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TMI Blog2022 (1) TMI 216X X X X Extracts X X X X X X X X Extracts X X X X ..... e) [ Per. Dr. Alok Srivastava, Member (Technical)] 1. This appeal has been filed under section 61 of the Insolvency & Bankruptcy Code, 2016 (hereinafter called "IBC") by the Appellant, who is aggrieved by the order dated 15.3.2021 passed under section 31 of IBC in CP(IB) No. 543/7/NCLT/AHM/2018 by the Adjudicating Authority (National Company Law Tribunal, Ahmedabad Bench). 2. The Appellant, ex-Director of the Corporate Debtor Kingston Paptech Pvt. Ltd., was arrayed as the Appellant vide order dated 22.7.2021 of this Tribunal in place of the Corporate Debtor company along with the Resolution Professional, who represents the Corporate Debtor, as Respondent No. 2 in the appeal. 3. The Appellant has claimed that section 7 application was fil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... without giving any proof of the alleged debt or without establishing default or date of default of the alleged financial debt as envisaged under the IBC, but solely on the basis of unaudited ledger account. He has further stated that the Adjudicating Authority was unable to ascertain the existence of default from the information submitted in section 7 application, and hence the Adjudicating Authority passed order on 12.2.2020 seeking certain clarifications under section 7(5) of the IBC from to the Respondent No. 1 (the clarification is attached at pp.103-111 of the Appeal paperbook). Thus the Impugned Order has been passed by the Adjudicating Authority on the basis of a vague clarificatory reply provided by Respondent No. 1, without even a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ertain rate of interest was advanced by Respondent No. 1. She has thus clarified that the amount of Rs. 52.50 lakhs which Respondent No. 1 claims as loan amount was actually paid by Respondent No. 1 to the Corporate Debtor as part of normal business dealing and repayment of Rs. 22.50 lakhs was made vide cheque no. 693350 dated 31.8.2017 drawn on State Bank of India, which was returned unpaid by the bank. The Learned Counsel of Appellant has claimed that since the original amount was paid to the Corporate Debtor as part of business dealing and not as a loan, the Respondent No. 1 should have taken recourse to proceedings under any other law than IBC. 9. The Learned Counsel for Appellant has pointed out that in his reply affidavit filed on 16 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (attached at pp. 71-72 of Appeal paperbook). The Learned Counsel has claimed that based on this evidence of transfer of Rs. 52.50 lakhs to the Corporate Debtor by Respondent No. 1, the existence of loan has been established, which is liable to be paid by the Corporate Debtor to Respondent No. 1. 12. Sub-sections 10, 11 and 12 of Section 3 of IBC contain definitions of "creditor" (including Financial Creditor), "debt" and "default" as follows:- "3 (10) "creditor" means any person to whom a debt is owed and includes a financial creditor, an operational creditor, a secured creditor, an unsecured creditor and a decree-holder. 3 (11) "debt' means a liability or obligation in respect of a claim which is due from many person and includes a f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ate of default. Moreover, no evidence by way of any written or oral contract or communication regarding the loan or record of information utility has been produced by Respondent No. 1 in support of his claim of advancing a loan to the Corporate Debtor. 14. The letter dated 20.7.2015 (attached at page 32 of the reply affidavit filed by Respondent No. 1) states the Corporate Debtor"s commitment to repay borrowed money to Respondent No.1 before 31.7.2015, and in case it fails to repay the loan on time, its liability to pay 18% interest per annum. The bank statement attached by the Appellant shows that Rs. 2.50 lakhs was transferred through RTGS to the Corporate Debtor on 20.6.2015 and Rs. 50 lakhs was transferred to the Corporate Debtor"s acc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the date of default, which is taken as 31.7.2015 means that section 7 application should have been filed within three years i.e. by 30.7.2018. The section 7 application in this case was filed on 14.9.2018. Hence, even if we assume the transaction between the Corporate Debtor and Respondent No. 1 resulting in financial debt, the section 7 application was not filed within the period of limitation. 17. In the above mentioned situation, we do not find that Respondent No. 1 was able to prove that the loan provided by him to the Corporate Debtor is a financial debt which is due and payable. We, therefore allow the appeal and set aside the Impugned Order dated 15.3.2021. All conditions enforced in compliance of Impugned Order are removed and the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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