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TMI Blog2019 (1) TMI 1813X X X X Extracts X X X X X X X X Extracts X X X X ..... evidence depicting clearly the payment was towards Interest. Under the provisions of the Income Tax Act either on payment or on accrual of interest it is the responsibility of the person to deduct TDS at the time of payment or on passing the credit entry as interest in its books of accounts. Keeping this provision of Income Tax Act in mind, the Debtor Company had deducted the TDS and issued a certificate on Form 26-AS, already furnished by the Petitioner as a part of the evidence. Because of this reason a conclusion can be drawn that the Respondent Company has unequivocally recorded the transaction in question as a Financial Liability. In the present case, the cause of action had arisen when the Debtor company had refused to return the loan. However, in the Civil proceedings the cause of action is in operation when the litigating parties file a suit of divorce. Both the legal proceedings are independent having no nexus with each other, therefore, can be independently adjudicated by two different judicial forum. This Bench is of the view that the transaction is within the definition of Financial Debt, hence the Petition u/s 7 deserves to be Admitted - Application admitted - moratori ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hereunder: Balance Debt Claim - as on 01.07.2017(cut-off date) Sr. No. Date Loan Amt. (₹) Amt. Returned Interest paid Outstanding Amount. 1. 20.12.2016 8,00,000 2. 21.12.2016 2,00,000 3. 22.12.2016 7,00,000 4. 26.12.2016 4,00,000 5. 27.12.2016 10,00,000 6. 29.12.2016 9,00,000 7. 30.12.2016 10,00,000 8. 31.12.2016 5,00,000 9. 13.01.2017 7,663 10. 15.03.2017 5,00,000 11. 03.04.2017 1,43,803 12. 28.08.2017 1,34,630 50,00,000 4. As there was no payment forthcoming, the Petitioner followed up with the Corporate Debtor continuously by way of SMS and email, but in vain. Therefore, on 11.10.2017, the Petitioner sent a legal notice to the Corporate Debtor demanding him to make the balance amount along with the interest for the quarter ended on 30.09.2017, however, the Corporate Debtor neither replied to the notice nor made any payment to the Petitioner. 5. In view of the above, the Petitioner felt that the Corporate Debtor become commercially insolvent and is not in a position to meet its liabilities. In the circumstances that the Corporate Debtor had claimed to have become insolvent and was not coming forward to settle the dues with the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... retain the amount. Although not connected with Insolvency proceedings, but informed that due to unlawful business by the Directors at one instance a director was arrested in Jan 18 by EoW, proof attached i.e. newspaper cutting. On the issue of Financial Debt attention was drawn that it was confirmed in the accounts that the amount was received as 'Short Term Borrowing'. Findings: 8. Both the sides have been heard at length. Case record is perused carefully along with the evidences as well as the case laws referred. Certain facts as discussed above are not in dispute and summarised hereinbelow with the purpose of addressing the claim and counter claim of both the sides. A Petition is filed in the capacity of a 'Financial Creditor' for a 'Financial Debt' of ₹50,00,000/- recoverable from the Corporate Debtor M/s. Shantai Exim Ltd. The impugned amount was paid in several tranches starting from 20.12.2016 and closing on 28.08.2017. As per the computation of the claim of debt, it is evident that a sum of ₹55,00,000/- was transferred up to 31.12.2016 to the account of the Debtor Company and thereafter ₹5,00,000/- were returned by the Debtor Company to the Petitioner on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rded in its books of accounts as 'Short Terms Borrowings', thus showing as a financial liability. iii. That the TDS was deducted as and when interest was paid. 8.3 An important fact is that the Respondent Company had undisputedly recorded in its books of accounts the impugned transaction under the head 'Liability'. Generally, in the books of accounts such type of loan liability is recorded in the Books of Accounts of the company under the head "Loans from Friends & Relatives". During the course of hearing a particular question was raised from the Bench to the Ld. Counsel of the Respondent that how this transaction was recorded in the books of accounts of the company? Ld. Counsel has candidly informed that transaction in question was undisputedly shown as a liability in the Accounts of the company. However, he has added that the recording in the books of accounts do not change the very nature of the transaction which was received from the Petitioner with an understanding that the amount was having the character of maintenance of his wife against matrimonial responsibility. In my opinion, an entry recorded in the books of accounts is to be narrated in the light of the surrounding ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he following manner: a. For September-December 2016 : on 13.01.2017 - ₹7,633/- b. For January-March 2017 : on 03.04.2017 - ₹1,43,803/- c. For April-June 2017 : on 29.08.2017 - ₹1,34,630/- d. For July-September 2017 - the payment of interest has not yet been received in spite of the due date being 01.10.2017. 6. That the TDS amount was also deducted from the interest payments and it is also on record. 7. That for the first quarter of 2017, you had made the interest payment on time. However, for the second quarter (April-June), your cheque for payment of interest had returned uncleared when it was first deposited in the month of July because you had stopped the payment on the said cheque. 8. It was only on 28th August that the cheque was again deposited by our client and it got cleared and the payment was released. 9. That our client, vide e-mails & telephonic communications starting from June 2017, had intimated you time and again that he needs his money back and requested you to pay back the entire amount at the earliest." 8.5 The issuance of this Notice-cum-Letter is a clear evidence that since inception the Petitioner was under the impression th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s that, quote "A financial debt is to be examined in the light of the definition that a Financial Debt means a Debt along with interest which is disbursed against the consideration for the time value of money" unquote. The law pronounced in that decision has a persuasive value hence to be applied on the facts of the present case to arrive at a correct decision. In my humble opinion, the condition requisite to declare a transaction as a financial debt has duly been accomplished in this case, therefore, without hesitation it is hereby declared that the transaction was within the definition of Section 5(8) "Financial Debt" of the Insolvency Code. 9. On the other hand, from the side of the Petitioner a reliance was placed on the decision of the respected NCLAT pronounced in the case of "Nikhil Mehta and Sons v. AMR Infrastructure Ltd." dated 21.07.2017 bearing No. Company Appeal (AT) (Insolvency) No. 7 of 2017, wherein an observation was made as under:- "11. According to Appellants they are the "Financial Creditors" of the Respondent, and the Respondent was deducting TDS on the amount which it was paying to the Appellants as Committed returns/Assured Returns under Section 194(A) of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e consent of the IRP viz. Mr. Ajay Kumar, 103, A.S. Dia Building, 1st Floor, 268/272, Dr. Cawasji Hormasji Street, Marine Lines, Mumbai - 400 002, email: [email protected], Reg. No.: IBBI/IPA-002/IP-N00139/20172018/10377. His appointment is confirmed as Interim Resolution Professional to carry-out the functions as mentioned under Insolvency & Bankruptcy Code. 12. On perusal of the documents placed and the reasons given above, this Bench being satisfied that the Debtor company defaulted in paying its debt to the Operational Creditor, hereby admits this Petition by imposing 'Moratorium' as follows ;- I (a) the institution of suits or continuation of pending suits or proceedings against the corporate debtor including execution of any judgment, decree or order in any court of law, tribunal, arbitration panel or other authority; (b) transferring, encumbering, alienating or disposing of by the corporate debtor any of its assets or any legal right or beneficial interest therein; (c) any action to foreclose, recover or enforce any security interest created by the corporate debtor in respect of its property including any action under the Securitisation and Reconstruction of Financia ..... X X X X Extracts X X X X X X X X Extracts X X X X
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