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TMI Blog2022 (2) TMI 1311X X X X Extracts X X X X X X X X Extracts X X X X ..... e crore sixty lakh only) which includes: a) Short Term Loan amount of Rs.39,60,00,000/- (Rupees thirty-nine crore sixty lakh only); and b) Working Capital Loan amounting to Rs.40,00,00,000/- (Rupees forty crore only) along with interest payable @ 10.50% p.a. 3. The Date of Default as mentioned in the Petition is 30.06.2019. 4. The case of the Financial Creditor is as under: a) The Corporate Debtor approached the Financial Creditor for the purpose of seeking loan. Accordingly, the Financial Creditor sanctioned the following facility to the Corporate Debtor: Sr. No. Particulars Amount Sanctioned Due Date for Repayment 1 Short Term Loan by way of Mortgage with interest @ 14% p.a. Rs.39,60,00,000/- 30.06.2019 2 Working Capital Loan by way of Pledge with interest @ 10.50% p.a. Rs.40,00,00,000/- 31.10.2019 b) The said facilities were disbursed to the Corporate Debtor in the following manner: Sr. No. Amounts Disbursed Date of Disbursement) 1 19,80,00,000/- 26.10.2018 2 19,80,00,000/- 06.11.2018 c) A total amount of Rs.40,00,00,000/- (Rupees forty crore only) was sanctioned by the Financial Creditor which was utilised by the Corporate Debtor as and when it w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f section 2 of the Code. c) The Corporate Debtor submits that, NCLT is Quasi-Judicial Authority created under the Companies Act, 2013 to handle corporate civil disputes under the Act. In view of the same the NCLT has no jurisdiction over the Co-operative Society. 6. The Financial Creditor has filed its written submissions and submitted as under: a) The Financial Creditor has sanctioned Short Term Loan by way of Mortgage with interest @14% p.a. of Rs. 39,60,00,000/- dated 30.06.2019 and Working Capital Loan by way of Pledge with interest @10.50% p.a. of Rs.40,00,00,000/- dated 31.10.2019. b) The repayment of Short-Term Loan was to be made by Corporate Debtor on or before 30th June 2019 along with the applicable interest. However, the Corporate Debtor has defaulted on the repayment. The details are as follows: Principal Amount 29,80,00,000/- Interest 1,04,07,000/- Total Amount Outstanding as on 30.06.2019 30,84,07,000/- c) The facility pertaining to the Working Capital Loan, which was due and payable by Corporate Debtor on or before 31st October 2019, was eventually extended by the Financial Creditor and was due and payable on or before 31st December 2020. d) The Fin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e category mentioned in Section 2 (d) for which separate notification is necessary from Central Government. (ii) Section 3(7) apart from Company and LLP also specifically includes any other person incorporated with limited liability under any law for the time being in force. To fit into this category the person must satisfy two conditions, namely: i. Person incorporated with limited liability; and ii. Such incorporation must be under any other law for the time being in force. If the abovementioned two conditions are satisfied then such person shall be a corporate person and if he owes any debt then he becomes Corporate Debtor, thereby comes within the ambit of the code. (iii) The Financial Creditor submits that, Section 3(7) of the code was notified by way of a notification dated 2nd November 2016. Section 2(d) of the code requires that for application of the code to any person other than Company and LLP notification from the Central Government is required and thereby objection of the Corporate Debtor does not remain valid. The notification is annexed to these written submissions at pp 15-16. (iv) The Financial Creditor submits that, assuming without admitting that ther ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e proceeding for winding up of the such Company or for the appointment of receiver in respect thereof. Therefore, as such, the proceedings under section 9 of the Code shall not be limited and/or restricted to winding up and/or appointment of receiver only. The Winding Up/ Liquidation of the Company shall be the last resort and only on an eventually when the CIRP fails. As observed by this Court in Swiss Ribbons Pvt Ltd, referred to hereinabove, the primary focus of the legislation while enacting the IBC is to ensure revival and continuation debtor from its own management and from a corporate debtor by liquidation and such CIRP is to be completed in a time-bound manner. Therefore, the entire CIRP as such cannot be equated with Winding Up proceedings. Therefore, considering Section 238 of the Code, which is a subsequent Act to the Tea Act, 1953. Any other view would frustrate the object and purpose of the IBC. If the submission on behalf of the Appellant that before initiation of proceedings under section 9 of the IBC, the consent of the Central Government as provided under section 16G (1) (c) of the Tea Act, 1953 is to be obtained, in that case, the main object and purpose of the IB ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mpanies Act, 2013 (18 of 2013), a limited liability partnership, as defined in clause (n) of sub-section (1) of section 2 of the Limited Liability Partnership Act, 2008 (6 of 2009), or any other person incorporated with limited liability under any law for the time being in force but shall not include any financial service provider; 11. After bare reading of the above provisions of the Code, even if we consider the Corporate Debtor to be a 'Corporate Person' as defined under section 3(7) of the Code, the Corporate Debtor is itself a Co-operative Society and hence cannot come under the provisions of section 2(d) of the Code as the Central Government has not issued the Notification of the applicability of the Code to the Co-operative Society. 12. Section 2 addresses the applicability of the code and listed down the various types of Corporate Debtors on whom/by whom Insolvency, Liquidation, Voluntary Liquidation or Bankruptcy Proceedings can be initiated. 13. From the bare reading of Section 2 of the Code, it can be understood that the Corporate Debtor in the given case is - i. Not a company incorporated under the Companies Act, 2013 or under any previous company law (Section 2(a) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the name under which it was registered having perpetual succession and a common seal. Thus, although the Society is not incorporated and it is registered, it is rendered a body corporate which can have perpetual succession and have a common seal. Section 18 makes it clear that as the Society will be rendered body corporate, it shall be entitled to acquire, hold and dispose of property, to enter into contracts, to institute and defend suits and other legal proceedings and to do all other things necessary for the furtherance of the aim for which it was constituted. The Learned Counsel for the Respondents has rightly submitted that even if best case of the Appellant is accepted, the Society which will be deemed to be a body corporate is for the purposes as mentioned in Section 18, and not Company incorporated as such. 32. We need not deliberate in more details on the effect of Section 18 of the A.P. Act for the reasons we have already discussed above. Looked at in any manner, Section 2 read with Section 3 (7) does not spell out that the Respondents Companies in these Appeals are 'Corporate Persons' under the 'I&B Code' to whom provisions for 'I&B Code' would apply. 33. For such r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ant was to say that the Respondents should be treated as body corporate under Section 18 of the A.P. Act, nothing is shown that Respondents Societies are persons "incorporated" or that the incorporation is with "limited liability". This has to be further read with Section 2(d) which requires that to apply the Code such other body incorporated under any law for the time being in force needs to be specified by Central Government only then 'I&B Code' would apply to it. 20. From the entire observations of the rulings, it is well understood that, the Corporate Debtor which is Co-operative Society, to become the 'Corporate Person' under section 3(7) has to complete the criteria given under section 2 of the Code, which deals with applicability of the Code. If the Corporate Debtor in the matter is not covered under the section 2 of the Code, the question of applicability of section 3(7) does not arise. 21. It is also important to note that the Central Government has issued the notifications with respect to CIRP of Corporate Debtor [Ministry of Corporate Affairs - Commencement of Sections under Chapter II, Chapter VII of Part IV and sections under Part V - Dated 01.11.2016 - SO 3355(E)] a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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