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TMI Blog2022 (9) TMI 1012X X X X Extracts X X X X X X X X Extracts X X X X ..... on C.P. (IB) No. 1220/MB/2020 filed by the Respondent No. 1 - Anand Rathi Global Finance Limited as Financial Creditor, for initiation of the Corporate Insolvency Resolution Process (CIRP) of M/s Doshi Holdings Pvt. Ltd., hereinafter referred to as "Doshi Holdings", under Section 7 of the IBC. The Appellant is a suspended Director of Doshi Holdings. 2. The Respondent No 1, a Non-banking Financial Company, hereinafter referred to as the "Financial Creditor" disbursed loan to the tune of Rs.6 Crores to M/s Premier Limited, hereinafter referred to as "Premier" under three separate Loan-cum-Pledge Agreements, dated 29th June 2015, 4th May 2016 and 5th October 2016, respectively. According to the Appellant, Doshi Holdings pledged shares held by it in Premier, in favour of the Financial Creditor, by way of security for the loan. 3. According to the Appellant, the Loan-cum-Pledge Agreements contemplated two distinct transactions under one document, that is, grant of loan to Premier, and creation of pledge by Doshi Holdings of securities held by the Doshi Holdings in Premier. 4. Premier failed to make repayments in terms of the Loan-cum-Pledge Agreements. The Financial Creditor, therefo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... standard form agreements in which Premier was the borrower and Doshi Holdings the pledgor. For convenience, the borrower and the pledgor have collectively been referred to as borrowers and individually referred to as borrower or pledgor. The Appellant executed the Loan-cum-Pledge Agreement and other related documents on behalf of Premier and Doshi Holdings, because the Appellant had independently and separately been authorised by Premier and Doshi Holdings to execute the documents. The fact remains that Doshi Holdings and Premier are separate entities. 13. Mr. Vishwanathan argued that since no disbursement has been made to Doshi Holdings against consideration for the time value of money, there was no obligation on the part of Doshi Holdings to make any repayment to the Financial Creditor. There was, therefore, no financial debt owed by Doshi Holdings to the Financial Creditor under Section 5(8) of the IBC. Insofar as Doshi Holdings is concerned, the Loan-cum-Pledge Agreements only created a pledge of the shares of Doshi Holdings in Premier in favour of the Financial Creditor. The petition under Section 7 of the IBC against the Corporate Debtor was clearly not maintainable. 14. I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0. Mr. Vishwanathan argued that the Adjudicating Authority (NCLT) interchangeably referred to Doshi Holdings as a co-borrower/guarantor under the Loan-cum-Pledge Agreement, losing sight of the difference in the liability of a pledgor from that of a guarantor. 21. Mr. Vishwanathan submitted that the Appellate Authority failed to appreciate that the execution of a promissory note gives rise to a presumption that such promissory note is supported by consideration. The presumption is, however, rebuttable. 22. Mr. Vishwanathan cited Bharat Barrel & Drum Manufacturing Company v. Amin Chand Payrelal (1999) 3 SCC 35 , where this Court held :- "12. Upon consideration of various judgments as noted hereinabove, the position of law which emerges is that once execution of the promisory note is admitted, the presumption under Section 118(a) would arise that it is supported by consideration. Such a presumption is rebuttable. The defendant can prove the nonexistence of a consideration by raising a probable defence. If the defendant is proved to have discharged the initial onus of proof showing that the existence of consideration was improbable or doubtful or the same was illegal, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 000/-. (vi) Demand Promissory Note unconditionally promising to pay to the Financial Creditor. 28. Mr. Sakseria pointed out that both Premier and Doshi Holdings have been described as borrowers in the Loan-cum-Pledge Agreements. Mr. Sakseria also pointed out that Doshi Holdings had acknowledged receipt of monies disbursed under three loan agreements by executing loan receipts. Doshi Holdings had also issued demand promissory note unconditionally promising repayment of loan to the Financial Creditor. The loan agreements, receipts and demand promissory notes have been signed by the Appellant in his capacity as the authorised signatory/Director of Doshi Holdings and Premier. After Premier defaulted in payment of loan, demand notice was issued to Doshi Holdings to repay the loan in its capacity as co-borrower. 29. Mr. Sakseria argued that the definition of financial debt contemplates a disbursal against consideration for time value of money, and not a disbursal necessarily to the Corporate Debtor. Otherwise, an amount payable under a guarantee could never have been included inasmuch as amounts are never disbursed to a guarantor, but he is liable for debts of another. 30. Mr. Sak ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he conduct of any other person. In a contract of indemnity, a promisee acting within the scope of his authority is entitled to recover from the promisor all damages and all costs which he may incur. A contract of guarantee, on the other hand, is a promise whereby the promisor promises to discharge the liability of a third person in case of his default. The person who gives the guarantee is called the surety. The person in respect of whose default, the guarantee is given is the principal debtor and the person to whom the guarantee is given is the creditor. Anything done or any promise made for the benefit of the principal debtor may be a sufficient consideration to the surety for giving the guarantee. On the other hand, the bailment of goods as security for payment of a debt or performance of a promise is a pledge. 36. The proposition of law which emerges from the judgment is that a pledgor per se may not be a Financial Debtor. However, in this case, as observed above, the Appellate Authority arrived at a factual finding that Disha Holdings was a borrower. In Lalit Kumar Jain v. Union of India (2021) 9 SCC 321, this Court held that the approval of a resolution plan in relation to a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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