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TMI Blog2021 (2) TMI 787X X X X Extracts X X X X X X X X Extracts X X X X ..... lue of money. From the careful perusal of the definition of Financial Debt, makes it clear that a debt will not become financial debt if it was not advanced for time value money. The letter dated 03.04.2016 at annexure D and the various balance sheets relied upon by the Petitioner makes it abundantly clear that there is no interest payable on the loan advanced by the Petitioner. Apart from the above, no time is fixed for repayment in the absence of which it cannot be said that the loan was lent for time value money. Thus, there should be no hesitation in holding that the above amount claimed in the above Petition does not fall under the definition of financial debt and the above Company Petition is liable to be dismissed. Petition dismissed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion of the Applicant from the board of directors of the Respondent and upon a demand thereafter being made for the same, the Respondent would immediately repay the said loan back to the Applicant without any demur or delay. 4. The said loan has been admitted and acknowledged by the Respondent by the same has being shown under the caption of unsecured loans for Directors in its Audited Annual Accounts of the Respondents for the year ended 31st March, 2016 and for the year ended 31st March, 2018. The loan is also reflected in the extract of the ledger account of the Respondent for the period from 16th February, 2016 to 29th March, 2016 i.e. when the said loan was received. Thereafter the confirmation of accounts was issued by the Respondent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... led reply contending as below: a. The liability created is a mere book entry and not by infusion of any funds, provision of goods or services. b. Liability created in favour of Mr. Dinesh Changela, is in violation of FEMA. As per Indian regulation, one cannot make payment of foreign supplier to another non-resident in Indian Currency. c. Absence of disclosure of related party transactions as required by ICAI, questions the transaction entered in the accounts about creation of creditors. d. Mr. Dinesh Changela without provding any goods or services, became creditor of the company by merely passing the journal voucher amounting ₹ 269,81,499.65/-. e. Payments made to Mr. Dinesh Changela for clearing its creditor outstanding, is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ela is correct and any payment is not on account of siphoning of money or transfer of money in violation of FEMA. i. Absence of disclosure of related party transaction as required by ICAI, questions the transaction entered in the accounts about repayment of creditors. j. In nutshell, loans received from Mr. Dinesh Changela was against the payment entries made for creditors created by book entry in financial year 2010-11. Under no circumstances the money advance as loan were from free funds but the source of advances made were technically to convert the questionable sundry creditors created in 2010-11 into unsecured loans. 10. We have carefully gone through the pleadings on record and heard the submissions made by the counsels on both s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... "12. There is nothing on the record to suggest that 2nd and 3rd Respondents had given the loan in favour of the 'Corporate Debtor' which can be termed to be 'disbursement of an amount for consideration for the time value of money' as required under Section 5(8). Merely grant of loan and admission of taking loan will ipso facto not treat the 2nd and 3rd Respondents as 'Financial Creditors', till they show that it complies with the substantive definition or any one or other clause of Section 5(8). 13. Mere fact that the company paid interest @ 12% per annum, during certain period cannot be the ground to hold that the 'debt' comes within the meaning of 'Financial Debt' to treat the 2nd and 3rd Respondents as 'Financial Creditors'. As we fi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t to be constituted under financial debt should be disbursed against time value of money as per the law laid by the Hon'ble Supreme Court in the matter of Innoventive Industries Ltd. v/s. ICICI Bank and Another, AIR 2017 SC 4084. In the present case the Petitioner has failed to produce on record any document to show that the amount which is actually given to the Corporate Debtor for interest i.e. loan disbursed against the time value of money. 13. From the careful perusal of the definition of Financial Debt and the above case laws relied upon by the Corporate Debtor makes it clear that a debt will not become financial debt if it was not advanced for time value money. The letter dated 03.04.2016 at annexure 'D' and the various balance sheet ..... X X X X Extracts X X X X X X X X Extracts X X X X
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