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TMI Blog2022 (12) TMI 58X X X X Extracts X X X X X X X X Extracts X X X X ..... kar, Mr. G. Kaushal, Mr. Arun Pal, Advocates for R-4/RP JUDGMENT Per : Justice Rakesh Kumar Jain : This appeal is preferred by an erstwhile Director of the Corporate Debtor (Shaila Clubs & Resorts Private Limited), being aggrieved against the order dated 29.10.2021, passed by the Adjudicating Authority (National Company Law Tribunal, Mumbai Bench, Court-II) in CP (IB) 170/MB/CII/ 2018, by which an application filed by Respondents No. 1 to 3 (Financial Creditors), under Section 7 of the Insolvency and Bankruptcy Code, 2016 (in short 'Code') to initiate Corporate Insolvency Resolution Process (in short 'CIRP') against the Corporate Debtor has been admitted. 2. In short, the Respondents No. 1 to 3 are the legal heirs of Rajeev Ramling Ko ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r discloses the default as prescribed under Section 2(12) of the Code. Rather it is submitted that the principal amount was to be repaid from the sale proceeds of the principal assets (Club Premises) which is the subject matter of the arbitration and litigation, therefore, the principal loan amount has not become due and payable and as such there was no default on the part of the Corporate Debtor (Respondent No. 4) which may trigger the cause of action for the filing of application under Section 7 of the Code. 4. Counsel for the Appellant has submitted that the Adjudicating Authority has passed the impugned order without applying its mind to the facts and circumstances much less the evidence brought on record as according to the Appellant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sence of any agreement between the parties about the manner in which the amount was to be repaid except that it shall be after the sale of the assets of the club premises. In this regard, Counsel for the Appellant has referred to the definition of financial debt which is provided in Section 5(8) of the Code and submitted that it does not come within the purview of the financial debt which means a debt alongwith interest and the debt is defined under Section 3(11) of the Code as a liability or obligation in respect of a claim which is due from any person. Similarly, Counsel for the Appellant has referred to the definition of default provided in Section 3(12) which means non-payment of debt when whole or any part or installment of the amount ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the Respondent (Corporate Debtor) which is also evident from the first page of the impugned order where the appearance of counsel for the parties has been marked. In the end, it is submitted that since none of the contentions, though noticed from Paragraph 8 to 10 in the impugned order have been discussed while recording its satisfaction in Para 12 and 13 of the impugned order for the purpose of initiation of CIRP against the Corporate Debtor, therefore, the impugned order may be set aside and the matter may be remanded back to the Adjudicating Authority to decide it again after taking into consideration the facts and circumstances of the case much less the primary issue as to how the provision of Section 7 of the Code are attracted when ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... th their able assistance. 9. In the matter of judicial review in appeal, the Appellate Court is more concerned about the manner in which the findings are ultimately recorded, while admitting or rejecting the application filed either under Section 7, 9 or 10 of the Code as the case may be because a reasoned and speaking order is the soul of principle of natural justice which has to be observed by the Adjudicating Authority being a quasi judicial authority. It has been found from the impugned order that the Adjudicating Authority has divided its order in three parts. The first part deals with the submissions of Financial Creditor, second part deals with the submissions of Corporate Debtor and the third is about its satisfaction for admitting ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... roved, the adjudicating authority is bound to admit the petition" 10. The Adjudicating Authority, has apparently committed an error in not deciding the issue as to whether there was actually a default on the part of the Appellant. It should have given the reason as to why the contention of the Corporate Debtor that there was an understanding that money shall be paid after the sale of assets only has no substance in it and how it has come to the conclusion that various financial statements shows acknowledgement of the money/loan by the Corporate Debtor. There is no discussion at all by the Adjudicating Authority about these material facts. Not only that, it appears that the Adjudicating Authority has not looked into the fact that no one ha ..... X X X X Extracts X X X X X X X X Extracts X X X X
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