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TMI Blog2021 (11) TMI 841X X X X Extracts X X X X X X X X Extracts X X X X ..... t the consideration for time value of money. Since, in the case in hand, there is no disbursal of the amount to the corporate debtor, therefore, the applicant cannot be treated as a financial creditor - the loan amount was not disbursed to the Corporate Debtor. Hence, this applicant is also not a financial creditor. Rather, the applicant is a secured creditor. Whether the RP can revise the claim or not? - HELD THAT:- A bare perusal of the Sub Regulation 2 of Regulation 14 (Supra) shows that the interim resolution professional or the resolution professional, as the case may be, shall revise the amounts of the claims admitted, including the estimates of claims made under sub regulation (1) as soon as may be practicable, when he comes across additional information warranting such revision. Application dismissed. - I.A. 4451/2020 and I.A. 1800/2021 in (IB) 667/ND/2019 - - - Dated:- 16-11-2021 - Abni Ranjan Kumar Sinha, Member (J) And L.N. Gupta, Member (T) For the Appellant : Kinshuk Chatterjee, Shubham S. Saxena, Srishti Gupta and Priyanka Gupta, Advocates For the Respondents : Rakesh Kumar, Preeti Kashyap, Ankit Sharma, Manish Paliwal and Vikas Kumar, Advocates ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Agreements, the Applicant has also submitted its claim in the said CIRP of Ninex and has been classified as a secured Financial Creditor therein. vi. It is further contended that vide email dated 21.09.2020, the Respondent informed the Applicant that on account of the findings of the Hon'ble Supreme Court in the Jaypee Infra case, the claim of inter alia the Applicant stands affected and is entitled to be reclassified from the current position of secured Financial Creditor to Other Creditors (secured). Despite several arguments and clarifications furnished by the Applicant in subsequent emails, vide email dated 06.10.2020, the Applicant was informed that their claim stands officially reclassified as such. IA/1800/2021 3. The facts mentioned in the application IA/1800/2021, in short, are as follows:- i. It is the case of the applicant that the Ninex Developers Ltd., the holding company of the Corporate Debtor, on account of its past and earlier loan agreements/dealings with applicant and towards discharge of its admitted financial liabilities had on 18.05.2018 entered into a Loan cum Guarantee agreement on 18.05.2018 with the Applicant acknowledging certain previ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ferro Alloys Corporation Ltd. v. Rural Electrification Corporation bearing Company Appeal (AT) (Insolvency) No. 92 of 2017 dated 08.01.2019 and submitted that on bare perusal of para 3 of the aforesaid agreement dated 18.05.2018, it can be seen that only charge lien as per section 100 of Transfer of Property Act, was created in favour of the Applicant by executing the letters of allotment for 31 units in the project of the corporate debtor. It is further submitted that charge is different from mortgage and the same has been specifically defined u/s. 100 of Transfer of Property Act, 1882. ix. That the Jaypee judgment would not be applicable in the special facts and circumstances of the case of the Applicant as the Applicant is not claiming against Corporate Debtor on the basis of any mortgages made by the Corporate Debtor or M/s. Ninex Developers Ltd. Rather have a direct privity with the Corporate Debtor on the basis of Corporate Guarantee. Hence, the status of the Applicant cannot be in any manner disturbed or altered or prejudiced on account of the Jaypee Judgment. 4. The Respondent Resolution Professional has filed its reply in IA 4451/2020 and submitted as follows ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o secure the credit facility to Abloom Infotech Private Limited. Since the Corporate Debtor does not owe any financial debt to the Applicant. However, the Corporate Debtor being the joint co-obligator to the debt facility availed by the other group company, there is a liability due by the Corporate Debtor towards the Applicant/Creditors. Therefore, the Applicant's claim was accepted by the Resolution Professional in the category of the Secured Debt instead of Financial Creditor. It is also stated that in the present case the Applicant has disbursed the credit facilities to M/s. Abloom Infotech Private Limited and Applicant only hold security interest in the Corporate Debtor, therefore, the Respondent re-classified the Applicant from 'Financial Creditors' of the Company to 'Other Creditors - Secured vide the email dated 6.10.2020. It is further contended that reading of the interpretation by the Supreme Court in the Jaypee case along with the provisions of Section 5(8) very clearly states that in order to qualify a debt to be a financial debt in accordance with the provisions of the Code, the same should have the essential elements of disbursement again ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se on 26.09.2020, that facts of the Supreme Court's judgment is not applicable to the case of applicant and by way of having a corporate guarantee the applicant stands as a financial creditor of corporate debtor. Thereafter, the respondent vide email dated 28.09.2020, asked applicant to submit further documents within two days. It is submitted that the CoC in meeting dated 20.10.2020, took a note to reconstitute the CoC. 6. On perusal of the averments made in both the applications filed by the applicants, replies as well as written submissions filed by the RP, we notice that the question for consideration is that whether the decision of the Hon'ble Supreme Court in Anuj Jain, Interim Resolution Professional for Jaypee Infratech Limited Versus Axis Bank Limited and Others Civil Appeal Nos. 8512-8527 of 2019 (2020) 8 SCC 401 (hereinafter referred to as 'Jaypee Case') is applicable in the case of these two applicants or not? 7. The contention of the Ld. Counsel for the applicant of IA No. 4451/2020 is that since the loan was borrowed jointly by all the borrowers, the Jaypee Case is not applicable in this matter. Whereas the contention of the Ld. Counsel f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ds, the essential element of disbursal, and that too against the consideration for time value of money, needs to be found in the genesis of any debt before it may be treated as 'financial debt' within the meaning of Section 5 of the Code. This debt may be of any nature but a part of it is always required to be carrying, or corresponding to, or at least having some traces of disbursal against consideration for the time value of money. 44. As noticed, the root requirement for a creditor to become financial creditor for the purpose of Part II of the Code, there must be a financial debt which is owed to that person. He may be the principal creditor to whom the financial debt is owed or he may be an assignee in terms of extended meaning of this definition but, and nevertheless, the requirement of existence of a debt being owed is not forsaken. 45. It is also evident that what is being dealt with and described in Section 5(7) and in Section 5(8) is the transaction vis-a-vis the corporate debtor. Therefore, for a person to be designated as a financial creditor of the corporate debtor, it has to be shown that the corporate debtor owes a financial debt to such person. Unde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... noticed, the expressions financial debt and financial creditor , having their specific and distinct connotations and roles in insolvency and liquidation process of corporate persons, have only been defined in Part II whereas the expressions secured creditor and security interest are defined in Part I. 47. A conjoint reading of the statutory provisions with the enunciation of this Court in Swiss Ribbons (supra), leaves nothing to doubt that in the scheme of the IBC, what is intended by the expression 'financial creditor' is a person who has direct engagement in the functioning of the corporate debtor; who is involved right from the beginning while assessing the viability of the corporate debtor; who would engage in restructuring of the loan as well as in reorganisation of the corporate debtor's business when there is financial stress. In other words, the financial creditor, by its own direct involvement in a functional existence of corporate debtor, acquires unique position, who could be entrusted with the task of ensuring the sustenance and growth of the corporate debtor, akin to that of a guardian. In the context of insolvency resolution process, this clas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The respondent mortgagees are not the financial creditors of corporate debtor JIL. 48. Indisputably, the debts in question are in the form of third party security; said to have been given by the corporate debtor JIL so as to secure the loans/advances/facilities obtained by JAL from the respondent-lenders. Such a 'debt' is not and cannot be a 'financial debt' within the meaning of Section 5(8) of the Code; and hence, the respondent-lenders, the mortgagees, are not the 'financial creditors' of the corporate debtor JIL. 51.4. The said decision in Smt. Kusum, at best, leads to the position that a promise to create a mortgage, even if given by a third party and not by the borrower would be deemed to be for consideration; that even if no direct consideration had flown from the plaintiff to the defendant who made the promise to create the mortgage, anything done for the benefit of the principal debtor would be sufficient consideration to the surety for giving guarantee as provided under Section 127 of the Contract Act. When the creditor abstained from enforcing the claim against the principal debtor because of such promise to create mortgage by the defen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that is why the word relevant borrower is mentioned there and not the word borrowers . 14. We further notice that the Clause 3.1, at page 35 of the application relates to the Security for the Obligations and Sub Clause (b) of that clause referred to each borrower shall procure unconditional and irrevocable guarantees from the Guarantors for due performance of the Transaction Documents and payment of all obligations on respective Due Dates and the Sub Clause (c) says that any security interest created over any secured property shall be a continuing security for all the obligations and amounts due and payable by the obligators. Therefore, the security clause shows that security interest have been created on all secured properties for collectively securing all obligations and amounts due and payable. 15. Clause 6.14 relating to the Declaration in Advertisement says that this property is mortgaged to DMI Finance Private Limited and they have the first charge and interest upon the property. Each allottee purchasing any space on this Property shall be required to obtain no objection certificate from DMI Finance Private Limited at the time of making the said purchase. 16. In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... terim resolution professional or the resolution professional, as the case may be, shall make the best estimate of the amount of the claim based on the information available with him. (2) The interim resolution professional or the resolution professional, as the case may be, shall revise the amounts of claims admitted, including the estimates of claims made under sub regulation (1), as soon as may be practicable, when he comes across additional information warranting such revision. 23. A bare perusal of the Sub Regulation 2 of Regulation 14 (Supra) shows that the interim resolution professional or the resolution professional, as the case may be, shall revise the amounts of the claims admitted, including the estimates of claims made under sub regulation (1) as soon as may be practicable, when he comes across additional information warranting such revision. 24. When we consider this Regulation referred to supra, it is seen that the resolution professional has revised the claim in the light of the changed position of law laid down by the Hon'ble Supreme Court in the Anuj Jain's case referred to supra. Hence, we are of the considered view that the RP is empowered to ..... X X X X Extracts X X X X X X X X Extracts X X X X
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