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TMI Blog2019 (12) TMI 1547X X X X Extracts X X X X X X X X Extracts X X X X ..... corporate debtor is situated at 71/5465, Reghar Pura, Karol Bagh, New Delhi-1 10015. 3. Facts which are material to the controversy raised may first be noticed. The pleaded case of the Petitioner is that the Respondent approached the Petitioner and took a sum of Rs. (Forty Lacs) for issuance of shares. The said money was paid on 27.12.2010, in the account of the Respondent maintained with Karnataka Bank Limited, Karol Bagh, New Delhi. 4. It is then pleaded that the Respondent Company did not allot shares nor did repay the deposits as per Section 74 of the Companies Act, 2013 and the share money pending allotment is liable to be treated as deposit. 5. It is further pleaded that on 09.02.2018 the Respondent returned the said money to the petitioner. However, no interest as per Companies (Acceptance of Deposits) Rules, 2014 (for brevity 'Rules, 2014) was paid. The petitioner then placed reliance on the Income Tax Notice dated 24.09.2018 (Annexure A-3) issued to him by the Office of the Assistant Commissioner of Income Tax, Central Circle-18, New Delhi under Section 133(6) of the Income Tax Act, 1961 seeking various information including the nature of the transaction of the amou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ish that the money is payable on demand and there has been default and that the Corporate Debtor is also bound to pay interest on the amount given by the applicant to the Corporate Debtor. 8. ............ However, there is no written agreement between the parties regarding the instant transactions. 9. ............... 10. That in the preceding paragraphs, the Respondent has amply established that the Financial Creditor has provided no documentary proof of any agreement between the parties to establish the existence of financial debt in terms of interest and consequent default in the payment of the same at the time when it was due to be paid." 9. Subsequently an additional affidavit has been filed by the Petitioner vide diary dated 05.09.2019 along with a copy of an email dated 23.11.2018 and an undated letter (both Annexure A-I) written on a plain paper without any receipt of delivery, stated to be sent by him to the Income Tax Department with respect to query made by the IT Department vide aforesaid notice (Annexure A-3). It has been highlighted that the Auditor of the Respondent has sent a mail to the Petitioner with a letter attached confirming that the amount of Rs. 40 lacs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... requires- 7. "financial creditor" means any person to whom a financial debt is owed and includes a person to whom such debts has been legally assigned or transferred to; (8) "financial debt" means a debt alongwith interest, if any, which is disbursed against the consideration for the time value of money and includes- (a) money borrowed against the payment of interest; (b) any amount raised by acceptance under any acceptance credit facility or its de-materialised equivalent; (c) any amount raised pursuant to any note purchase facility or the issue of bonds, notes, debentures, loan stock or any similar instrument; (d) the amount of any liability in respect of any lease or hire purchase contract which is deemed as a finance or capital lease under the Indian Accounting Standards or such other accounting standards as may be prescribed; (e) receivables sold or discounted other than any receivables sold on nonrecourse basis; (f) any amount raised under any other transaction, including any forward sale or purchase agreement, having the commercial effect of a borrowing; (g) any derivative transaction entered into in connection with protection against or benefit from fluctuation in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rson to whom a Financial debt is owed and includes even a person to whom such debt has been legally assigned or transferred to. In order to understand the expression 'Financial Creditor', the requirements of expression 'financial debt' have to be satisfied which is defined in Section 5(8) of the IBC. The opening words of the definition clause would indicate that a financial debt is a debt along with interest which is disbursed against the consideration for the time value of money and it may include any of the events enumerated in sub-clauses (a) to (i). Therefore the first essential requirement of financial debt has to be met viz. that the debt is disbursed against the consideration for the time value of money and which may include the events enumerated in various sub-clauses. A Financial Creditor is a person who has right to a financial debt. The key feature of financial transaction as postulated by section 5(8) is its consideration for time value of money. In other words, the legislature has included such financial transactions in the definition of 'Financial debt' which are usually for a sum of money received today to be paid for over a period of time in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... made categorical assertion which goes unrebutted establishing that no element of time value for money is attracted and it is a simple friendly loan. There is no document on record to prove that element of interest. Therefore, such a transaction would not acquire the status of a 'financial debt' as the transaction does not have consideration for the time value of money, which is a substantive ingredient to be satisfied for fulfilling requirements of the expression 'Financial Debt'. 17. It is also relevant to note that under Section 7(3)(C) of the Code, 2016 at the time of filing an application by the Financial Creditor before this Tribunal, along with such application the applicant is required to furnish any other information as may be specified by the IBBI. The Ministry of Corporate Affairs has framed Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016 where under the form to be adopted by different categories of creditors have been specified and in relation to a Financial Creditor the form prescribed being form l. A perusal of clause 5 of part V of form 1 shows that the Financial Creditor is required to place a latest and complete copy o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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