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TMI Blog2021 (2) TMI 901X X X X Extracts X X X X X X X X Extracts X X X X ..... re must be a subsisting debt. After all, the word default is like not doing something which one should do. In fact, the term default refers to an omission or failure to perform a legal or contractual duty. Suffice it to point that the word default , applies to a sum of money which was promised at a future date as against a sum now due and payable. It cannot be forgotten that Section 5(8) of the Insolvency Bankruptcy Code speaks of time value and these words are interpreted to mean compensation or the price paid for the length of time for which the money was disbursed. An existing obligation to pay a sum of money is the sine qua non of a financial debt . The Financial Creditor has a right to financial debt . Thus, the essence of any debt to be mentioned as financial debt is the time value of money , as borrowing money is for monetary transaction - To determine the plea of occurrence of default is the debt which must be due and become payable. An existence of debt and default are to be met for admission of an Application under section 7 of the Insolvency and Bankruptcy Code. A Debt is/was recoverable from the Corporate Debtor . There is no second opinion of an important fact that dis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... - the Adjudicating Authority (National Company Law Tribunal, New Delhi Bench-V) is directed to restore the Company Petition filed by the Appellants / Financial Creditors / Petitioner (under Section 7 of the Insolvency Bankruptcy Code ) to its file and admit the same and to proceed further in accordance with Law. X X X X Extracts X X X X X X X X Extracts X X X X ..... dy held in the matter of Satish Chand Gupta vs. Servel India Private Limited (IB) 1886 (ND)/2019 and the present case is also covered with this decision, therefore, we are of the considered view that though the applicants have some other remedy under the law to recover the amount which they have deposited with the Corporate Debtor but so far initiation of the Section 7 of the IBC is concerned for the reasons discussed above, the present application is not maintainable, accordingly, we hereby, reject the prayer of the applicants to initiate the proceedings under Section 7 of the Code." and ultimately dismissed the Application, granting liberty to the Appellant to file an appropriate Application under Chapter V of the Companies Act, 2013. APPELLANT'S SUBMISSIONS: 3. According to the 'Appellant'/Financial Creditors' of the 'Respondent/Corporate Debtor', and Application for initiation of 'Corporate Insolvency Resolution Process' (herein after referred to 'CIRP') under Section 7 of the 'Insolvency & Bankruptcy Code, 2016 (herein after referred to IBC 2016) was filed against the 'Respondent/Corporate Debtor' by the 'Appellant' & other 'Financial Creditors' for a default of ₹ 16 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n favour of the 'Investors', but also failed to pay the amount payable on maturity together with 'interest' and 'Assured return'. Because of the failure of the 'Respondent'/'Corporate Debtor' to offer allotment of land or pay the principal amount along with interest, resulted in default, thus leading to the filing of the Application before the 'Adjudicating Authority' (National Company Law Tribunal), New Delhi. Besides this, the refusal of the 'Respondent'/'Corporate Debtor' to honour the 'Promissory Notes' issued by it in lieu of 'Assured' returns' clearly demonstrates the 'Respondent'/'Corporate Debtor's inability to repay its admitted debts. 6. The Learned Counsel for the 'Appellant' contends that the 'Adjudicating Authority' by the 'Impugned Order' dated 12.3.2020 had rejected the 'Application'/'Petition' of the 'Appellant' on the basis that the claim of the 'Appellant' does not come within the ambit of Sec.5(8) of the Insolvency & Bankruptcy Code, 2016 or any Clause(a) to (i), because of the fact that all the Applicants therein is that they deposited the said amount under 'scheme' and they had not given 'Debt' to the 'Corporate Debtor', in as much as they are entitled to get ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t include such categories of amount as may be prescribed in consultation with the RBI". Appellant's Case Laws: 13. The Learned Counsel for the 'Appellant' cites the decision of Hon'ble Supreme Court in Innoventive Industries Ltd. V ICICI Bank & Another, reported in (2018) SCC 407, wherein it is observed that the Insolvency & Bankruptcy Code over rides other Laws and the 'Claim' included 'Disputed Claims' and the 'Insolvency Process' is triggered the moment the 'default' is committed. 14. The Learned Counsel for the 'Appellant' refers to the judgement of this Tribunal, in Nikhil Mehta & Sons V AMR Infrastructure Ltd. (2017 SCC Online NCLAT 377), wherein it is held that money disbursed against 'time value of money' is a 'Financial Debt'. 15. The Learned Counsel for the 'Appellant' refers to the judgement of this Tribunal, in Ms.Anju Aggarwal V Bombay Stock Exchange & Others reported in (2019 SCC Online NCLAT P 789) wherein it is observed and held that Section 28A of the 'SEBI Act, 1992', being inconsistent with Section 14 of the 'Insolvency & Bankruptcy Code' will prevail over Section 28A of the 'SEBI Act, 1992' etc. 16. In support of the proposition that collective investments ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al' that the investments made by them under the 'Schemes of the Corporate Debtor' matured in the year 2017-2018. But the 'Respondent'/'Corporate Debtor' failed in its commitment to offer the allotment and/ or the possession of the plots of land as promised by it or pay the 'Assured Returns' or repay the amounts collected by it along with interest on the maturity of the schemes. Hence, Joint Application under Section 7 was filed by the 'Financial Creditors' before the 'Tribunal'. 21. According to the 'Appellant, the total amount claimed to be due was ₹ 16,28,300/- (Rupees Sixteen Lakhs Twenty Eight Thousand and Three Hundred only) which includes a sum of ₹ 13,70,000/- (Rupees Thirteen Lakhs Seventy Thousand only) towards the amount payable by the 'Corporate Debtor' at the maturity of the schemes invested in by the 'Financial Creditors' and ₹ 2,58,300/- (Rupees Two Lakh Fifty Eight Thousand Three Hundred only), towards interest at the rate of 12% per annum from the date of expiry of the term under the Certificates till October 2019. 22. The clear-cut stand of the 'Appellant' is that the 'Adjudicating Authority' (National Company Law Tribunal) had failed to take in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Bankruptcy' Code speaks of 'time value' and these words are interpreted to mean 'compensation' or the 'price paid for the length of time for which the money was disbursed. An existing obligation to pay a sum of money is the sine qua non of a 'financial debt'. The 'Financial Creditor' has a right to 'financial debt'. Thus, the essence of any debt to be mentioned as 'financial debt' is the 'time value of money', as borrowing money is for monetary transaction. 29. To determine the plea of 'occurrence of default' is the debt which must be due and become payable. An existence of 'debt' and 'default' are to be met for 'admission' of an 'Application' under section 7 of the 'Insolvency and Bankruptcy' Code. A 'Debt' is/was recoverable from the 'Corporate Debtor'. 30. It is relevant to point out that a 'deposit' is more than a loan of money. Significantly, 'deposit' is given at the instance of an individual who is making a deposit. Under the Companies Act, 2013, the powers of 'Tribunal' are of wide amplitude. Rule 17 of 'Companies (Acceptance of Deposits) Rules, 2014' provides that a Company shall be liable to pay penal interest' at 18% p.a. to the 'depositor', if there is any failure to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the ambit of definition of 'Financial Debt' and the contra conclusions arrived at by the 'Adjudicating Authority' (National Company Law Tribunal, New Delhi Bench-V) to the effect that 'the amount which the applicants deposited does not come under the definition of 'Debt' and further that it was unable to accept the contention of the applicants that there was a default in payment of debt, are incorrect, invalid and the same is set aside by this 'Tribunal' to secure the ends of justice. Likewise, the other observation made by the 'Adjudicating Authority' in the impugned order that the applicants are at liberty to file an appropriate application under Chapter V of the Companies Act, 2013 is also set aside. Resultantly, the 'Appeal' succeeds. 35. In fine, the present 'Appeal' is allowed. However, there shall be no order as to costs. The 'Impugned Order' of the 'Adjudicating Authority' (National Company Law Tribunal, New Delhi, Bench-V) dated 12.3.2020 passed in C.P.No.(IB)2978/(ND)/2019 is set aside by this 'Tribunal' for the reasons ascribed in the instant 'Appeal'. 36. As a logical corollary, the 'Adjudicating Authority' (National Company Law Tribunal, New Delhi Bench-V) is direct ..... X X X X Extracts X X X X X X X X Extracts X X X X
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