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TMI Blog2023 (7) TMI 314X X X X Extracts X X X X X X X X Extracts X X X X ..... s not been disputed by the either side. However, since there was no written agreement for sanctioning loan with interest the appellant has taken a futile stand that in absence of any written agreement it cannot be said that there was a financial debt. The circumstances and documents which have been brought on record suggest that impliedly there was an agreement for providing loan to the corporate debtor for time value and also with interest. In view of the provisions for the admission of a petition under Section 7 of the IBC there are certain relevant criteria. There must be debt and default. If an application fulfils the said criteria, the Adjudicating Authority is to admit such application. However, proviso 1st to Section 7 (5) speaks that only for rejection of an application reasons are required to be assigned. Meaning thereby if an application fulfils certain criteria, the Adjudicating Authority is to admit the said application and while admitting there is no requirement for assigning detailed reasons. However, if the Adjudicating Authority is going to dismiss the application as per provisions contained Section 7 of the IBC reasons are mandatory. Accordingly it is evident ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... irst tranche of the loan amount of Rs.51 lakh was disbursed by the financial creditor vide Cheque No.000036 drawn on HDFC Bank, West Punjabi Bagh in favour of Corporate Debtor. Subsequently on 3rd June, 2017 the second tranche of loan amount of Rs.50 lakhs was disbursed to the Corporate Debtor by financial creditor through RTGS-HDFC Bank. 3. The financial creditor in a petition filed under Section 7 of the IBC before the Adjudicating Authority claimed that since the loan amount with interest was not paid despite terms and conditions put for payment by 31st March, 2018, the Financial creditor requested the Corporate Debtor for payment and since payment was not made the Financial Creditor on 06.08.2019 sent legal notice through its counsel to the Corporate Debtor and finally due to non-payment of the financial debt the Financial Creditor/Respondent No.1 was constrained to file application under Section 7 of the IBC for initiation of the CIRP. The Financial creditor claimed that on the date of the filing of the application the Corporate Debtor was liable to pay Rs.1,21,95,953/- (Rupees One crore twenty one lakh ninety five thousand nine hundred fifty three only) which includes inte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rs. 1,01,00,000/- (Rupees One Crore One Lakhs Only) been shown as other current liability payable to M/s. Ambrane India Pvt. Ltd. (pages 273, 278 of the application). 5. Further the applicant has filed certificate dated 04.02.2022 issued by the information utility NeSL with respect to the debt of the CD amounting to Rs. 1,21,95,953/- (Rupees One Crore Twenty One Lakhs Ninety Five Thousand Nine Hundred Fifty Three Only) Deemed to be Authenticated . Earlier, vide order dated 07.04.2021 a cost of Rs. 50,000/- was imposed on the CD to file reply within seven days as a last chance. Today, the CD was not present, however his reply dated 20.07.2021 has been perused. The main ground taken by the CD in his reply is that there is no agreement annexed by the applicant to prove that there was any interest payable @ 9% per annum as claimed by the applicant. 6. We have heard the Ld. Counsel for the applicant and perused the documents placed on file. The amount of Rs. 1,01,00,000/- (Rupees One Crore One Lakhs Only) has been disbursed for which bank statements have been annexed. Further, as per the certificate issued by NeSL the debt of the corporate debtor is deemed to be authenticate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... communicate a copy of the Order to the Applicant, the Corporate Debtor, Interim Resolution Professional and the Registrar of Companies, NCR, New Delhi, at the earliest, but not later than seven days from today. The Registrar of Companies shall update his website by updating the status of Corporate Debtor' and specific mention regarding admission of this petition must be notified. 5. Against the said order the present appeal was presented on 17.05.2022. 6. After the appeal was filed for the first time it was taken up on 06.06.2022 by two Members Bench of this Tribunal. On first date Respondent was represented by its counsel. However, notice was directed to be issued to Respondent No.2. This Tribunal also recorded as follows:- Heard Mr. Abhishek Anand, the Learned Counsel appearing for the Appellant. At this stage, Mr. Ashok Juneja, the Learned Counsel appearing for the Respondent No. 1 and prays for time to file Vakalat and Reply/Response (through E-filing as well as through Hard Copy ) of R1 before the Office of the Registry and to serve a copy of the same to the other side before the next date of Hearing . The Learned Counsel for the Appellant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... shek Anand, learned counsel for the appellant has mainly assailed the impugned order on the plea that there was no written agreement regarding loan and as such there was no financial debt. According to Mr. Anand in absence of financial debt the application filed under Section 7 was required to be rejected outrightly. He has specifically referred to Page 29 para 2 of Volume 1 of Memo of Appeal and has shown para 2 of the impugned order to substantiate that though Learned Adjudicating Authority had noticed the submission on behalf of the financial creditor that the loan of Rs.1,01,00,000/- @ 9% per annum to be compounded on 31.03.2018 and an amount of Rs.51 lakhs was disbursed to the Corporate Debtor on 26.05.2017 by cheque and subsequently on 03.06.2017 additional amount of Rs.50 lakh was disbursed through RTGM, the Learned Adjudicating Authority was not apprised with any written agreement to show as to whether the aforesaid amount was given as loan or not. However, it was contended by Mr. Anand that the said amount was an investment by the financial creditor in respect of the immovable property of the Corporate Debtor. Mr. Anand, learned counsel has also referred to para 4 of the i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... driah Vs Sunil Kumar Agarwal. He has specifically relied on para 17 to 20 which are quoted hereinbelow:- 17. The precise question to be answered is as to whether the payment of Earnest Money even if it is accepted as disbursement whether disbursement is against the consideration for the time value of money. 18. The disbursement made by the Appellant to the Corporate Debtor was only a payment of Earnest Money which was to be adjusted in sale of the land. The disbursement was not in consideration for the time value of money. We may refer a Judgement of this Tribunal in Company Appeal (AT) Ins. No. 180 of 2021 Sach Marketing Pvt. Ltd. Vs. Resolution Professional of Mount Shivalik Industries Ltd where dealing with Section 5(8) in paragraph 17 and 18 following was observed by this Appellate Tribunal: 17. For a debt to be termed as 'Financial Debt', the basic elements that are to be seen is whether (a) there is disbursal against consideration for time value of money and (b) whether it has a commercial effect of borrowing. The definitions provided in Section 5(7) and 5(8) show that a 'Financial Creditor' refers to a person to whom 'Financial Debt' ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t money by the Appellant was Financial Debt . 11. Similarly Mr. Anand, learned counsel for the appellant has referred to un reported judgement of this Tribunal passed in Company Appeal (AT)(Ins) No.251 of 2020 dated 3rd August, 2021 in Pawan Kumar Vs Utsav Securities Pvt Ltd and referred to para 21, 22, 26 and 27 which are reproduced hereinbelow:- 21. We have considered the submissions, the Financial Creditor has not furnished any document to show that the transaction in question is a loan transaction. So far as the section 10 of Indian Contract Act and Rule 3 (1) (d) of the Rules is concerned we again refer the Prayag Polytech (Supra) in which this Tribunal held that: 7. As regard relying on Section 10 of the Contract Act, 1872, in our view IBC is a complete code in itself. Section 238 of IBC has overriding effect on provisions inconsistent with IBC. The Financial contract is defined in Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016 Rule 3(1)(d) requires setting out the terms of the financial debt including tenure etc. We find that Appellant has failed to show any record showing financial debt to be there. As such, we are unable t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... interference with the impugned order particularly in view of the fact that in the present case default has taken in the month of April, 2018 and petition for initiation of CIRP has been filed in the year 2019 itself. However, due to many reasons including Covid 2019 delay had occurred and finally by the impugned order dated 06.04.2022 the application filed under Section 7 was admitted. After admission since there was no stay order passed by this Tribunal several development has taken place which has been reflected from the Status Report submitted by R2. It was argued by Shri Ashok Juneja, learned counsel for Respondent No.1 that Board Resolution of the Financial Creditor dated 25.05.2017 gives a vivid picture that for financial assistance the Corporate Debtor through its director who is appellant in the present appeal had approached financial creditor for loan of Rs.1,01,00,000/- and as such the Board of Directors resolved to sanction the loan on terms of charging 9% interest per annum and it was to be compounded on 31.03.2018. Only after the Board Resolution on 26.05.2017 a cheque for the amount of Rs.51 lakhs was disbursed by the financial creditor in favour of the corporate deb ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which has not been disputed by the either side. However, since there was no written agreement for sanctioning loan with interest the appellant has taken a futile stand that in absence of any written agreement it cannot be said that there was a financial debt. The circumstances and documents which have been brought on record suggest that impliedly there was an agreement for providing loan to the corporate debtor for time value and also with interest. 18. Before proceeding it would be necessary to reproduce Board Resolution of the financial creditor which has been brought on record in the Memo of Appeal Volume II at Page 138. The Board Resolution dated 20.05.2017 is reproduced hereinbelow: CERTIFIED TRUE COPY OF THE BOARD RESOLUTION PASSED AT THE MEETING OF THE BOARD OF DIRECTORS OF AMBRANE INDIA PRIVATE LIMITED HELD ON SATURDAY, THE 20TH DAY OF MAY, 2017 AT 11.00 A.M. AT THE REGISTERED OFFICE OF THE COMPANY AT C 91/7, WAZIRPUR INDUSTRIAL AREA, DELHI-110052 To make loans or investments and to give guarantees or to provide security in connection with a loan made under Section 186 of the Companies Act, 2013 RESOLVED THAT pursuant to section 186 and all other applica ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... porate debtor for the period 1.4.2017 to 28.05.2019 which is at running page 223 Volume I of the Memo of Appeal reflects that on 25.05.2017 Rs.51 lakh was remitted from the account of financial creditor to the account of corporate debtor and on 3rd June, 2017 Rs.50 lakhs was debited from the account of the financial creditor to the account of MP Promoters Pvt Ltd CD through RTGS and as on 31.07.2019 the total amount comes to Rs.1,21,95,953 which includes the interest amount. 20. So far as plea taken by the learned counsel for the appellant and reliance placed on the balance sheet of the corporate debtor at running page 64 Volume 1 of the appeal is concerned, we are of the opinion that such defence which has been taken on behalf of the appellant that it was advance against the property is required to be noticed only for its rejection. Before proceeding it would be necessary to reproduce running page 64 of the Memo of Appeal particularly which deals Note 7(a) other current liabilities advance against property 13/13:- Note No.7(a) Other current liabilities Advance Against Property 13/13 W.E.A IN RUPEES Particulars 31st March, 20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d by 31.03.2018. So far as Pawan Kumar case (supra) is concerned in the said case the financial creditor had not filed any evidence of default alongwith application under Section 7 nor financial creditor had filed copy of their balance sheet for the relevant years. However, in the present case the balance sheet of the Corporate Debtor has been brought on record which reflects the loan amount and also interest amount. Accordingly we are of the opinion that the appellant may not get any assistance from aforesaid two judgements on which reliance was placed by learned counsel for the appellant. 24. We have also perused the status report dated 8.05.2023 submitted by the RP/Respondent No.2. The para 5 of the status report is necessary to be reproduced hereinbelow: 5. That it is humbly submitted that the present status of the CIRP of CD is as follows: i) In response to the publication for inviting the claims the COC was constituted with a sole member of CoC that is Financial Creditor in the month of May, 2022 ii) In the last one year of the CIRP five meetings of CoC has been conducted by the RP. iii) The RR has already published the COI in form G on 15.03.2023 in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... this sub-section, a default includes a default in respect of a financial debt owed not only to the applicant financial creditor but to any other financial creditor of the corporate debtor. (2) The financial creditor shall make an application under sub-section (1) in such form and manner and accompanied with such fee as may be prescribed. (3) The financial creditor shall, along with the application furnish (a) record of the default recorded with the information utility or such other record or evidence of default as may be specified; (b) the name of the resolution professional proposed to act as an interim resolution professional; and (c) any other information as may be specified by the Board. (4) The Adjudicating Authority shall, within fourteen days of the receipt of the application under sub-section (2), ascertain the existence of a default from the records of an information utility or on the basis of other evidence furnished by the financial creditor under sub-section (3). Provided that if the Adjudicating Authority has not ascertained the existence of default and passed an order under sub-section (5) within such time, it shall record its reasons i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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