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TMI Blog2022 (11) TMI 160X X X X Extracts X X X X X X X X Extracts X X X X ..... eved by the Impugned Order in that the section 7 application filed by respondent No. 1 has been admitted and Corporate Insolvency Resolution Process (in short 'CIRP') has been initiated against the corporate debtor Varsha Corporation Limited. 3. In brief, the Appellant's case is that a promissory note was executed between the corporate debtor and Respondent No. 2 Mr. Rajendra Shah on 23.2.2012 for a loan of Rs.50,00,000/- (Rupees Fifty Lakhs Only) payable by the corporate debtor, and the requisite amount was given by Respondent No. 2 vide cheque no. 468828 dated 21.2.2012 drawn on Central Bank of India. The Appellant has stated that during the life of the promissory note i.e. up to 23.2.2015, there was no demand for repayment by Respondent No.2 and therefore, no default can be determined during this period. He has further stated that in accordance with Article 35 of the Schedule which includes periods of limitation in the Limitation Act, 1963, a period of limitation of three years is stipulated for a promissory note, which is payable on demand, and thus the section 7 application filed by Respondent No. 2 on 25.10.2019 was clearly barred by limitation, as it was filed after more th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s clearly barred by limitation, should be rejected. 7. The Learned Counsel for Appellant has cited the following judgments of NCLAT in support of his contention that lack of record to show disbursal of loan is a serious short-coming in section 7 application on which basis the insolvency application cannot be admitted:- (i) Prayag Polytech Pvt. Ltd. v/s Gem Batteries Pvt. Ltd. (Company Appeal (AT) (Ins) No. 713 of 2019). (ii) Pawan Kumar v/s. Utsav Securities Pvt. Ltd. and Anr. (Company Appeal (AT) (Ins) No. 251 of 2020). 8. The Learned Counsel for Appellant has also cited the judgment of NCLAT in Anita Jindal Vs. M/s. Jindal Buildtech Pvt. Ltd., [CA (AT) (Insolvency) No. 512 of 2021], whereby the Hon'ble Tribunal has held that for seeking initiation of CIRP, the factual matrix of the case should be seen whether it is only with an intention for recovery of dues and not for the purpose of insolvency resolution, and if it is meant for recovery of dues, the application for CIRP initiation ought not to have been admitted. 9. In reply, the Learned Counsel for Respondent has argued that the promissory note was executed between him and the corporate debtor for providing a loan of Rs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7, in which the existence of the three cheques bearing no. 964293 for Rs. 50 lakhs, no. 958801 for Rs. 3,41,250/- and no. 964332 for Rs. 1,72,500/-, all issued on 22.10.2016 drawn on the Greater Bombay Co-operative Bank, Mumbai has been found to be correct and so affirmed by the Metropolitan Magistrate, Mumbai. 11. The issue, therefore, that falls for consideration in this appeal is whether the loan advanced by Respondent No. 2 to the corporate debtor regarding which the promissory note has been executed is a financial debt and further whether the letter dated 7.6.2016 constitutes admission of such debt and whether the date of dishonouring of cheques i.e. 16.12.2016 is the date of default. 12. We note that the ledger statement regarding confirmation on account of the corporate debtor for the period 1.4.2014 to 2015, which was sent by the corporate debtor to Respondent No. 2 (attached at page 97 of the appeal paperbook) clearly shows that interest on unsecured loan amount of Rs.170625/- was paid on 9.4.2014, further an amount of Rs.172500/- was paid on 20.11.2014 and an amount of Rs.341250 was paid on 20.06.2015. Therefore, it is clear, as claimed by Respondent No. 2, that the cor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rporate debtor's letter dated 7.6.2016 states very clearly the existence of the loan and also the fact that on depositing the cheque with the bank of Respondent No. 2, the same will definitely be honoured and the dishonouring of cheques will be taken as default for which the financial creditor can take legal action. Thus the date 16.12.2016 has been correctly considered as the date of default by the Adjudicating Authority, which the said cheques were dishonoured. 16. The corporate debtor has admitted the fact that a loan was taken by the corporate debtor from Respondent No. 2 (para 5 of reply dated 16.1.2017 to the notice of Respondent No. 2, attached at pp. 92-96 of the appeal paperbook). Further in the same reply, the corporate debtor has accepted that such cheques were given by the corporate debtor, but with an understanding that the same shall be deposited in the month of March, 2017. We are not inclined to accept this claim of the corporate debtor and are of the view that Respondent No. 2 deposited the cheques in accordance with date of the cheques, i.e. 22.10.2016. Therefore, it also supports the contention of the Financial Creditor that the date of 16.12.2016, when these ch ..... X X X X Extracts X X X X X X X X Extracts X X X X
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