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TMI Blog2019 (10) TMI 1340X X X X Extracts X X X X X X X X Extracts X X X X ..... voluntarily waived or abandoned. Consent to suffer may be express or implied. Thus, in view of the terms and conditions of Time Share Membership, the Applicant is entitled for refund provided the applicant cancels his Time Share Membership within a period of 10 days from the date of enrolment as Time Share Member. The Applicant himself has waived his right and has consented expressly to the non-refund of Time Membership Fees. This shows the Applicant has the knowledge of risk and has voluntarily agreed for the Membership Fees which is not refundable. The person who himself voluntarily waived or abandoned his right cannot have any claim over it. Applicant does not fall within the category of Financial Creditor - Application disposed off. - IA 388 of 2019 in C.P. (I.B) No. 127/NCLT/AHM/2017 - - - Dated:- 9-10-2019 - Manorama Kumari, Member (J) And Chocklingram Thirunavukkarasu, Member (T) For the Appellant : Navin Pahwa, Sr. Advocate, Himani Chhabra For the Respondent : Zubin F. Bharada, Advocates ORDER Manorama Kumari, Member (J) 1.1 CP(IB)No. 127/2017 was filed by Asset Reconstruction Company (India) Limited under section 7 of the Insolvency and B ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ;s First Report to CoC dated 29th May, 2019 which shows that NLL's Time Share Members are placed in NLL's CoC. The aforesaid report is annexed with the IA which classifies the Applicant and other similarly placed creditors as Financial Creditors with total claim amount of ₹ 82,28,68,000/- with voting share of 5.90%. 3. It is further contented by the Applicant that later on, the IRP, without any sufficient reason and without any supporting statutory provisions, decided against the Time Share Members to disallow their representation, seat and voting rights in CoC as Financial Creditors. 4. It is further stated by the Ld. Counsel of the Applicant that since the IRP has already taken such decision, now the IRP is stopped from changing his own decision and has no authority to change his own decision and that too without even affording an opportunity of hearing to the Applicant and other similarly placed creditors. The Applicant submits that once the IRP has decided the status of the Applicant and the other similarly placed creditors to be that of financial creditors, the IRP does not have power and authority to unilaterally decide that the Applicant and the other sim ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d the contention of the Respondent IRP that claims of the Time Share Members are admitted provisionally. 6.1 The Applicant vide his affidavit dated 26.08.2019 submitted the following additional documents before this Adjudicating Authority: i Terms and conditions of Cambay Family Holidays Club RCI Membership. ii. Abstract of Balance Sheet of the Corporate Debtor as at 31.03.2009. iii. Order passed by Income Tax Appellate Bench, Chennai Bench-B in the matter of the Assistant Commissioner of IT/Deputy Commissioner of IT, Company Circle-4, Chennai vs. M/s. Mahendra Holidays Resorts India Limited., iv. Abstracts of report of TR Chaddha and Co., Auditors. 7. The Applicant in his submission dated 09.09.2019 has further stated that money extended by the Applicant and by other similar creditors to NLL is a kind of commercial borrowing for the Corporate Debtor. 8. Heard both sides at length, also seen the records/documents annexed with the IA as well as the additional documents submitted by the Applicant. This Adjudicating Authority, before making any decision/judgment in the present matter, would like to deliberate on the question, who is a Financial Creditor. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... terms as meaning non-payment of a debt once it becomes due and payable, which includes non-payment of even part thereof or an instalment amount. For the meaning of debt , we have to go to Section 3(11), which in turn tells us that a debt means a liability of obligation in respect of a claim and for the meaning of claim , we have to go back to Section 3(6) which defines claim to mean a right to payment even if it is dispute. The Code gets triggered the moment default is of rupees one lakh or more (Section 4). The corporate insolvency resolution process may be triggered by the corporate debtor itself or a financial creditor or operational creditor. A distinction is made by the Code between debts owed to financial creditors and operational creditors. A financial creditor has been defined under Section 5(7) as a person to whom a financial debt is owed and a financial debt is defined in Section 5(8) to mean a debt which is disbursed against consideration for the time value of money. As opposed to this, an operational creditor means a person to whom an operational debt is owed and an operational debt under Section 5(21) means a claim in respect of provision of goods or services. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... given complete insight to the correct interpretation of the financial debt. While upholding the judgment of NCLT, New Delhi, the NCLAT upheld the observations made by NCLT, New Delhi as contained in para 12 of its judgment. Relevant part of the said judgment read as under: 17. The first question arises for consideration is as to who is a 'Financial Creditor'. Learned Adjudicating Authority, for determination of the aforesaid issue examined the definition provided in Section 5(7) and 5(8) and in the impugned judgement rightly observed: - 12. A perusal of definition of expression 'Financial Creditor' would show that it refers to a person to whom a Financial debt is owed and includes even a person to whom such debt has been legally assigned or transferred to. In order to understand the expression 'Financial Creditor' the requirements of expression financial debt' have to be satisfied which is defined in Section 5(8) of the IBC The opening words of the definition clause would indicate that a financial debt is a debt along with interest which is disbursed against the consideration for the time value of money and it may include any of the events enu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion are sometimes used as devices for raising money. In a transaction of this nature an entity may require liquidity against an asset and the financier in return sell it back by way of a forward contract. The difference between the two prices would imply the rate of return- to the financier. 11. On perusal of the documents, it is amply clear that the amount paid as Time Share membership is only for claiming the services in future from NLL being Time Share Member. Section 3(1) defines 'Debt'. Debt means a liability or obligation in respect of a claim which is due from any person and includes a financial debt and an operational debt. Thus, in order to be 'debt', there ought to be a liability or an obligation in respect of a claim . Admittedly, as per terms and conditions of the Time Share Membership, the Applicant is entitled for refund provided the applicant cancels his Time Share Membership within a period of 10 days from the date of enrolment as Time Share Member. Knowing all the terms and conditions, the Applicant comes forward to become the Time Share Member, by making a onetime payment, which he knew, is non-refundable and in lieu thereof, he is assur ..... X X X X Extracts X X X X X X X X Extracts X X X X
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