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TMI Blog2021 (3) TMI 473X X X X Extracts X X X X X X X X Extracts X X X X ..... ged by the Corporate Debtor having the impressed seal of the Financial Creditor. Whether there is a Creditor-Debtor relationship between the Financial Creditor and Corporate Debtor herein? - HELD THAT:- There is Creditor- Debtor relationship between them, since the Financial Creditor admitted that they received money from the Financial Creditor and the Corporate Debtor has no case that he has repaid the money received from the Financial Creditor - As there is a default in the payment of the financial debt, which has been confirmed by them in the counter affidavit that the Financial Creditor paid the money to the Corporate Debtor. This Tribunal is of the view that, the present application filed by the Financial Creditor is satisfies all the definitions of Financial Creditor , Default and Financial Debt and qualifies for filing an application under Insolvency and Bankruptcy Code. By making various technical snags the Corporate Debtor cannot wash its hands in repaying the amount borrowed which is a financial debt owed by them. Hence, there is a Creditor-Debtor relationship with them. This Tribunal is on the view that the application is filed in the capacity of a Financia ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Creditor, agreeing to repay the same in 120 monthly instalments together with interest and charges set forth in the loan documents. Towards collateral Security the Corporate Debtor created equitable Mortgage in favour of the Applicant. Due to non-payment of monthly instalments the Account of the credit facility turned to the status of a Non-Performing Asset with effect from 29.10, 2019. The Financial Creditor caused a Demand Notice dated 16.12.2019 to the Corporate Debtor requiring them to repay the entire outstanding in the Loan Account. Though the said notice was served on the borrowers including the Corporate Debtor, they did not pay the amounts demanded. 5. As on 16-03-2020 an amount of ₹ 6,39,13042/- is due from the Corporate Debtor and the Corporate Debtor is unable to pay its debt. Therefore, the present application has been filed by the Financial Creditor to initiate Corporate Insolvency Resolution Process (CIRP for short) against the Corporate Debtor. Submissions by the Corporate Debtor 6. The Corporate Debtor submitted that the application has been filed by Maya C. who is a power of attorney holder without any specific authorization by the Board of Dire ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t recoverable as against the Corporate Debtor. The amount advanced by the applicant being in excess of the paid-up share capital and free reserves of the company, the amount advanced by the Financial Creditor is not valid and effectual so as to bind the Corporate Debtor, company. Hence the Corporate Debtor submits that there is no debt that is legally recoverable as against the company. 8. The Corporate Debtor further stated that the Document No. 2 is a document which purports to create right, title and interest is immoveable property of the value of more than ₹ 100/- and is compulsory registerable. In the absence of registration and payment of registration fee and stamp duty, Document No.2 cannot be relied on. It is also stated that the term loan agreement produced by the Financial Creditor is bad in law, The Board Resolution requires affixing the Company seal, which is not present in the documents produced. In the absence of the Common seal as required by the resolution and articles of association of the Corporate Debtor, the documents produced by the Financial Creditor are not valid. The Board Resolution specifically requires affixing common seal of the company, which i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for the amount covered under the promissory note, which itself shows that no separate amount has been disbursed. 11. The Corporate Debtor also stated that there is no Debtor Creditor relationship between the Financial Creditor and Corporate Debtor. There is no undertaking to repay the amount with interest within the specified period and hence there is no default. On the basis of documents which are not enforceable in law, the Financial Creditor cannot claim to owe Financial Debt from the Corporate Debtor and thereby cannot be claimed to be a Financial Creditor as defined under Section 5(7) and (8) of the Insolvency and Bankruptcy Code, 2016. Though the Financial Creditor had given money to the Corporate Debtor, there is no undertaking to repay the amount by the Corporate Debtor nor is there any agreement for payment of interest. 12. It is further stated that the application filed by the Financial Creditor under Section 7 of the IBC is not complete as it is not supported by the documents mandated under the IBC, especially under Section 7. The Financial Creditor submits that as per Section 7(3), the Financial Creditor shall furnish a 'record of the default' recor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Corporate Debtor under the head 'No Debt is Due and Payable' are all incorrect and unsustainable. The contention that the debt as claimed by the Financial Creditor is not due as it is not payable in law is incorrect and baseless. The very contention presupposes admission of a debt. The further contention that there is no default of any financial debt is also incorrect and unsustainable. The averment that the Financial Creditor has not disbursed any money to the Corporate Debtor as debt as the documents produced by the applicant are unenforceable against the Corporate Debtor Company is incorrect and unsustainable. The contention that the Financial Creditor has not produced any documents to show that the Corporate Debtor had actually received any amount as financial debt with a promise to repay within a stipulated time and that there has been default in the terms of the agreement etc are false and misleading. 16. The Board of directors of the Corporate Debtor Company has exercised the powers of borrowings only after obtaining the consent of the company by a Special Resolution as contemplated under section 180(1)(c) of The Companies Act 2013. The Notice for convening E ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ii. Whether the documents filed by the Financial Creditor is having the common seal? iii. Whether there is a Creditor-Debtor relationship between the Financial Creditor and Corporate Debtor herein? Point No (i) On perusal of the record, I found out that Smt. Maya C. is the Assistant Vice President/ Branch Head of the Financial Creditor has the proper authority to file the present application, and the objection raised by the counsel for the Corporate Debtor is merely incongruous, and therefore, holds no water. Moreover, this issue was decided by this Tribunal vide order dated 24.09.2020 in IA/105/KOB/2020, which was affirmed by the NCLAT. Hence, that contention will not stand now, and it is only to be rejected. Point No. (ii) On 26.02.2021 this Tribunal verified original documents produced by the Financial Creditor in compliance with the order passed by this Tribunal dated 16.02.2021 and made sure that the documents alleged by the Corporate Debtor having the impressed seal of the Financial Creditor. Point No. (iii) From the records filed by both the parties I found out that there is Creditor- Debtor relationship between them, since the Financial Creditor admitte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ibed under Section 14 of the Code shall be operative henceforth with effect from the date of order shall be applicable by prohibiting institution of any suit before a Court of Law, transferring/encumbering any of the assets of the Debtor etc. i. The Financial Creditor has suggested the name of Mr. Sathiq Buhari, Sagreen Law Chamber, Vanchiyoor, Thiruvananthapuram- 695 035, e-mail id: [email protected], IBBI Registration Number: IBBI/IPA-001/IP-P00758/2017-2018/11307 for appointment as Interim Resolution Professional (IRP). The Insolvency Resolution Professional is directed to submit the copy of AFA (Authorization for Assignment) issued by the Insolvency Professional Agency within 2 days from the date of receipt of this order. ii. Accordingly, the IRP proposed by the Financial Creditor, Mr. Sathiq Buhari, Sagreen Law Chamber, Vanchiyoor, Thiruvananthapuram- 695 035, e-mail id: [email protected], IBBI Registration Number: IBBI/IPA-001/IP-P00758/2017-2018/11307, is hereby appointed as Interim Resolution Professional to conduct the Insolvency Resolution Process. iii. The Financial Creditor shall deposit an amount of ₹ 2,00,000/-(Rs. Two Lakhs Only) with the IRP to meet ..... X X X X Extracts X X X X X X X X Extracts X X X X
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