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TMI Blog2019 (7) TMI 1641X X X X Extracts X X X X X X X X Extracts X X X X ..... that leaves no doubt, that he (the director) has due authority to represent the Corporate Debtor. Therefore, the plea raised by the Corporate Debtor with regard to the Board resolution for obtaining loan from the Applicant is misdirected, the same stands rejected. Legally enforceable debt or not - HELD THAT:- In the case on hand, the Respondent/Corporate Debtor did not deny the signature, thus the presumption under Sec. 139 would operate. The Respondent failed to rebut the presumption by adducing any cogent or credible evidence. In addition to this a.pronote has also been executed by the managing director viz., Senthil kumar on 21-2-2017. Therefore, the Applicant has proved his case by over-whelming evidence to establish his claim based on acknowledgment/confirmation letter and pro-note, both dated 21-2-2017 and Cheque dated 12-6-2017 [along with 'Cash Book'] that are admissible in evidence which were issued by the Corporate Debtor towards the discharge of an existing liability and legally enforceable debt. This authority takes judicial notice that during the pendency of this Application, the Resolution Plan came to be approved by the CoC, which has been filed before ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed the same vide letter of rejection dated 30-4-2019. The reasons for rejection as stated in the said letter are as follows: There are no documentary evidence for having paid the amount of ₹ 5,10,72,990/- (₹ 3 Crores principal and balance claimed as interest) to the Corporate Debtor. All payments are reportedly in cash. The financial statements of the company do not reflect the borrowings. There is no duly signed loan agreement or contract. The claimant says he has been paying sums despite no repayment coming up and no interest payment made by the borrower. Claimant has not cared to get prior authorization or approval from the board of directors by way of a resolution approving such huge borrowings. Therefore, the RP is unable to admit the claim of Mr. Jonathan Mouralidarane for ₹ 5,10,72,990/- in the absence of acceptable evidence of the money having been brought into the accounts of the Corporate Debtor. Therefore, the Resolution Professional hereby determine the claim of Mr. Jonathan Mouralidarane, as financial creditor, after having regard to all records and information made available, clarifications called for, after having give him opportunity to p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d any benefit and the Applicant has not produced any original documents till date. 10. The Resolution Professional has also submitted in the reply that the Applicant has not produced any income tax return to demonstrate the source of such loan, actual disbursal of such loan and accounting of such loan in books of the Applicant. It is further stated that the only document relied upon by the Applicant is his cash register (Cash Book). This cash register is not supported by return of income, audited accounts, statement of account and it is sealed with seal of a Chartered Accountant without any details stated therein about the nature of certification, purpose of certification and who is responsible for such certification. 11. Based on the pleadings of the parties and the oral submissions made, the issues involved in the present application are framed as follows: i. Whether the Authorized Representative/Power Agent is legally entitled to argue on behalf of the Applicant? ii. Whether the non-filing of the income tax return by the Applicant disentitles him to claim the re-payment of the loan advanced? iii. Whether the non-compliance with FED master direction No. 6/2015-16 d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e authorized representative of the Applicant has referred to the judgment of the Hon'ble Supreme Court given in Harishankar Rastogi v. Girdhari Sharma [1978] 2 SCC 165 wherein, the Hon'ble Supreme Court had granted permission to the petitioner to be represented by a private person as was prayed for. 15. It is worthwhile to mention that as per the provisions of Section 32 of the Advocates Act, 1961, the court/Tribunal has the Power to permit any person not enrolled as an advocate under the Act, to cause appearance in particular cases. For the sake of convenience the provisions of Section 32 of the Advocate Act, 1961 are extracted below: 32. Power of Court to permit appearances in particular cases.-Notwithstanding anything contained in this Chapter, any court, authority, or person may permit any person, not enrolled as an advocate under this Act, to appear before it or him in any particular case. 16. It is noted that in K. Anand's case (supra), cited by learned Sr. Counsel for the Respondent the provisions of Section 432 of the Companies Act, 2013 and Rule 45 of the National Company Law Tribunal, Rules 2016 were not the subject matter of interpretation before t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gs to the income tax department. In the opinion of this court, after having obtained a loan, it does not behove of the debtor to repudiate on the ground that the creditor had earned the money through illegal means. In other words, after having borrowed from a compassionate harlot, can the borrower deny the repayment of loan on the ground that she had earned the money immorally and illegally? The answer to this question can only be an emphatic No and nothing else. In short, a thief is not entitled to legitimately rob a dacoit. The case cited above contains similar set of facts and circumstances as are involved in the case on hand. Therefore, this authority relies upon the observations made by the Hon'ble High Court of Madras in the above noted case, on the issue under reference. The Corporate Debtor after availing the loan, cannot take the plea that the Applicant has not produced any income tax return to demonstrate the source of loan. In this connection this authority also relies upon on the judgment given by Hon'ble High Court of Madhya Pradesh, in Smt. Ragini Gupta v. piyush Dutt Sharma. [2020] 116 taxmann.com 354 In the light of the above, the plea taken by the Cor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and such action on the part of the company being in violation of the prohibition is contrary to law. The Hon'ble Apex court had further held that when the receiver held the scrips and the transfer forms, it was not open to the persons in whose names the shares originally stood to exercise rights to ownership in respect thereof or to transfer their ownership to anyone else. In view of it, the Hon'ble Supreme Court while interpreting the provisions of Section 108 of the Act, 1956 held that the said provisions are mandatory. It is seen that the case law cited by the Sr. Counsel has no relevance with the issues involved in the present case. Therefore, the same cannot be made applicable to the facts and circumstances of the case on hand. 21. Further, if the arguments of the learned Sr. counsel for the Respondent have any relevancy with case on hand, then it is the company (Corporate Debtor), which has failed to comply with the said direction issued by the RBI and the acceptance of the loan by the Corporate Debtor from the Applicant is the culpability attributable to the Corporate Debtor. It is settled proposition of law that no one can be allowed to reap the benefit of his o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s violation of said direction, the transactions do not become void, the non- compliance with the direction will entail penalty, if any. It is important to note that the loan transactions took place between the Applicant and the Corporate Debtor with effect from 5-3-2014 to 21-2-2017 and the Corporate Debtor had never raised any issue of such violation with the Applicant. Further, it is necessary to place on record that the Corporate Debtor has not pleaded anything in its counter with regard to the violation of the Foreign Exchange Management Act. In view of the discussion made, the cash transactions between the Applicant and the Corporate Debtor do not involve any violation of FED master direction No. 6/2015-16 dated January 1, 2016 issued by the Reserve Bank of India, as contended. Accordingly, the issue no. iii stands decided in favour of Applicant and against the Respondent. 23. In relation to the issue No. iv, the Respondent would contend that there is no document to substantiate the claim of the Applicant. There is a demand promissory note dated 21-2-2017 for ₹ 3 Crores and there is no common seal affixed on it, there is no board resolution authorizing such borrowing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the said document clearly provides that the loan was taken with the consent of all the Directors of the Corporate Debtor. For the sake of convenience the relevant portion of the acknowledgment/confirmation letter 21-2-2017 is extracted as follows;- I have borrowed various amounts from you on various dates since 2014 for the business of M/s. PRC International Hotels Pvt. Ltd and on behalf of M/s. PRC International Hotels Pvt. Ltd agreeing to pay interest thereon and as on this date the total amount due by us to you is ₹ 2,50,00,000/- (Two Crore and fifty Lakhs Only). Today we have received a further sum of ₹ 50,00,000/- (Fifty Lakhs Only) by cash from you and as on this date M/s. PRC International Hotels Private Limited owns you a total sum of ₹ 3,00,00,000/-(Three Crores only). All the borrowings are made for the business of M/s. PRC International Hotels Pvt. Ltd with the knowledge, consent and permission of the other directors. Today I have executed a new Pronote for the total amount if ₹ 3,00,00,000/-(Three Crore Only) in capacity as the Managing Director of M/s. PRC International Hotels Pvt Ltd agreeing to pay principle together with interest at ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... held that under Section 139 of the N.I Act, once a cheque has been signed and issued in favour of the holder, there is statutory presumption that it is issued in discharge of a legally enforceable debt or liability. This presumption is a rebuttable one, if the issuer of the cheque is able to discharge the burden that it was issued for some other purpose like security for a loan. In the case on hand, the Respondent/Corporate Debtor did not deny the signature, thus the presumption under Sec. 139 would operate. The Respondent failed to rebut the presumption by adducing any cogent or credible evidence. In addition to this a.pronote has also been executed by the managing director viz., Senthil kumar on 21-2-2017. Therefore, the Applicant has proved his case by over-whelming evidence to establish his claim based on acknowledgment/confirmation letter and pro-note, both dated 21-2-2017 and Cheque dated 12-6-2017 [along with 'Cash Book'] that are admissible in evidence which were issued by the Corporate Debtor towards the discharge of an existing liability and legally enforceable debt. Accordingly, issue No. iv is decided in favour of the Applicant against the Respondent. 29. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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