9911796707
TMI Blog2021 (1) TMI 717X X X X Extracts X X X X X X X X Extracts X X X X ..... s undisputed that the Corporate Debtor owes more than 1 lacs and committed default in repaying the same. Thus, it is clear that when a default takes place, and debt becomes due and is not paid, the Insolvency Resolution Process begins. Non-payment of debt, once it becomes due and payable, is considered a default under Section 3(12) of the Code. It is further held that the Adjudicating Authority is satisfied that default occurs, the Application must be admitted unless it is incomplete. In the instant case, the amount of 25 lacs was given as inter-corporate loan to the Corporate Debtor for 90 days which was repayable with interest @ 15% per annum. It is also clear that the Corporate Debtor has not paid the amount due and more than 1 lac. The Application is complete. Therefore, the Adjudicating Authority was justified in admitting the petition. Appeal dismissed. X X X X Extracts X X X X X X X X Extracts X X X X ..... tion under Section 7 can be admitted. The date of default is crucial to determine the date on which the cause of action accrued. A bare reading of Form-I shows that no date of default has been mentioned. An incomplete Application, such as in the instant case, could not have admitted by the Adjudicating Authority. 4. We have heard the arguments of the Learned Counsel for the parties and perused the records. 5. Learned Counsel for the Appellant vehemently argued that Financial Creditor has failed to establish any financial contract between the parties. The oral agreement and payment of TDS cannot be treated as sufficient to prove the transaction as financial debt. 6. The alleged transaction can be treated as financial debt, or not can be analysed from on the nature of the contract. Section 5(7) define Financial Creditor, which is as under: "Section 5(7) "Financial Creditor" means any person to whom a financial debt is owed and includes a person to whom such debt has been legally assigned are transferred to. Section 5(8) "Financial Debt" means a debt along with interest, if any, which is disbursed against the consideration for the time value of mo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the premises, the Corporate debtor has committed default, as on 20th January 2018 for sum of ₹ 28,03,083/- only and a copy of the Financial Ledger of the Applicant company, in the name of the debtor company, as on 20th January 2019 is annexed hereto marked with "Annexure11." 13. Thus, it is clear that the Appellants argument that the date of default is not mentioned in the Application is contrary to the fact of the case. Learned Counsel for the Appellant further emphasises that Financial Creditor has disbursed loan. But its certificate of registration does not authorise to accept the public deposit. Appellant has filed the photocopy of registration certificate issued by the Reserve Bank of India. 14. On perusal of the above certificate, it appears that it is registered as a Non-Banking Financial Institution but is not authorised to accept public deposits. The alleged inter-corporate loan for a short period of 90 days repayable with a 15% per annum cannot be treated as a public deposit. Therefore, the objection of the Corporate Debtor in this regard is without any basis. 15. The Learned Counsel for the Corporate Debtor laid much emphasis on the question of defaul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) which defines "claim" to mean a right to payment even if it is disputed. 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. 28. When it comes to a financial creditor triggering the process, Section 7 becomes relevant. Under the Explanation to Section 7(1), a default is in respect of a financial debt owed to any financial creditor of the corporate debtor - it need not be a debt owed to the applicant financial creditor. Under Section 7(2), an application is to be made u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... operational creditor the existence of a dispute or the record of the pendency of a suit or arbitration proceedings, which is pre-existing-i.e. before such notice or invoice was received by the corporate debtor. The moment there is existence of such a dispute, the operational creditor gets out of the clutches of the Code. 30. On the other hand, as we have seen, in the case of a corporate debtor who commits a default of a financial debt, the adjudicating authority has merely to see the records of the information utility or other evidence produced by the financial creditor to satisfy itself that a default has occurred. It is of no matter that the debt is disputed so long as the debt is "due" i.e. payable unless interdicted by some law or has not yet become due in the sense that it is payable at some future date. It is only when this is proved to the satisfaction of the adjudicating authority that the adjudicating authority may reject an application and not otherwise." (emphasis in bold supplied) 19. Thus, it is clear that when a default takes place, and debt becomes due and is not paid, the Insolvency Resolution Process begins. Non-payment of debt, once it becomes d ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
