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TMI Blog2023 (10) TMI 239X X X X Extracts X X X X X X X X Extracts X X X X ..... tedly established and default in payment is also crystal clear, it is opined that the Adjudicating Authority did not commit any error in admitting the Section 7 application. There are substance in the contention of Respondent No.1 that the IA was not only heard by the Adjudicating Authority but was heard before pronouncing the order in the main company petition. It is also borne out from the orders that both parties were present and had placed their respective contentions / arguments before the Adjudicating Authority in the matter of the IA. It is an undisputed fact that there was disbursal of funds by the Financial Creditor to the Corporate Debtor. Receipt of this amount by the Corporate Debtor has not been controverted by the Appellant. Neither has any claim been made that this entire sum was repaid by the Corporate Debtor. That being the case there arises no doubt in our mind that there was a debt on the part of the Corporate Debtor qua the Financial Creditor which remained unpaid. There is no infirmity in the findings of the Adjudicating Authority that the Financial Creditor having successfully proved the financial debt and default on the part of the Corporate Debtor, Sec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ure Trustee as per the Debenture Trust Deed of 26.11.2018. Debenture holders, namely, India Realty Excellence Fund III and India Realty Excellence Fund IV managed by Motilal Oswal Financial Services Ltd. as Fund Manager agreed to invest in the project by subscribing to 3441 NCDs. Subsequent to the subscription of NCDs, the debenture holders invested Rs.34,41,00,000/-. On 27.09.2019, the First Supplemental and Amendment Deed to the Debenture Trust Deed came to be executed. The Corporate Debtor started committing payment defaults besides not complying to obligations set out in the Debenture Trust Deed. The Debenture holders and the Fund Manager issued notices / emails to the Corporate Debtor seeking payment of outstanding amounts. As the Corporate Debtor continued to remain in default, the Respondent No.1 issued a Put-Option Notice dated 12.01.2023 to the Corporate Debtor calling upon it to redeem or purchase the NCDs from the debenture holders. The Corporate Debtor failed to redeem the NCDs and repay the due amount of Rs.65,08,05,433/- following which the Financial Creditor Respondent No.1 filed the Section 7 application vide CP(IB)/283(MB)2023 before the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng their arguments further, it was stated that the present Section 7 application has been filed with the help of fabricated and manufactured documents as well as by suppression of material facts. It was reiterated that the Adjudicating Authority should have taken due cognizance of the interim application filed by the Appellant and hearing of the main company petition while the interim application was pending cannot be justified. Rather than admitting the Section 7 application, the Adjudicating Authority could have considered passing orders under Section 65 of the IBC. 6. Refuting the above submissions made by the Appellant, the Learned Senior Counsel for the Respondent submitted that the Corporate Debtor in their reply before the Adjudicating Authority having clearly admitted that there was a financial debt owed to the Financial Creditor and that there was a default committed thereto, the Adjudicating Authority committed no error in admitting the Section 7 application. Rebutting the contention of the Appellant that the Adjudicating Authority had passed the impugned order in the main company petition without adjudicating on the IA No. 2002/2023, it was pointed out that the said I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... financially incapacitated in repaying the outstanding debt on their own steam and were trying to mobilize resources to liquidate their debt. 10. Now coming to the impugned order, we find that all these facts have been appropriately captured therein by the Adjudicating Authority in arriving at their findings. The relevant portions of the impugned order is as reproduced below: 18. On the other hand, in the reply filed by the Corporate Debtor no solid defence has been raised. It has simply been stated that due to circumstances beyond its control, the Corporate Debtor could not pay the amount due and payable to the Financial Creditor. It has also been stated in the reply that the Real Estate industry was going through a lean patch and there was overall slowdown in the Real Estate Industry at the national level and owing to low demand and slow convertibility, the projects of the Company could not take off. Besides, the business was hit hard by COVID lockdowns. The Corporate Debtor has further stated in the reply that he was trying to settle the matter by getting some investors and, therefore, the Corporate Debtor ought not be admitted into CIRP. 19. Considering the fa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... No. 4 following which a Family Settlement Deed dated 31.10.2019 was executed along with a Memorandum of Understanding dated 05.11.2019 (hereinafter referred to as MoU-1 ). By virtue of this MoU, the brothers of the Appellant were to transfer their respective shareholdings to him for which he paid certain amounts to his brothers but after partially acting upon the settlement agreement, they had later backtracked. 14. It was also submitted that the said I.A. pointed out that Respondents No. 2 and 3 had executed two mortgage deeds on 07.09.2019 and 21.12.2019 by which the property of the Corporate Debtor was mortgaged to the Fund Manager for Rs.114 crore though mortgage rights were given only for about Rs.12 crores. The mortgage deed was illegally executed on the basis of a Board Resolution dated 09.01.2019. This Board Resolution had been passed illegally in violation of the provisions of the Companies Act, 2013 by keeping the Appellant in the dark. Elaborating further, it was submitted that once the Appellant started investigating into the fabrication of documents leading to illegal utilization of the monies by Respondents No.2 and 3, the latter had executed a Memorandum of Unde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a/w. Adv. Zaid Mansuri i/b. DSK Legal appeared for the Financial Creditor. The present application is filed by Mr. Sanjay Pandurang Kalate who is Director and Shareholder of the Corporate Debtor under Rule 11 of NCLT Rules, 2016. Heard IA No. 2002/2023. Applicant claims that certain fraud has been committed by one Mr. Kaneria. It has been stated that C.P.(IB)/283/2023 has already been Reserved for Order by this Bench. In the C.P.(IB)/283/2023 which has been filed under Section 7 of Insolvency Bankruptcy Code, 2016, one Mr. Kaneria is stated to file reply without any authorization of Board of Directors. It has further been pointed out that there is some dispute inter se between the Directors of the Company and some settlement agreement was executed whereby, Mr. Kaneria agreed to step down from his Directorship. It is further been pointed out that the reply filed by the Mr. Kaneria in the C.P.(IB)/283/2023 should not be taken into consideration as the same has been filed without any authorization of the Board of Directors of the Company. During the course of the arguments when the Counsel for the applicant asked as to whether the instant application has been filed with th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... olution. 18. We have already observed in the preceding paragraphs that it is an undisputed fact that there was disbursal of funds by the Financial Creditor to the Corporate Debtor. Receipt of this amount by the Corporate Debtor has not been controverted by the Appellant. Neither has any claim been made that this entire sum was repaid by the Corporate Debtor. That being the case there arises no doubt in our mind that there was a debt on the part of the Corporate Debtor qua the Financial Creditor which remained unpaid. There is no infirmity in the findings of the Adjudicating Authority that the Financial Creditor having successfully proved the financial debt and default on the part of the Corporate Debtor, Section 7 application has been admitted. Even if for arguments sake we accept the contention raised by the Appellant that there were serious internal disputes amongst the Respondents that cannot be a cogent and reasonable ground for denying the Financial Creditor their right to claim payment towards the debt owed to them by the Corporate Debtor. 19. In fine, we do not find any error in the order impugned passed by the Adjudicating Authority admitting the Section 7 application ..... X X X X Extracts X X X X X X X X Extracts X X X X
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