creditor under the Award/Settlement agreement dated 07.04.2017. According to the said settlement agreement the financial creditor was entitled to recover ₹ 87,73,41,875 on or before 07.04.2017, ₹ 89,40,43,836 on or before 30,09.2017, ₹ 95,05,74,272/- on or before 28.02.2018 failing which the overdue shall carry interest @ 14% p.a. till the date of actual payment. I. That in acceptance of the Award/Settlement agreement, a payment of only ₹ 65,00,00,000 was received on 11.04.2017. 2. I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... increasing) therefore cannot carry interest, and in present case the amount carry interest: A company cannot buy its securities until authorized by its Articles of Association - Section 68(2) (i) Companies Act 2013. Ambience Project and Infrastructure Private Limited does not have power to buy back under its Articles of Association. 5. That the respondents in its written submissions have submitted that according to Section 5 (8), the disbursal has to be against the consideration for the time value of money. The disbursal means initial disbursal and not subsequent event making it payable with interest. That the Financial Creditor disbursed the amount to M/s. Ambience Projects Infrastructure Pvt. Ltd. under Shares Subscription-Cum-Shareholder Agreement dated 28.05.2011. That according to the said agreement, the Developer, M/s. Ambience Pvt. Ltd. (APL), the Promoter Mr. Raj Singh Gehlot (RSG) and the Investor predecessor in interest of the Financial Creditor agreed to make investments in SPV, M/s. Ambience Projects Infrastructure Pvt. Ltd. (APIPL) for funding the SPV for utilizing and acquisition of project land and for other purposes. Therefore, the agreement entered int ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r 3, 2011 an Amendment Agreement has been entered into in relation to the agreement dated 28.3.2011 wherein it is seen that certain clauses have been amended including that of definition of 'IRR' as contained in the initial agreement of 28.03.2011. It is also seen from the said agreement that the Investor/Petitioner had agreed to invest inter alia in 13,49,36,343 unsecured optionally convertible debentures of ₹ 10/- defined as Investor Debentures, however without any guaranteed coupon rate which is left to the approval of the Board. 8. A second amendment agreement seems to have been entered into on 07.02.2012 making the Promoter/Developer to complete the project within 12 months from the closing date. Now coming to the Settlement Agreement entered into as between the parties that by virtue of clause (G) as contained in the recital portion, the following investments have been made: As on the Execution Date, Investor is the legal and beneficial owner of 9,800 ordinary Equity Shares and 10,000 Class A Equity Shares of the SPV ( Investor Shares ). The Investor is also the beneficial owner of 13,49,36,343 Unsecured Optionally Convertible Debentures of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Developer shall pay simple interest @ 14% per annum to the Investor, subject to deduction of Tax at source at applicable rates, with effect from the respective due dates till the actual date of payment. (c) The Investor shall simultaneously with the receipt of the amounts due and the outstanding interest as aforesaid, transfer the Investor Securities to the Promoter and/or Developer and/or their designated nominees as per applicable laws in the following manner:- (i) On payment of ₹ 65,00,00,000/-(Rupees Sixty Five Crore only) and the interest due by the 7th April, 2017, the Investor shall simultaneously with the receipt of the amount, transfer the following ordinary Equity Shares and class A Equity Shares in favour of the Promoter and/or Developer and/or their designated nominees, and the SPV shall record such transfer. Also 43,854,311 of Investor Debentures in the SPV shall stand redeemed by the SPV, 3,185 ordinary Equity Shares held by the Investor; 3,250 Class A Equity Shares held by the Investor; and 43,854,311 Investor Debentures. ₹ 21,13,92,540/- (Rupees Twenty One Crore Thirteen Lakh Ninety Two Thousan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... esponsible, at their costs and expenses, for making necessary applications, executing documents and obtaining approvals as may be required for repatriation of the Amount Due and Outstanding Interest to the Investor. 2.3 The Parties hereby agree that they shall execute such further documents and writings as may be necessary or required to give effect to the transaction/s contemplated by this Agreement including for sale and purchase of investor Securities. 9. Keeping the original Agreement dated 28.03.2011 as well as subsequent agreements dated 28.05.2011 and 07.02.2012 and the Settlement Agreement, it is evident that apart from the unsecured loan amounts, instalment payments has also been agreed for return of securities by way of shares and debentures. 'Financial Debt' under IBC.2016 has been defined under sub-section (8) of Section 5, which is as follows:- '5(8) financial debt means a debt along with interest, if any, which is disbursed against the consideration for the time value of money and includes- (a) money borrowed against the payment of interest; (b) any amount raised by acceptance under any acceptance credit facil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icularly in relation to 'Investor Debentures', whether any coupon rate is prescribed or not comes within the 'financial debt'. Further as observed from Share Subscription-Cum-Shareholders Agreement executed on 28.05.2011, at clause 12.3 (a), the clause mentions in case of event of default total investor contribution to be returned with 20% IRR being the time value of money even though subsequently left to the discretion of the Board unanimously by way of amendment agreements and subsequent to which the parties have also settled, and a settlement agreement is also entered into amongst the parties according to which, an amount of ₹ 65 Crores has already been deposited by the respondent and further according to the said settlement agreement the financial creditor was entitled to recover in terms of clause 2.2 of Article 2 of the Settlement Agreement of the specified amount at 6% per annum within the specified time period of ₹ 87,73,41,875 on or before 07.04.2017, ₹ 89,40,43,836 on or before 30.09.2017, ₹ 95,05,74,272/- on or before 28.02.2018 failing which the overdue shall carry interest @ 14% p.a. till the date of actual payment. 11. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 5(8) of the Code and that the Applicant has rightly invoked the provisions of the Code. From the Application filed it is seen that the Applicant has named an interim resolution professional in Part III of its Application whose details are as follows: Mr. Sandeep Chandana Reg. No. IDDI/IPA-002/IP-N00447/2017-18/11237 R/O. HOUSE NO. 23, GROUND FLOOR, A-BLOCK, SOUTH CITY 2, GURUGRAM, HARYANA 12. It is also seen from the Application that the above named IRP has given a written consent in Form 2 wherein he has agreed to accept appointment as an IRP, if Application is admitted. Certificate of registration of the IRP as issued by the Insolvency and Bankruptcy Board of India (IBBI) self attested has also been enclosed along with the Application by the proposed IRP and taking into consideration all the above, this Tribunal finds that this is a fit case to be admitted in terms of Section 7 of the Code and thereby initiate corporate insolvency resolution process as against the Corporate Debtor with the following consequences: a. Mr. Sandeep Chandana, having Registration No. IDDI/IPA-002/IP N00447/2017-18/11237 proposed by the Financial C ..... X X X X Extracts X X X X X X X X Extracts X X X X
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