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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 ..... ication preferred by Mr. Piyush Patel one of the Promoters of M/s. Shipraj Developers Private Limited/ the 'Corporate Debtor' who prayed inter alia for the following directions: "a. Interim Prayer i. Stay be granted on the process of CIRP until outcome of this Application as practically there is no claim and Corporate Debtor has enough liquidity to pay the claim of original applicant. Number of days this IA remain pending be excluded from the threshold limits to conclude the CIRP. b. Prayers i. R-2 Mukesh Desai's claim as Financial Creditor as admitted by the R-1 be cancelled. ii. On cancellation of claim of R-2 as Financial Creditor, COC constitution be declared as cancelled. iii. R-3 being original applicant be paid from the current account of the Company having enough balance. iv. No other creditor remains and CIRP commenced may be declared as stopped as there being no claim by creditors as R-3 only creditor is being paid and no grievance remains on their part. v. Cost may be imposed on R-1 IRP for doing such acts against the code in conspiracy with R-2. vi. R-1's action may be declared as suspicious and matter may please be referred to IBBI for necessary actio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n of corporate person, partnership firms and individual in a time bound manner for maximization of value of assets of such persons, to promote entrepreneurship, availability of credit and balance the interest of all the stakeholders including alternation in the order of priority of payment of Government dues and to establish an Insolvency and Bankruptcy Board of India...' The Hon'ble NCLAT, in the matter of Binani Industries Limited Vs. Bank of Baroda & Anr. clarified the objectives of the Code as under: 'The first order objective is 'resolution'. The second order objective is 'maximisation of value of assets of the 'Corporate Debtor' and the third order objective is 'promoting entrepreneurship, availability of credit and balancing the interest'. This order of objective is sacrosanct. Thus, when the Company is sound and going concern and looking to the object of the IB Code, it would not be prudent to bring the Company under liquidation for some vested interest. 25. Under the facts and circumstances as narrated herein above is sequel, the status of the Respondent No. 2 (Mr. Mukesh Desai) cannot be taken as Financial Creditor. Hence, the COC so constituted by the RP is void ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ppeal (AT) (Insolvency) No. 143, 175 & 176 of 2017, dated 21/05/2018 wherein this Tribunal observed that 'grant of loan and to get benefit of development is object of the Respondent- ('Financial Creditor'), as apparent from their 'Memorandum of Association'. Thus, we find that there is a 'disbursement made by the Respondent - ('Financial Creditor') against the 'consideration for the value of money'. The investment was made to derive benefit of development of 'Q-City', which is the consideration for time value for money. Thus, we find that the Respondent- ('Financial Creditor') come within the meaning of 'Financial Creditor' and is eligible to file an application under Section 7, there being a 'debt' and 'default' on the part of 'Corporate Debtor'. Merely because the Appellant is a partner in the said Project it does not create any embargo per se for the Appellant to not to be considered as a 'Financial Creditor'. Further, any 'person' as mentioned under Section 5(7) of the Code, r/w Section 3(23)(e) includes 'partnership', hence a partner is also a 'Financial Creditor' as enshrined under the Code. 6. Submissions of the Learned Counsel appearing on behalf of first and second Resp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gistered on 26/05/2014, detailed as hereunder: (Emphasis Supplied) 9. It is also not in dispute that Arbitration proceedings are pending between the parties with respect to the disputes raised and claims made. 10. It is the main case of the Appellant that since the amount is termed as a 'Long Term Borrowing' in the Audited Balance Sheet for the year ending 2019, the ratio of the Judgement of the Hon'ble Supreme Court in 'Orator Marketing Private Limited' (Supra) applies. In Orator Marketing Private Limited' (Supra) the Hon'ble Supreme Court has discussed elaborately 'the issue whether a person who gives a term loan to a 'Corporate Person', free of interest, on account of its working capital requirements is not a 'Financial Creditor', and therefore, incompetent to initiate the Corporate Resolution Process under Section 7 of the Code'. The Hon'ble Apex Court held that the triggering for CIRP by a 'Financial Creditor' under Section 7 of the Code is the occurrence of a 'default' by the 'Corporate Debtor'. The definition of 'Financial Debt' under Section 5(8) of the Code does not expressly, exclude 'an interest free loan'. 'Financial Debt' would have to be construed to include intere ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion 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, 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-clauses (a) to (h) of this clause;' 14. In the instant case, on mutual Agreement, the 'Corporate Debtor' and other parties decided to transfer 25% of the land to the Appellant herein on a price decided jointly. As per Clause 4 of the MoU, the Appellant shall fund the cost of construction to the 'Corporate Debtor'/developer, till the sample flat is ready. It was correlatively decided that 'both parties have rights to book flats with mutual consent'. Clause 6 stipulates that 'whatever income is earned from the sale of flats, the Appellant is entitled to 25% of the Net Profit'. 15. The MoU entered into is an Agreement of reciprocal rights and obligations. We are of the earnest view that both parties being 'Joint Development Partners' ..... X X X X Extracts X X X X X X X X Extracts X X X X
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