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TMI Blog2022 (2) TMI 1079X X X X Extracts X X X X X X X X Extracts X X X X ..... ement of reciprocal rights and obligations. Both parties being Joint Development Partners who entered into a consortium of sorts for developing the subject land and for any breach of terms of the contract, Section 7 Application filed under the Code would not be maintainable as the amount cannot be construed as Financial Debt as there is no sum(s) i.e., owed, assigned or transferred to in compliance of the provisions of Section 5(8) of the Code - Keeping in view the peculiar facts of the attendant case on hand, wherein an Application under Section 12-A, the Corporate Debtor has settled the claims of the Operational Creditor and the sole Member of the CoC is the Appellant herein, whom we, for all the aforenoted reasons, are of the considered view is not a Financial Creditor , we do not find any illegality or infirmity in the Impugned Order, whereby the Adjudicating Authority has sought to close the CIRP proceedings against the Corporate Debtor . This Tribunal also took into consideration the observation by the Adjudicating Authority, that subsequent to the Public Announcement, not a single claimant had come forward to file their claims. This Tribunal is not inclined to i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mitted on 24/07/2019 and an IRP was appointed. During the pendency of CIRP, I.A. 752 of 2019 was preferred by the Corporate Debtor with the aforenoted prayers. The first Meeting was convened on 16/09/2019 wherein, Mr. Mukesh Desai, the Appellant herein was the sole Member of the constituted CoC. The Corporate Debtor objected to the inclusion of Mr. Mukesh Desai as the Financial Creditor /Member of CoC on the ground that he is a partner in the Project of the Corporate Debtor , having an ownership of 25% shares in the land meant for the Project Coconut Mr. Desai is said to have made a payment of ₹ 12,57,42,071/- towards 25% of the ownership; that an MoU was entered into between Mr. Desai and the Corporate Debtor on 26/05/2014 whereby it was decided to transfer 25% of the land to him and therefore being a partner of the Project, Mr. Mukesh Desai cannot be termed as a Financial Creditor . 3. While allowing the Application, the Adjudicating Authority observed as follows: 19. It is also evident and a matter of record that public announcement has been made but not a single claimant has put forward their claim before the RP. Under such situation it can be presume ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ingly, the instant Application is allowed with the above directions. (Emphasis Supplied) 4. The main issue which arises in this Appeal is: Whether a landowner intending to share profits emanating from the agreed venture, by way of an MoU, would fall within the ambit of the definition of Financial Creditor as defined under Section 5 of the Code. Whether the Adjudicating Authority in the event of an Application being filed under Section 9 of the Code and the Corporate Debtor having settled with the Operational Creditor , can close the CIRP Proceedings on the ground that the sole Member of the CoC does not fall within the ambit of definition of Financial Creditor , as defined under the Code. 5. Submissions of the Learned Counsel appearing on behalf of the Appellant: It is submitted by the Learned Counsel for the Appellant that during the period 22/05/2014 to 25/08/2014, an amount of ₹ 4,41,82,071/- was extended to the Corporate Debtor by way of a loan vide cheque payment and the same is also reflected in the Balance Sheet dated 31/03/2019 under the heading Long Term Borrowings . In support of his argument that the amount lent and reflected in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ant has not contributed even the entire amount in compliance of the terms of the Agreement. The said matter is still pending before the Arbitrator. The Appellant is not a Financial Creditor , and nowhere is it mentioned that any interest has been paid to the Appellant even as per the terms of the MoU. It is stated in the MoU dated 26/05/2014 that the Appellant is a 25% partner in the Project and has not proved by way of any documents that the amount given under the MoU is for time value of money. 7. Submissions of the Learned Counsel appearing on behalf of Respondent No. 3/Resolution Professional: The IRP made a Public Announcement dated 30/07/2019 inviting the claims from Creditors under provisions of Section 15 of the Code and admitted the claim of one Financial Creditor Mr. Mukesh Desai/ the Appellant to the tune of ₹ 4,41,82,701/- and three Operational Creditors i.e., Nuvoco Vistas Corporation Limited, Kunjal Dalal and Income Tax Officer, Surat. The claim of the Operational Creditor amounted to ₹ 1,60,14,829/-. The claim of the IT Department amounting to ₹ 1,45,00,000/- was transferred to them and the other Operational Creditor Nuvoco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ven towards financing the Project Coconut , in which, the Appellant herein is a 25% partner, involved in profit sharing and therefore is a significant part of the ownership share. The said fact is not disputed by the Appellant, but contends that merely because the Appellant is sharing the profits, the same would not bar the Appellant from being termed as Financial Creditor as defined under Section 5(7) of the Code. 12. The definition of Financial Creditor under Section 5(7) of the Code is reads as hereunder: 5(7) financial creditor means any person to whom a financial debt is owed and includes a person to whom such debt has been legally assigned or transferred to; 13. The definition of Financial Debt under Section 5(8) of the Code is reads as under: 5(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, not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... act, Section 7 Application filed under the Code would not be maintainable as the amount cannot be construed as Financial Debt as there is no sum(s) i.e., owed, assigned or transferred to in compliance of the provisions of Section 5(8) of the Code. To reiterate, being a profit share owner, who in the event of the success of the Project would receive the residual gain, the amount invested in the land cannot be said to be a Financial Debt as defined under Section 5(8) of the Code. Hence, the ratio of the Judgements relied upon by the Learned Counsel for the Appellant are not applicable to the facts of this case. 16. Keeping in view the peculiar facts of the attendant case on hand, wherein an Application under Section 12-A, the Corporate Debtor has settled the claims of the Operational Creditor and the sole Member of the CoC is the Appellant herein, whom we, for all the aforenoted reasons, are of the considered view is not a Financial Creditor , we do not find any illegality or infirmity in the Impugned Order, whereby the Adjudicating Authority has sought to close the CIRP proceedings against the Corporate Debtor . This Tribunal also took into consideration the observation ..... X X X X Extracts X X X X X X X X Extracts X X X X
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