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TMI Blog2023 (2) TMI 899X X X X Extracts X X X X X X X X Extracts X X X X ..... rust by the Corporate Debtor for the Appellant - The Explanation to Section 18 (1) clearly provides that assets shall not include assets owned by a third party in possession of the corporate debtor held under trust. First judgment relied by the Appellant is GANESH EXPORT IMPORT CO VERSUS MAHADEOLAL NATHMAL [ 1955 (1) TMI 17 - HIGH COURT OF CALCUTTA] where it was held that The party who put the Property in the hands of the company can claim it back in a winding up as his property, while the creditors cannot claim that it should be brought into the distribution. The next judgment relied by learned counsel for the Appellant is RESERVE BANK OF INDIA VERSUS BANK OF CREDIT COMMERCE INTERNATIONAL (OVERSEAS) LTD. [ 1992 (3) TMI 276 - HIGH COURT OF BOMBAY] where it was held that In an annual general meeting of RR. Ltd. on July 2, 1964, payment of dividend was approved. R.R. Ltd. had an overdraft with the Bank which exceeded the limit. The Bank refused to make funds available to RR. Ltd. for the purpose of implementation of resolution declaring dividends. The third judgment on which learned counsel for the Appellant placed reliance is CANBANK FINANCIAL SERVICES LTD. VERSUS ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... two orders passed by the Adjudicating Authority (National company Law Tribunal), Mumbai Bench, Court III i.e. 29.09.2022 in I.A. No.2247/2021 filed by the Appellant as well as order dated 29.09.2022 passed in I.A. No.665/2022 filed by the Resolution Professional for approval of the Resolution Plan. The Adjudicating Authority vide order dated 29.09.2022 rejected the I.A. No. 2247/2021 filed by the Appellant for admitting his claim as Financial Creditor and by order of the same date allowed the application of the Resolution Professional approving the Resolution Plan. Brief facts of the case necessary to be noticed for deciding this Appeal are: (i) The CIRP commenced against the Corporate Debtor - Dolphin Offshore Enterprises (India) Limited by order dated 16.07.2020. (ii) Public announcement was made on 21.07.2020, in pursuance of which Appellant submitted its claim in Form C on 31.07.2020 raising a claim of Rs.50 Lakhs as financial debt against the Corporate Debtor. (iii) The Resolution Professional informed the Appellant by email dated 30.07.2021 that debt of Appellant cannot be termed as financial debt and he may file his claim as operational debt. (iv) In CIRP, an I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ppendix to the MOU signed between both the parties. BY AND BETWEEN Dolphin Offshore Enterprises (India) Limited a company duly incorporated and validly existing under the laws of India having its office at, having its registered office at 1001, Raheja Centre, 214 Nariman Point, Mumbai 400 021 (hereinafter referred to as Member 1 ), which expression shall unless excluded by or repugnant to the subject or context thereof, be deemed to include its successors, administrators executors and permitted assigns): AND JAL Engineers Pvt Limited, a company duly incorporated and validly existing under the laws of India having its office at Runwal Chambers 1st Floor, 1st Road, Chembur Mumbai - 400 701, (hereinafter individually referred to as the Member 2), which expression shall unless excluded by or repugnant to the subject or context thereof, be deemed to include its successors, administrators executors and permitted assigns): AND The above Member 1 and Member 2 hereinafter shall be individually referred to as Consortium member and collectively be referred to as Consortium . WHEREAS Both the Consortium members have entered into an MOU ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rate Debtor. It is relevant to notice that before the Adjudicating Authority no such pleading or argument was raised. However, in the appeal ground has been taken that amount of Rs.50 Lakhs was held in trust by the Corporate Debtor for the Appellant. We, thus, proceed to examine the claim of the Appellant that the amount was given in trust to the Corporate Debtor by the Appellant. 8. Section 18 Sub-section (1) Sub-clause (f) provides as follows: 18(1)(f) take control and custody of any asset over which the corporate debtor has ownership rights as recorded in the balance sheet of the corporate debtor, or with information utility or the depository of securities or any other registry that records the ownership of assets including- (i) assets over which the corporate debtor has ownership rights which may be located in a foreign country; (ii) assets that may or may not be in possession of the corporate debtor; (iii) tangible assets, whether movable or immovable; (iv) intangible assets including intellectual property; (v) securities including shares held in any subsidiary of the corporate debtor, financial instruments, insurance policies; (vi) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assets of the company. The party who put the Property in the hands of the company can claim it back in a winding up as his property, while the creditors cannot claim that it should be brought into the distribution. 10. The next judgment relied by learned counsel for the Appellant is 1992 SCC Online Bom 110, Reserve Bank of India vs. Bank of Credit and Commerce International (Overseas) Ltd. Anr. , where in Para 20 Bombay High Court has held as follows: 20. I shall now refer to the leading judgment of House of Lords in the case of (Barclays Bank Ltd. v. Quistclose Investments Ltd.)6. (1968) 3 All. ER. 651. In my opinion, the ratio of this judgment and the formulation of relevant principles by the Court of Appeal in the case of (Quistciose Investments Ltd. v. Rolls Razor Ltd.)7, (in voluntary liquidation), (1968) 1 All ER. 613 also clinch the issue in favour of the applicants. In the above referred case, the House of Lords affirmed the decision of Court of Appeal. Lord Wilberforce delivered the main judgment on behalf of House of Lords and Lord Reid, Lord Morris of Borth-YGost, Lord Guest and Lord Pearce concurred with Lord Wilberforce. It is necessary to notice the mat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d in question should be held on trust. The principle in Barclays Bank6 has been applied both where part of the funds advanced had indeed been used for the specific purpose in question, holding that the creditor was entitled to recover whatever was left (see EVTR, Re7) as also where the funds, although advanced for a specific purpose, were paid not by way of loan but rather in satisfaction of a contractual debt. (See Carreras Rothmans Ltd. v. Freeman Mathews Treasure Ltd.8) 12. There can be no dispute to the preposition that any amount given in trust to a Corporate Debtor cannot be treated as asset of the Corporate Debtor as per Section 18(1)(f), noticed above. There can be no quarrel to the law laid down by the Hon ble Calcutta High Court, Hon ble Bombay High Court and Hon ble Supreme Court as noticed above but question which needs to be answered is as to whether the amount which was given by the Appellant to the Corporate Debtor was an amount given in trust. 13. The agreement entered between the parties on 24.10.2018, as noticed above clearly indicate that the amount was the share of the Appellant for submitting Bid Bond Bank Guarantee by the consortium, Appellant being o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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