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TMI Blog2023 (7) TMI 155X X X X Extracts X X X X X X X X Extracts X X X X ..... whether the claim of the Applicant is required to be admitted in the capacity as a Financial Creditor. After perusing the pleadings and documents filed along with the application, it could be seen that the Loan Agreement was executed between the parties on 27.12.2019 in and by which the amount of Rs.16.00 Crores was converted into loan to be paid with 15% Interest per annum. 15. Further, it is also seen from the Bank Statement that the Applicant has disbursed a sum of Rs. 12,94,04,499/- to the account of Corporate Debtor and the same is also not disputed. However, it could be seen from the Balance Sheet that the name of the Applicant's Partner namely Sanjay Kumar P.Shah and Manish Kumar P.Shah is reflected in the Shareholder in the Books of Corporate Debtor and the said fact is also intimated to the Applicant as early as on 27.01.2020. 16. While this being the fact that if the Applicant's real intention was not to hold any shares in the Corporate Debtor Company, the Applicant ought to have taken steps under section 59 of the Company's Act 2013 for rectification of his name in the Registrar of Company. However, it could be seen that no steps taken by the Applicant i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s actually inchoate and the legal title remains vested in the transferor." "31. Till the stage of execution of 'transfer' all that is made is to pass an equitable interest in the shares to the 'Transferee'. In reality, there is no completion of legal assignment. Even when the 'Board of Directors' accepts the transfer and passes it for registration of transfers in records, the 'transfer' is not completed. Until the actual entry of transferee's name was effected in the Company's register, the transferor remains the legal holder of shares....." 3. The Learned Counsel also placed reliance on the Judgment of the Hon'ble Supreme Court in the matter of 'Messrs Howrah Trading Co. Ltd. Vs. The Commissioner of Income-Tax', Calcutta 1959 AIR 775 wherein it was held that 'a Shareholder shall only constitute those whose names are inscribed in the Register of Members' 4. It is submitted that the Annual Documents depicting the Appellants as a Shareholder are manipulated and filed to create a 'Shareholder Status', a few weeks before the commencement of the CIRP. It is submitted that the MGT-7 and the balance sheet are documents under the control of the Promoter and the Annual Documents pertain ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reasoning while arriving at that finding. 7. The Learned Senior Counsel appearing for the 'Respondent'/ 'Resolution Professional (RP) submitted that the Appellant was involved in the Management of the Company, post his investment; that the Loan Agreement dated 27/12/2019 is for a future transaction; that the Board Resolution dated 27/09/2019 alleged to have revoked the MoU dated 02/08/2019 is not reflected in the 'Number of Board Meetings' recorded in the statements submitted to the 'Registrar of Companies' (RoC); that the MoU was never revoked as the Board Resolution had never taken place; when the Appellant had filed their Claim, the Copy of this Board Resolution was never filed and that though the original MoU had five Signatories, the alleged revoked MoU dated 27/11/2019 had only four signatories. It is submitted by the Learned Senior Counsel that prior to the RP verifying the Claims, the MoU was never revoked. The Appellant also had the email ID of the Company which only a Shareholder would have access to. 8. It is submitted by the Learned Senior Counsel for the RP that the Share Certificate in respect of 18,60,000 shares of Rs. 100/- (Rupees Hundred Only) each with distinct ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of funds in the Corporate Debtor Company. It is seen from the MoU that the existing promoters of the Company had agreed to sell 46.5% of the total issued Equity Shares of the Capital as on date, from existing Equity shares held by them in the Company for a total consideration of Rs. 15,00,00,000/- (Rupees Fifteen Crores Only) to be paid by the investors in a phased manner by way of infusion of funds into the Company. It is the case of the Appellant that this MoU is only an interregnum arrangement to be replaced or added by a full-fledged Shareholders Agreement and Investment Agreement between the Parties to be entered into, on or before 31/01/2020. The Learned Company Secretary drew our attention to the Clause 6 of the MoU which is vehemently contended by the Learned Company Secretary that this MoU was later revoked and drew our attention to the MoU which is said to have been revoked on 27/11/2019. A mere perusal of this MoU shows that there are four signatories on the first page who have signed that 'this Agreement will be withdrawn or cancelled/terminated by all the Partners'. It is the case of the Respondent that the Board Resolution dated 27/09/2019 which the Appellant has refe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... prise. It is submitted in the letter that they had never signed any Transfer deed and that it was handed over to them only for 'safety and security purpose'. This letter refers to the cancelled MoU. At the cost of Repetition, this Tribunal has observed that there is no evidence brought on record to establish that there was a Board Meeting which was held cancelling the MoU dated 02/08/2019 and therefore, the question of the amount infused into the Company by the Appellant being converted into Loan in the absence of any Books of Accounts of the Corporate Debtor reflecting the same as an 'outstanding loan amount' either in the 'long term' or in the 'short term borrowings' or in the 'Auditor's Report', does not arise. 12. This Tribunal is of the view that the ledger account is to be read with the statements in the balance sheets and the Financial Statements, together with the Auditor's Report filed with the RoC. It is settled Law that these aforenoted Financial Statements filed with the RoC have greater evidentiary value than that of a 'ledger statement' which is an 'internal document'. 13. As regarding the Submission of the Learned Company Secretary that the RP had 'adjudicated' the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der Section 59 of the Act, is untenable as they themselves are relying on the letter dated 22/02/2020 in support of their argument that they had come to know that their amount was converted into Equity despite not having signed any Share Transfer Deed, then there are no substantial reasons for not having taken any effective steps under Section 59 of the Act. A physical perusal of the Register of Members cannot be said to be a mandatory prerequisite for taking recourse under Section 59 of the Act. Be that as it may, this Tribunal is of the considered view that the documentary evidence on record establishes that the money was infused by the Appellant, vide the terms in the MoU dated 02/08/2019 as an 'Investment' to be converted into 'Equity'. MGT-7 available from the MCA Portal read together with the Auditor's Report and the endorsement of the Appellant on the Share Transfer Certificate, all clearly establish that the Shares were indeed transferred in the name of the partners of the Appellant and therefore, this Tribunal is of the earnest view that there are no substantial grounds to interfere with the order of the 'Adjudicating Authority'. 16. For all the aforegoing reasons, this C ..... X X X X Extracts X X X X X X X X Extracts X X X X
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