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TMI Blog2021 (3) TMI 62X X X X Extracts X X X X X X X X Extracts X X X X ..... rate debtor. He further stated in the reply that the financial creditor has not released the entire loan amount. He further stated in paragraph 7(l) of the reply that in the sanction letter dated January 23, 2019 (in clause 15) it is mentioned that bullet payment of entire loan at the end of six (6) months from the debt of disbursement, hence the corporate debtor has not committed the default in repayment and so there is no default in repayment of loan. Mere plain reading of the provision show that under section 7 of the Insolvency and Bankruptcy Code, 2016, the Adjudicating Authority to see whether there is a financial debt and default has occurred in repayment of that debt or not, the application is complete or whether any disciplinary proceedings is pending against the proposed RP or not. So far dispute is concerned like section 9 of the Insolvency and Bankruptcy Code, 2016, in section 7 of the Insolvency and Bankruptcy Code, 2016, proceedings, there is no scope to raise the disputes. Therefore, the averments made in the reply regarding the dispute raised by the corporate debtor is concerned, is not liable to accepted. Thus, the application is complete and the loan has been disb ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2041, dated May 1, 2019 and 482042, dated June 1, 2019 for ₹ 2,00,000 each given for payment of interest on loan amount were dishonoured on presentation by the financial creditor. (vi) Further, the financial creditor has initiated criminal proceedings dated August 7, 2019 against the corporate debtor and its director under section 138 read with section 141 of the Negotiable Instruments Act, 1881 for dishonour of aforesaid cheques, before the court of learned Metropolitan Magistrate, Karkardooma Court, Delhi. (vii) Further, cheque No. 482043, dated July 1, 2019 for ₹ 2,00,000 given for interest amount and cheque No. 482044 dated August 1, 2019 for ₹ 1,00,00,000 for payment for principal amount were also dishonoured by the bank of the corporate debtor with remark-stop payment on September 16, 2019. The financial creditor has served the corporate debtor with notice of payment dated September 25, 2019 under section 138 read with section 141 of the Negotiable Instruments Act, on dishonour of aforesaid cheques. (viii) Further, notice dated October 7, 2019 was issued by the financial creditor to corporate debtor to make payment of ₹ 1,16,79,338.40 of which th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... documents to him on January 29, 2019 in presence of Shri Manish Mehra accountant and Mr. Veeresh Kumar. (viii) The actual documents, which need to be executed at the time of disbursement of loan, were not even executed because full amount of loan of ₹ 1 crore was not in fact disbursed by the corporate debtor. (ix) The financial creditor got transferred ₹ 20 lakhs on January 30, 2019 to the corporate debtor. However, on instructions of Rajeev Aggarwal, the corporate debtor had transferred ₹ 25 lakhs through RTGS, through its sister concerned on January 31, 2019 and February 1, 2019 to "Pine View Portfolio Consultants P. Ltd.". (x) Further, on February 7, 2019 ₹ 20 lakhs was transferred by corporate debtor to the account of Pine View Portfolio Consultants P. Ltd., and thereafter ₹ 25 lakhs was also transferred on February 25, 2019. (xi) In aforesaid manner, a total amount of ₹ 65 lakhs was transferred by the financial creditor to the account of corporate debtor. Balance amount of ₹ 40 lakhs remained with the corporate debtor against the loan documentation of ₹ 1 crore as signed and executed by the director of the corpo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt of ₹ 1 crore only a sum of ₹ 65 lakhs has been disbursed and moreover out of ₹ 65 lakhs the corporate debtor has transferred ₹ 25 lakhs to Prime View Portfolio Consultant P. Ltd. In fact, the corporate debtor actually received an amount of ₹ 40 lakhs only and hence, the corporate debtor as per section 52 of the Indian Contract Act is stopped from claiming performance of the terms of the loan agreements from the corporate debtor, on the contrary the corporate debtor is entitled to compensation from the financial creditor as per section 54 of the Indian Contract Act. 6. We have heard learned counsel for the applicant but no one appeared on behalf of the respondent, despite several adjournment given to the respondent. Therefore, in course of writing of order, we shall consider the averments made in the reply filed by the corporate debtor. 7. Learned counsel for the applicant in course of his argument submitted that the corporate debtor had applied for loan which is enclosed by the applicant as annexure A1 at page 28 of the paper book for the loan amount of ₹ 1 crore, thereafter the loan was sanctioned on January 23, 2018 the sanction letter is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... January 23, 2019 (in clause 15) it is mentioned that bullet payment of entire loan at the end of six (6) months from the debt of disbursement, hence the corporate debtor has not committed the default in repayment and so there is no default in repayment of loan. In the light of the facts mentioned in the reply, when we shall consider the statement of learned counsel appeared for the applicant then we find that admittedly, a loan agreement was executed in between the financial creditor and the corporate debtor, and the financial creditor has disbursed the loan on the request of the corporate debtor and that amount has not been paid. Therefore, at this juncture, we would like to refer section 7 of the Insolvency and Bankruptcy Code, 2016 and the same is quoted below : "7. (1) A financial creditor either by itself or jointly with other financial creditors, or any other person on behalf of the financial creditor, as may be notified by the Central Government may file an application for initiating corporate insolvency resolution process against a corporate debtor before the Adjudicating Authority when a default has occurred : Provided that for the financial creditors, referred ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e financial creditor under sub- section (3) : Provided that if the Adjudicating Authority has not ascertained the existence of default and passed an order under sub-section (5) within such time, it shall record its reasons in writing for the same. (5) Where the Adjudicating Authority is satisfied that- (a) a default has occurred and the application under sub-section (2) is complete, and there is no disciplinary proceedings pending against the proposed resolution professional, it may, by order, admit such application ; or (b) default has not occurred or the application under sub-section (2) is incomplete or any disciplinary proceeding is pending against the proposed resolution professional, it may, by order, reject such application : Provided that the Adjudicating Authority shall, before rejecting the application under clause (b) of sub-section (5), give a notice to the applicant to rectify the defect in his application within seven days of receipt of such notice from the Adjudicating Authority. (6) The corporate insolvency resolution process shall commence from the date of admission of the application under sub-section (5). (7) The Adjudicating Authority shall communi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the application must be admitted unless it is incomplete, in which case it may give notice to the applicant to rectify the defect within seven days of receipt of a notice from the adjudicating authority. Under sub-section (7), the adjudicating authority shall then communicate the order passed to the financial creditor and corporate debtor within seven days of admission or rejection of such application, as the case may be. The scheme of section 7 stands in contrast with the scheme under section 8 where an operational creditor is, on the occurrence of a default, to first deliver a demand notice of the unpaid debt to the operational debtor in the manner provided in section 8(1) of the Code. Under section 8(2), the corporate debtor can, within a period of 10 days of receipt of the demand notice or copy of the invoice mentioned in sub-section (1), bring to the notice of the 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts or any legal right or beneficial interest therein ; (c) any action to foreclose, recover or enforce any security interest created by the corporate debtor in respect of its property including any action under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (54 of 2002) ; (d) the recovery of any property by an owner or lessor where such property is occupied by or in the possession of the corporate debtor." Further : "(2) The supply of essential goods or services to the corporate debtor as may be specified shall not be terminated or suspended or interrupted during moratorium period. (3) The provisions of sub-section (1) shall not apply to such transactions as may be notified by the Central Government in consultation with any financial sector regulator. (4) The order of moratorium shall have effect from the date of such order till the completion of the corporate insolvency resolution process : Provided that where at any time during the corporate insolvency resolution process period, if the Adjudicating Authority approves the resolution plan under sub-section (1) of section 31 or passes an order for liqui ..... X X X X Extracts X X X X X X X X Extracts X X X X
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