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TMI Blog2021 (12) TMI 1150X X X X Extracts X X X X X X X X Extracts X X X X ..... (8) TMI 532 - SUPREME COURT ] has held that for a debt to correspond to the definition of a Financial Debt under the Code, there must be disbursal which must be a disbursal of money and which must be against consideration for the time value of money. The Hon ble Supreme Court has conclusively affirmed that there must be actual disbursal of money for a debt to be a financial debt. It is clear that the applicant s claim falls under the preview of Financial Debt as defined under Section 5(8) of I B Code, 2016, which is disbursed against the consideration for the time value of money - Resolution Professional cannot reject a claim stating that financial debt of the applicant originating from the term loan agreement dated 22.03.2017 is merged with the amount settled under the Settlement Deed dated 04.09.2019 without classifying identity of financial debt. The merger of the financial debt and other multi claims emanating under different business transactions into a single settled amount between the parties are so complex making it impossible to cull out or identify the interfused financial debt from other claims or settled claims. The Resolution Professional cannot deny the claim o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e the Corporate Debtor, until the disposal of the present application. 2. The Federal Bank Limited, financial creditor of the Corporate Debtor, instituted an Insolvency Application bearing C.P. NO. IBA/25/KOB/2020 for initiation of Corporate Insolvency Resolution Process ( CIRP ) against the Corporate Debtor. The Application was admitted by this Tribunal vide Order dated 08.03.2021 whereby the CIRP of the Corporate Debtor was ordered and Mr. Sathiq Buhari, the respondent herein, was appointed as the Interim Resolution Professional. On 13.03.2021, Respondent published Public Announcement in From A as prescribed under Section 15 of the Code. 3. The applicant stated that being a financial lender of the Corporate Debtor they filed their claim for ₹ 3,71,01,369.86 (Rupees Three Crore Seventy-One Lakh One Thousand Three Hundred Sixty-Nine and Eighty-Six Paisa only) as a Financial Creditor in Form C dated 07.05.2021. In support of the claim, various documents including the Term Loan Agreement dated 22.03.2017 executed between the Applicant and the Corporate Debtor was annexed which clearly stated that the loan was disbursed at an interest of 8% p.a. Upon receipt of the above, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en to the applicant to substantiate the claim. Instead of substantiating the claim, the applicant cleverly tried to mislead the IRP. 8. The applicant suppressed and concealed the material facts and disputes affecting the very legal validity of the settlement deed dated 04.09.2019 under which the applicant traces out its claim stated in Form-C. On the ground of fraud, cheating, forgery and falsification of documents including the said Settlement deed dated 04.09.2021 in question, a crime was registered by Vellayil Police, Kozhikode as FIR No.0051 dated 15/02/2020 against the applicant and 12 others under Sections 406, 420, 465, 471 and 34 of IPC. Now the said crime is pending for trial before the Honourable First Class Magistrate Court-IV, Kozhikode as CA No.586/2020.The applicant company is the 4th accused and the person who signed the present Interlocutory Application and Form-C application is the 9th accused in the said Criminal case of forgery. To quash the FIR referred above, 13th accused filed Criminal MC No.4828 /2020 which is pending before the Honourable High Court of Kerala. This vital fact about pending criminal case against the applicant with respect to the Settlement ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g. In the present case applicant being a financial lender of the Corporate Debtor filed its claim for ₹ 3,71,01,369.86 (Rupees Three Crore Seventy-One Lakh One Thousand Three Hundred Sixty-Nine and Eighty-Six Paisa only) as a Financial Creditor vide Form C dated 07.05.2021. On verification of the Form C and based on the decision, the Resolution Professional rejected the claim stating that the applicant is not a Financial Creditor and that Term Loan Agreement dated 22.03.2017 executed between the applicant and the corporate debtor was novated by the Settlement Deed dated 04.09.2019. The claim verification order issued by the IRP states: - 9) It is explicit from the contractual terms narrated in Clause H (s) of the Settlement deed that an amount of ₹ 37636518 (Rupees three crore seventy-six lakhs thirty-six thousand five hundred and eighteen) was settled as a full and final settlement amount between BMW India Pvt. Ltd and Platino Classic (India) Pvt. Ltd. How this final amount of ₹ 376365 18 (Rupees three crore seventy six lakhs thirty six thousand five hundred and eighteen) was worked out in terms of the conditions stipulated in Clause No.H (1) and H (2) was st ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... As narrated above an amount of ₹ 37686518/ was settled as the final amount payable by the Platino Classic (India) Pvt. Ltd as specifically stated in Clause No. H (3) of the Settlement deed dated 04/09/2019. The principles of novation of contract is stated in Section 62 of the Indian Contract Act, 1872 which says that if the parties to a contract agree to substitute a new contract for it, or to rescind or alter it, the original contract need not be performed. If the parties to a contract agree to substitute a new contract for it, or to rescind or alter it, the original contract need not be performed. 16. Since the term loan agreement dated 22/03/2017 is altered and substituted by the parties by executing a settlement deed dated 04/09/2019, the former agreement cannot be performed except the novated contract. 17. Here the Financial debt of the claimant originating from the term loan agreement dated 22/03/2017 is merged with the amount settled under the settlement deed dated 04/09/2019 without any classifying identity. The merger of the Financial debt and other multi claims emanating under different business transactions in to a singular settled amount between t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... joint settlement deed of this nature, it is doubtful whether it is possible for one party without exhausting the remedies provided under the contract, to fragmentize his rights adversely affecting the rights of other parties who have reciprocal rights and obligations in the contract. 20. In the light of the above discussion, it is manifestly evident that the Form-C claim application dated 07/05/2021 preferred by BMW India Pvt. Ltd styling as a Financial Creditor will not come under the ambit of a Financial debt as defined under Section 5 (8) of IBC, 2016 or cannot claim the status of a Financial Creditor as defined under Section 6 (7) of IBC, 2016 entitling to submit a Form-C application as contemplated under Regulation 8 of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process For Corporate Persons) Regulations, 2016 and hence the claim submitted by BMW India Pvt. Ltd is hereby rejected. 12. As stated above, the Resolution Professional has rejected the claim as the same does not amount to a Financial Debt under Section 5(8) of the Code. It is necessary to note the definition of Financial Debt under Section 5(8) of the Code, which states: - ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion 5(8) would be falling within the ambit of Financial Debt only if they carry the essential element of disbursal , and that too against the consideration for time value of money. 14. The Hon ble Supreme Court in Pioneer Urban Land and Infrastructure Limited v. Union of India ((2019) 8 SCC 416, Para 71) has held that for a debt to correspond to the definition of a Financial Debt under the Code, there must be disbursal which must be a disbursal of money and which must be against consideration for the time value of money. The Hon ble Supreme Court has conclusively affirmed that there must be actual disbursal of money for a debt to be a financial debt. 15. The term disburse has not been defined in the Code. Black s Law Dictionary, 10th Edition defines disbursement as follows: The act of paying out money, commonly from a fund or in settlement of a debt or account payable. 2. The money so paid; an amount of money given for a particular purpose. Further, Law Lexicon by P Ramanatha Aiyar, 4th Edition defines disbursement as follows: A term used in accounting and finance to indicate the actual paying out of cash. 16. In view of the above, it is clea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of creditors shall be (a) available for inspection by the persons who submitted proofs of claim; (b) available for inspection by members, partners, directors and guarantors of the corporate debtor; (c) displayed on the website, if any, of the corporate debtor; (d) filed with the Adjudicating Authority; and (e) presented at the first meeting of the committee 14. Determination of amount of claim: (1) Where the amount claimed by a creditor is not precise due to any contingency or other reason, the interim 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. 20. The Hon ble NCLT Mumbai Bench vide order dated 05.02.2019 in the matter of Dr. Ramakant Suryanath Pande v. CS Prakash K. Pandya and others held that the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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