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TMI Blog2022 (1) TMI 461X X X X Extracts X X X X X X X X Extracts X X X X ..... espondent Company; the entries of debit and credit dated 07.11.2015, 10.11.2015, 24.11.2015 (Exhibit K) establish several internal transactions between the Satra Group Companies ; the Auditor s Report detailing the Related Party transactions which figures the names of common Directors and the corresponding transactions; therefore the Appellant has failed to satisfy that the transaction in question is a Financial Debt as defined in the Code and a default has occurred. The scope and objective of the IBC is to be cautious in admitting an Application and not encourage recovery proceedings. Appeal dismissed. - COMPANY APPEAL (AT) (INSOLVENCY) No. 715 of 2020 - - - Dated:- 11-1-2022 - [Justice Anant Bijay Singh] Member (Judicial) And [Ms. Shreesha Merla] Member (Technical) For the Appellant : Mr. Malak Bhatt, Mr. Rajat Bector Ms. Devanshi Singh, Advocates For the Respondent : Mr. Prakash Shinde, Mr. Nishit Dhruva, Mr. Pulkit Sharma, Ms. Sneha Botwe, Mr. Kaushal Parsekhar, Ms. S.M. Algaus Ms. Pratiksha Agarwal, Advocates JUDGEMENT [ Per; Shreesha Merla, Member (T) ] 1. Challenge in this Appeal namely Company Appeal (AT) (Insolvency) No. 715 of 2020 i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r annum, repayable on demand. It is contended that the Appellant had provided the said loan to the Corporate Debtor till 11.01.2018, which is reflected in the Bank Statements and the Respondent has from time to time repaid parts of the payment of the said loan and also deducted TDS on the interest amount. It is argued that the Respondent has also confirmed the same in the accounts for the FY 2015-16, 2016-17 and 01.04.2017 to 31.01.2018. On 06.05.2019, the Appellant issued a Demand Notice calling upon the Corporate Debtor to repay the outstanding amount of ₹ 12,39,06,879/- within a period of three days from the date of receipt of the Notice. On 13.05.2019, a revised Demand Notice was issued calling upon the Corporate Debtor once again to repay the outstanding amount. On 15.05.2019, the Corporate Debtor replied to the Demand Notice and declined to repay the Financial Debt stating that the transaction of borrowing was an Improper Transaction . Hence, the Appellant preferred an Application under Section 7 of the Code on 28.05.2019, which was dismissed by the Adjudicating Authority. Learned Counsel contended that the Appellants had brought on record ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... disbursed on 15.02.2016 find mention on page 274 of the Appeal Paper Book and amounts of ₹ 34 Lakhs and ₹ 30 Lakhs disbursed on 26.09.2016 and 29.09.2016 are mentioned in page 261 of the Appeal Paper Book. It is denied that the Loan Agreement dated 02.12.2015, is in violation of Section 186 of the Companies Act, 2013. The Appellant Company has specifically passed a Special Resolution dated 02.04.2014 authorising the Board of Directors to give loan in compliance with Section 186 of the Companies Act, 2013. The Audited Report annexed to the Balance Sheet is also self-explanatory. It is further submitted that any proceeding initiated by the sister concerns of the Respondent Company has no bearing on this Application filed under Section 7. Moreover, the purported claim of the sister concerns is only ₹ 6,25,28,545/- which is much less than the claim of the Appellant which is ₹ 12,39,06,879/-. It is denied that the Appellant Company is a part of the Satra Group of Companies and that it is directly controlled by the Satra Group as there are multiple transactions between them. Mr. Praful Satra and Mrs. Minaxi Satra of the Satra Group have ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rol of the Satra Group and is also indirectly controlling the Appellant. The Appellant failed to produce proper authorisation for initiation of CIRP and has filed the Petition with false and fabricated documents and hence, the Adjudicating Authority has rightly dismissed the Petition. Assessment: 4. It is the case of the Appellant that the MOU is a forged document and was never mentioned in the replies to both the Demand Notices dated 06.05.2019 and 13.05.2019. The common Reply to both the Demand Notices dated 15.05.2019 is detailed as hereunder: (Emphasis Supplied) 5. From the Reply, it is seen that the Corporate Debtor Company has raised the issue of Improper Transaction carried out by Satra Group and the Appellant and that the Loan Agreement dated 02.12.2015 was never forwarded by the Satra Group to this new management. Both parties placed reliance on the Loan Agreement dated 02.12.2015 with the Appellant Counsel vehemently contending that the length of the loan document has no correlation to its validity or legitimacy and that the Loan Agreement is to be read together with the confirmation of accounts executed on 01.02.2018, that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... duced as hereunder: 5. Definitions.-In this Part, unless the context otherwise requires,- (8) financial debt means a debt along with 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 non-recourse basis; (f) any amount raised under any other transaction, including any forward sale or purchase agreement, having the commercial effect of a borrowing; [Explanation.-For the purposes of this sub-clause,- (i) any amount raised from an allottee under a real estate project shall be deemed to be an amount ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d in the use of this popular and pejorative word. I apprehend that, if it has any meaning in law, it means acts done or documents executed by the parties to the sham which are intended by them to give to third parties or to the court the appearance of creating between the parties legal rights and obligations different from the actual legal rights and obligations (if any) which the parties intend to create. (Emphasis Supplied) ... 55. NCLT in its order dated 19-7-2019 has noted that AAA and the corporate debtor had entered into multiple agreements regarding the same property without giving any explanation or rationale regarding variation in the consideration. This showed that the transactions were collusive in nature entered with the purpose of diverting properties of the corporate debtor to AAA. Mr Viswanathan sought to explain the multiple agreements, and argued that AAA entered into a development agreement dated 1-1-2012 with the corporate debtor to obtain 38.3% of development nights. Since the development agreement could not be implemented because the licence for the project could not be split into two parts, an agreement to sell and a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... p which include Satra Property Development Limited , Satra Estate Private Limited , Mr. Praful Satra and Mrs. Minaxi Satra. Though the Respondent Counsel has raised this issue of regular internal transactions where there are uninterrupted receipt/payments of money between the Appellant and the Satra Group it has not been rebutted by the Appellant by way of any documentary evidence to counter the same. The audited Balance Sheets reflected that maximum loan was advanced by the Corporate Debtor Company to the Companies under the management and control of the Satra Group . It is not in dispute that the Corporate Debtor Company was a subsidiary of the Satra Group Companies and was previously under the control and management of the Satra Group . Admittedly, it was only on 09.02.2018 that it was taken over by the new management MJ Shah Group. Mr. Praful Satra has resigned from the Directorship of the Respondent Company on 20.04.2018 and the name of the Company was changed from Satra Realty and Builders Limited to the present name Centrio Lifespaces Limited on 19.07.2018. The copy of the statement of account annexed with the Company Petition is signed by the same Mr. Pra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... etween Satra Realty and Builders Limited and Satra Properties Development Limited together with the admitted fact that the Respondent Company was a part of the Satra Group ; that the Directorship is common in all the Satra Companies ; it was only on 09.04.2018 that the name of the Respondent Company was changed to Centrio Lifespaces Limited with the new management stepping in; that the statement of account appended to the Petition is signed by Mr. Praful Satra, the erstwhile Director of the Respondent Company; the entries of debit and credit dated 07.11.2015, 10.11.2015, 24.11.2015 (Exhibit K) establish several internal transactions between the Satra Group Companies ; the Auditor s Report detailing the Related Party transactions which figures the names of common Directors and the corresponding transactions; we are of the view that the Appellant has failed to satisfy that the transaction in question is a Financial Debt as defined in the Code and a default has occurred. Therefore, the contention of the Learned Counsel for the Appellant that ratio of M/s. Innoventive Industries (Supra) alone is to be applied, cannot be sustained. The scope and objective of the IBC is to be ..... X X X X Extracts X X X X X X X X Extracts X X X X
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