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TMI Blog2021 (4) TMI 1148X X X X Extracts X X X X X X X X Extracts X X X X ..... bridge, Ahmedabad. That Authorised and paid up share capital of the respondent company is Rs. 30,00,000/- each. 4. The learned FCA on behalf of the applicant submitted that, the applicant has provided finance as well as security margin to the respondent - corporate debtor since 26.12.2017. The total of which amounts to Rs. 1,01,74,984.56 by way of actual payment and Rs. 2,58,93,350/- in the form of share and securities. In support of the contention, the applicant has annexed details of payment as well as account ledgers as Annexure-C at page no. 92 and Annexure-D from page 93 to 96. The applicant has also annexed the details of shares and securities provided as security margin to the corporate debtor as Annexure-E at page no. 97, which reflects an amount of Rs. 2,58,93,350/- in the form of share and securities. 5. It is further submitted by the applicant that the above said amount are derived after giving effect to all the necessary and appropriate entries and modification to the manipulated accounts received from respondent and the same is certified by the chartered accountant duly authorized by the applicant for the purpose owing to the manipulation done by the respondent. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the respondent company with Investor Grievance Resolution Panel, which came to be rejected, with observation, by the Members of Investor Grievance Resolution Panel on 16.08.2019. The copy of the said meeting held on 16.08.2019 is annexed as Annexure-C. 13. It is submitted that it is the applicant on the contrary is liable to pay an amount of Rs. 23,48,095/- to the respondent as per the ledger for the period ending on 30.06.2019, Annexure-D. 14. It is further submitted that the applicant is closely associated with M/s. Jayprakash Associates and its director and upon the instruction of the applicant, the respondent company traded in market on behalf of the applicant and the applicant never raised concern till the said company made profits. 15. It is further submitted by the respondent that respondent had requested the applicant to clear and settle the outstanding dues of the respondent company and clarified that once the outstanding dues are settled the respondent will release the security, which have been given as collateral. In view of the above, the applicant is liable to pay an amount of Rs. 23,48,095/-. 16. It is further submitted by the respondent that the present petition ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Respondent for trade in shares and securities in the Cash Segment and Future & Option Segment on account of which, the Respondent had allotted Trade Code-V006 but the Respondent has not provided the copy of the said agreement despite the requests and reminders (Annexure-F (Colly.) on pg. no. 102-110 of the application). However, the Respondent has not alleged/contended that there is no such agreement in absence of which the Respondent shall not be authorised to deal/transact on behalf of the Applicant which establishes that there exists an agreement between the Applicant and the Respondent, the copy of which seems to be unfurnished to the Applicant. 22. The Applicant has also furnished the copies of bank statements of multiple accounts of the Applicant (Annexure-G on pg. no. 111-154) for compliance of the records relating to the entries in a bankers book in accordance with the Bankers Book Evidence Act, 1891 to show that the debt of the Applicant has not been paid and that the Corporate Debtor is unable to pay its debts. 23. The Applicant has also furnished multiple ledgers (Annexure-H on pg. no. 155-164 of the application and Annexure-B on pg. no. 44-80 of the rebuttal) as ci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Respondent has also contended that it is not a Corporate Debtor in terms of Section 3(8) of the Code not being a Corporate Person in terms of Section 3(7) of the Code since it is FSP in terms of Section 3(17) of the Code which is engaged in providing financial services in terms of Section 3(16)(e) of the Code and is governed by the Financial Sector Regulator (FSR) in terms of Section 3(18) of the Code contending that the Respondent holds certificate of registration issued by SEBI as a Stock Broker. 26. The Respondent has relied upon the judgement of the Hon'ble NCLAT in the matter of Praveen Kumar Mundra v/s. CIL Securities Ltd. (Company Appeal (AT) (Insolvency) No. 89 of 2019) wherein the Hon'ble NCLAT has recorded the observations of the Adjudicating Authority, wherein, the Respondent had contended that the Respondent is a registered entity under SEBI for which the certificate of registration as Stockbroker was filed and thus, the Respondent was considered as FSP within the meaning of Section 3(17) of the Code which does not come under the definition of Corporate Person and that it is exempted from the purview of the Code. However, on perusal of the said judgment, it i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Code, envisages that the term "Financial Services" shall include rendering or agreeing, for consideration, to render advice on or soliciting for the purposes of (i) buying, selling, or subscribing to, a financial product; (ii) availing a financial service; or (iii) exercising any right associated with financial product or financial service whereas the Respondent being engaged/involved in Stock Broking business is directly dealing in the shares, securities, derivatives, etc. on behalf of its clients including the Applicant rather than only rendering advice or soliciting or agreeing in that regard. Hence, it can be said that the Respondent is covered under the purview of the Corporate Debtor and cannot be considered as the Financial Service Provider since it is directly dealing with the financial products and not only rendering advice or soliciting or agreeing in that regard. 29. In addition to the above, Section 5(8)(g) of the Code states that the Financial Debt shall include any derivative transaction which can only be entered into by a company which is registered with SEBI as its regulatory authority which is in contradiction with the stand taken by the Respondent being a comp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ready dealt with hereinabove. Moreover, the said judgement is applicable to NBFC and hence, not applicable to the present case since the Respondent is involved in Stock Broking business and is not a NBFC. 34. The Respondent has referred to the definition of the Financial Sector Regulator (FSR) under section 3(18) of the Code and stated that it includes SEBI and relied upon the judgement of the Hon'ble NCLAT in the matter of Randhiraj Thakur v/s. M/s. Jindal Saxena Financial Services Private Limited & Anr. (Company Appeal (AT) (Insolvency) No. 32 & 50 of 2018), however, the said judgement is applicable to NBFC and, hence, not applicable to the present case since the Respondent is involved in Stock Broking business and is not a NBFC. Also, the definition of the Financial Sector Regulator includes SEBI; however, the question under consideration is that whether the Respondent is covered under the purview of Financial Service Provider, so as to exclude it from the definition of the Corporate Person has been dealt with hereinabove. 35. The Respondent has contended that there must be "Financial Contract" as defined under Rule 3(1)(d) of the Insolvency and Bankruptcy (Application to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... money which has already been dealt with hereinabove. 37. The Respondent has referred to the judgement of the Hon'ble NCLT, New Delhi Bench, New Delhi in the matter of Prayag Polytech P. Ltd. v/s. Good Marketing & Sales P. Ltd. (IB-219/ND/2019) wherein the Petitioner could not satisfy about the details of the 'Financial Contract' and could not demonstrate the default in respect of the 'Financial Debt' which has been dealt with in the preceding paragraph(s). 38. The amount of debt payable by the Respondent - Corporate Debtor is more than the statutory limit prescribed under the provisions of the section 4 of the Insolvency and Bankruptcy Code, 2016 as on the date of filing of the application i.e. 22.07.2019. 39. The Applicant has furnished the copy of Written Communication of the Proposed Interim Resolution Professional - CA Prakash Udhawdas Tekwani in Form - 2 in terms of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016. 40. Under the facts and circumstances as discussed hereinabove in sequel and from the material placed on record by the Applicant, this Adjudicating Authority is satisfied that the application is complete in a ..... 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