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TMI Blog2019 (7) TMI 1891X X X X Extracts X X X X X X X X Extracts X X X X ..... application money will be treated as a deposit. On the non-allotment of shares, after the expiry of the time limit of 75 (60+15) days the share application money will be a deposit advanced to the company, which has to be returned by the company at the rate of 12% per annum from the expiry of the 60th day. The person applying for the shares will get compensation for the time vale of the share application money given by him to the company, which makes the money advanced a financial debt to be repaid by the company - In the present case the money was transmitted in 2008 and the allotment has not been made till date, thus, the money transmitted is a deposit and can be treated as a financial debt. Whether there is a default on behalf of the Respondent in payment of the amount claimed? - HELD THAT:- This issue cannot be answered in favour of the Applicant as a perusal of the documents show that the Respondent has been ready to refund the money after it receives the required letter from the Applicant. Although the Applicant has placed on record a letter dated 03.07.2015 signed by the Applicant's representative, there is nothing to show that the said letter was actually delivered ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Respondent had agreed to, subject to Reserve Bank of India approval, refund the amount of share application money being reflected in the balance sheet of the Respondent as on 31.03.2015. A No Objection certificate was also issued by the Respondent vide letter dated 27.04.2015 addressed to Suresh Kumar Chauhan. g. Once again, a request for refund of money was made by the Applicant herein vide letter dated 03.07.2015, the Respondent has miserably failed to refund the share application money as aforestated. 3. The Respondent in its reply has opposed the application on the following grounds: a. The alleged claim is barred by limitation in as much as the Applicant itself has stated that the alleged share application money was given in the year 2008-2009 and last alleged correspondence with respect to the refund of said share application was made on 03.07.2015, the present application has been filed only on 13.02.2019 i.e. after lapse of about 3.5 years from the date of last alleged default. b. The said money was remitted to the Respondent for the issuance of shares and not for any other purpose. Due to the fact that share application was not refunded the very substance of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a. The claim is not barred by limitation. The Respondent's balance sheet for the year 2014-2015 shows the amount of ₹ 1,14,02,640 under the head Share Application Money (Allotment Pending ). In the balance sheet for the year 2015-2016, the same amount has been shown under the head Other Current Liabilities . The fact that the Respondent has acknowledged and reflected the said debt in the balance sheet for the years 2014-2015 and 2015-2016 makes it clear that the limitation should be calculated from 31.03.2016. b. Section 42(6) of the Companies Act, 2013 provides that the allotment of shares has to be made within 60 days, failing which the amount has to be returned within 15 days and beyond a period of 15 days, the amount has to be refunded with an interest @ 12% per annum. Thus, the debt owed by the Respondent is a financial debt. c. It is denied that the refund has not been initiated because of nonavailability of documents form the Applicant. The Applicant in response to the email dated 02.07.2015 submitted a request with the Respondent duly typed on its letter head, handed over in person at the office of the Respondent. 5. We have perused the documents and he ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lation and Development) Act, 2016 (16 of 2016);] (g) any derivative transaction entered into in connection with protection against or benefit from fluctuation in any rate or price and for calculating the value of any derivative transaction, only the market value of such transaction shall be taken into account; (h) any counter-indemnity obligation in respect of a guarantee, indemnity, bond, 1 Ins. by Act No. 26 of 2018, sec. 3 (w.e.f. 6-6-2018). 2 Ins. by Act No. 26 of 2018, sec. 3 (w.e.f. 6-6-2018). 8 documentary letter of credit or any other instrument issued by a bank or financial institution; (i) the amount of any liability in respect of any of the guarantee or indemnity for any of the items referred to in sub-clause (a) to (h) of this clause; 8. The Hon'ble Appellate Tribunal in Nikhil Mehta Sons vs. AMR Infrastructure Ltd. approved the following description of a financial debt: 17. The first question arises for consideration is as to who is a 'Financial Creditor'. Learned Adjudicating Authority, for determination of the aforesaid issue examined the definition provided in Section 5(7) and 5(8) and in the impugned judgment rightly observed: 12... Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... repayment of monies where the company is unable to allot securities. (1) In these rules, unless the context otherwise requires, (c) deposit includes any receipt of money by way of deposit or loan or in any other form, by a company, but does not include-(vii) any amount received and held pursuant to an offer made in accordance with the provisions of the Act towards subscription to any securities, including share application money or advance towards allotment of securities pending allotment, so long as such amount is appropriated only against the amount due on allotment of the securities applied for; Explanation.- For the purposes of this sub-clause, it is hereby clarified that- (a) Without prejudice to any other liability or action, if the securities for which application money or advance for such securities was received cannot he allotted within sixty days from the date of receipt of the application money or advance for such securities and such application money or advance is not refunded to the subscribers within fifteen days from the date of completion of sixty days, such amount shall be treated as a deposit under these rules. 2[Provided that unless otherwise req ..... 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