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TMI Blog2017 (7) TMI 1364X X X X Extracts X X X X X X X X Extracts X X X X ..... in this Code. This case is a befitting examples that if presumably the Petition is allowed, then the consequential insolvency commencement shall not take place because the Committee of Creditors having only two Creditors i.e. Father and Son, shall not approve the commencement of the Insolvency Resolution. The exception as carved out in the First Proviso is therefore logical hence to be adhered strictly. In the given situation we are not inclined to expand the scope of this Proviso by holding that a Director can be treated as a Financial Creditor so as to be allowed to participate in Committee of Creditors in that capacity. Without going into other allegation of the Respondent Company challenging the signatures of the Petitioner, authority given by the Petitioner to his younger Son, hospitalization of the Petitioner, etc., we are of the conscientious view that on technical ground itself the Petition is not allowed to be admitted - Petition dismissed. - TCP No. 411/IBC/NCLT/MB/MAH/2017 - - - Dated:- 7-7-2017 - M.K. Shrawat, Member (J) And Dr. Ashok Kumar Mishra, Member (T) For the Appellant : Rabindra Hazari, Advocate For the Respondent : S.K. Jain, Authorised Repr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... khs, a sum of ' 27 lakhs was repaid, thus the outstanding principal debt amount remained ' 38 lakhs (Thirty Eight Lakhs only). The Financial Creditor has further claimed 18% interest per annum on the outstanding principal debt amount of ' 38 lakhs from 27.04.2016 to 26.05.2017. e) The Annual Report of the Corporate Debtor for 2012-2013 and 2013-2014 containing the Balance Sheet of the Corporate Debtor acknowledged the Long term borrowing of ' 30 lakhs from Mr. Vir Vikram Vaid. f) The audited Balance Sheet and Profit and Loss Account of the Corporate Debtor for the Financial Year ending 31st March 2015, was signed by Mr. Shaleen Vaid and by the Petitioner-Financial Creditor as the two Directors, acknowledged and admitted that an amount of ₹ 38 lakhs is due and owing as a debt and liability by the Corporate Debtor to the Financial Creditor as Long Term Borrowing from Mr. Vir Vikram Vaid. g) In the Petition it is alleged that Mr. Shaheen Vaid, the other Director of the Corporate Debtor, through his Advocate sent a reply dated 19th May 2016 to the Advocates of the Financial Creditor, wherein did not flatly deny the Corporate Debtor's liability to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rporate Debtor for the Financial year ending 31st March, 2015. 5. Learned Representative of the Respondent Company (Financial Debtor) has submitted that the Petitioner is hospitalised and his attorney holder has maliciously moved this Petition on his behalf. As a Director the Petitioner has advanced the money for business purpose and not as an Investor, therefore, the Petitioner is not a Financial Creditor; hence Petition deserves to be dismissed. Reliance was placed on the Affidavit in Reply as under:- I Shaleen v. Vaid, aged 37 years, residing at Bunglow No. 04, Shamniwas, Dr. C.G. Road, Chembur, Mumbai 400 074, Maharashtra, India, a.m. the Director of Respondent Company and being conversant with the facts of the Application filed by the Applicant above named, I am competent to file Reply to the Application filed by the Applicant on behalf of the Respondent Company. I hereby solemnly affirm and state as under :- The Applicant above named has filed the present Applicator under Section 7 of the Insolvency and Bankruptcy Code, 2016, read with Rule 4 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016 against the Respondent Company through M ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... understood the contents, he was incoherent . Annexed hereto and marked as Annexure A is the copy of Orders dated 11.01.2016 passed by Hon'ble High Court, Bombay It is therefore, humbly prayed that this Hon'ble Tribunal be prayed to dismiss the Application filed by the Applicant with exemplary cost. FINDINGS 6. As seen from the facts narrated hereinabove an interesting question had emerged that whether a Director who had invested money in his own Company can move a Petition seeking insolvency as Financial Creditor Second question to be answered is whether Father as an investor has an alternate remedy under any other provisions of Law Most of the facts are not in dispute that the Company (Respondent 1) is promoted by two Directors namely Mr. Vir Vikram Vaid (Father) having 1450 equity shares of ₹ 100 each aggregating to 93.55%; and Mr. Shaleen Vaid (son) holding 100 equity shares of ₹ 100 each aggregating to 6.5% shareholding. In addition to the two status viz-a-viz. Company, one as a Shareholder and two as a Director, they have third status as a Depositor. Father had made an investment or advanced a sum of ₹ 38 lakhs (outstanding balanc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that since it was described under the head long term borrowings in the books of accounts hence it can be presumed that the debt in question was actually a financial debt . It is worth to mention that this Code has serious consequences. A running concern is to be declared bankrupt or insolvent if insolvency process is commenced under this Code. Therefore, the judicial discipline requires to adopt a strict interpretation of the language used in the Code. As a result, there is no scope of any assumption or supposition. A financial assistance not having component of agreed rate of interest whether to be considered as 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. 9. There is one more angle to examine the correctness of the claim. The Code prescribes appointment of Committee of Creditors under section 21 of The Code, relevant portion reproduced verbatim below:- Committee of Creditors 21. (1) The interim resolution professional shall after collation of all claims received against the corporate debtor and determination of the f ..... X X X X Extracts X X X X X X X X Extracts X X X X
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