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TMI Blog2019 (8) TMI 1713X X X X Extracts X X X X X X X X Extracts X X X X ..... Rules, 2016 (in short, IB Rules 2016). 2. Before proceeding with this matter, it would be appropriate to make a note of background facts for the purpose of determination of this petition. 3. The financial creditors are individual persons/business men and the father/father-in-law and brother/brother-in-law of the financial creditors are directors of the corporate debtor and 50 per cent. shareholders. The managing director of the company requested the financial creditors to provide unsecured loans and accordingly an amount of Rs. 66,75,000 was disbursed on different dates. The financial creditors had requested the managing director as well as the directors of the company to repay the said loan amount along with interest, but the corporate debtor kept on postponing the payment on the pretext of financial difficulties. The corporate debtor had also shown the amount of Rs. 66,75,000 as unsecured loan amount in its annual financial statements filed with the Registrar of Companies from the year 2006-07 to 2015-16 and the corporate debtor has not filed the annual financial statements for the year 2016-17 and 2017-18. As on December 10, 2018 the corporate debtor owes an amount of Rs. 1,4 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of the corporate debtor has filed a counter and the learned practising chartered accountant (PCA) stated that the petitioners have provided only interest free unsecured loan of Rs. 66,75,000 to the corporate debtor in part compliance with the memorandum of understanding executed on April 29, 2007 between Mr. Vishnu Dutt Gupta and Mr. Suresh Chand Agarwal. Since the project got inordinately delayed and due to the time and cost over-run, another agreement was entered into between these parties on February 8, 2012. The family members of Suresh Chand Agarwal were appointed as managing director and director with effect from May 13, 2013. 7. The learned practicing chartered accountant further submitted that the corporate debtor had approached M/s. Canara Bank for a term loan of Rs. 950 lakhs which was duly sanctioned by the said banker. According to the sanction letter, the promoters and associates had to execute a subordination agreement in favour of the said banker. Accordingly, promoters/ co-promoters, i. e., the petitioners group and the respondents group executed a subordination agreement on August 26, 2014 in favour of M/s. Canara Bank. The said subordination agreement was execu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e petitioners are not financial creditors and the debt has not become due and payable and the petitioners are signatories to the sub- ordination agreement entered into with M/s. Canara Bank. In view of the same, the learned PCA submitted that the petition under section 7 of the IBC, 2016 cannot be maintained and it is liable to be dismissed and accordingly prayed for dismissal of the petition. 10. One Mr. Ajay Kumar Agarwal has also filed a counter statement on behalf of the corporate debtor and the learned practicing company secretary appearing on behalf of corporate debtor, inter alia, submitted that the unsecured loan of Rs. 66,75,000 was brought in by the petitioners and Mr. Ajay Kumar Agarwal and Mrs. Karuna Agarwal became the additional directors of the company on October 17, 2012. He further stated that the company had availed term loan from M/s. Canara Bank and due to the fraudulent activities of Mr. Vishnu Dutt Gupta and his son the company suffered financial losses. The CMU entered into between the company and M/s. Parle Biscuits P. Ltd., on March 12, 2013 has not been renewed and it was terminated on October 16, 2018. The company is negotiating with M/s. Parle Biscuits ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t has to be taken into con sideration or not to decide the matter ? 15. It is a fact that the petitioners have provided unsecured loan to the company and the corporate debtor has also not denied the same. In this regard, the memorandum of understanding entered into on April 29, 2007 and other agreement entered into on February 8, 2012 are relevant to decide the present matter. Both the memorandum of understanding and the agreement, inter alia, deal with the interest free unsecured loan and the equity shares to be allotted to both the parties and both the memorandum of understanding and the agreement never discussed about the time of repayment. Since, the unsecured loan is interest free, the submission of the practicing chartered accountant appearing on behalf of the corporate debtor that claiming interest in the petition is not tenable is correct. The PCS appearing on behalf of Mr. Ajay Kumar Agarwal, director the corporate debtor relied on the provision of section 5(7) and 5(8) of the IB Code, and submitted that financial debt means a debt along with interest if any which is disbursed against the consideration for the time value of money. Further, the learned PCA has also explain ..... X X X X Extracts X X X X X X X X Extracts X X X X
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