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TMI Blog2024 (1) TMI 342X X X X Extracts X X X X X X X X Extracts X X X X ..... t before the Adjudicating Authority there was no mention of any loan at any point of time given to the Corporate Debtor by the Appellant. Whether there was any financial debt owed to the Appellant by the Corporate Debtor for which the claim was filed? - HELD THAT:- The Balance Sheet even if it is taken on its face value does not in any manner prove that there is any financial debt. The financial debt ought to have reflected under the heading of borrowings and there being no reflection of the claim which is filed in Form C under the heading borrowings . The Submission of the Appellant that the balance sheet supports the claim of the Appellant cannot be accepted. The balance sheet as on 31.03.2022 does not prove that there was any financial debt owed by the Corporate Debtor to the Appellant. The Adjudicating Authority in exercise of its jurisdiction under subsection (5) of Section 60 having adjudicated the claim as submitted by the Appellant, the question to be answered in this Appeal is as to whether the order of the Adjudicating Authority adjudicating the claim of the Appellant is sustainable or not. Adjudicating Authority after noticing the judgment of the Hon ble Supreme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... before the Adjudicating Authority. The Adjudicating Authority vide order dated 31.10.2022 replaced the RP- Mr. Seikh Abdul Salam with Mr. Pratim Bayal- Respondent No.1 as Resolution Professional of the Corporate Debtor. On 23.12.2022, Resolution Professional- Respondent No.1 sent an e-mail to the Appellant seeking additional information/documents in relation to financial claim submitted by the Appellant. Appellant vide its reply dated 27.12.2022 informed the Resolution Professional that his claim has already been admitted, the issue raised by the Resolution Professional vide his e-mail dated 23.12.2022 are not relevant and cannot be used to embark upon process of re-verification of an admitted claim. Resolution Professional again sent an e-mail dated 27.12.2022 requesting the Appellant to provide relevant documents to prove his claim. Appellant on 28.12.2022 replied to the Resolution Professional stating that the provisions of the Code do not authorise the Resolution Professional to recheck, re-verify and relook into an admitted claim of the Appellant. The Resolution Professional vide an e-mail dated 19.04.2023 communicated the Appellant that since no such records have been furnis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... able to the RP and his powers thereafter is limited only to revising the admitted claim. None of the Regulations authorises the RP to re-verify an admitted claim. The decision of the RP to disallow the claim allegedly for non-furnishing of loan documents is misconceived and contrary to law. The audited financial statements of the Corporate Debtor for the year ending 31.03.2022 under the heading Financial Liabilities Note No.13 mentioned inter-corporate deposit and under the heading Other Financial Liabilities Note No.14 , a sum of Rs.521 Crores is mentioned as Payable to Demerged Company (demerged company being the Appellant). Annual report and financial statement though formed part of the Application before the NCLT, the same was neither considered nor appreciated. Learned Counsel for the Appellant has referred to Clause 4.2.10 of the Scheme of Demerger. It is further submitted that the consortium lenders of the Appellant Company did not give effect to the demerger and transfer the loan relating to the tyre business until February 2021 and by reason of the delay by the Lenders until February 2021 in giving effect to the transfer of the aforesaid debt of the tyre business unde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reas the alleged claim of Appellant is for Rs.518 Crores which makes the claim and the submissions contrary. Even assuming that any amount can be claimed by the Appellant from the Corporate Debtor, the said claim cannot be a financial debt, there being no financial transaction within the meaning of Section 5(8) of the Code. The balance sheet for the financial year 2021-2022 on which much reliance has been placed by the Appellant, no amount is shown to be due to the Appellant under loan or borrowing. Rather, an amount is reflected only under the heading Other Financial Liabilities and not borrowings. Other financial liabilities not being borrowings cannot be financial debt. The books of accounts of the Corporate Debtor do not support the Appellant s claim for financial debt. It is further relevant to notice that the balance sheet of the Corporate Debtor is prepared at the instance of the Appellant and signed by common Chairman of both Appellant and the Corporate Debtor. Appellant failed to refer to any document on the basis of which Appellant can claim a financial debt. The figure given in Form C is imaginary figure which was not supported by single document. Appellant itself in i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3. Address and email address of the financial creditor for correspondence Address: Birla Building, 9/1 R.N. Mukherjee Road, Kolkata- 700 001 Email: [email protected] 4. Details of claim, if it is made against corporate debtor as principal borrower: (i) Amount of claim (ii) Amount of claim covered by security interest, if any (Please provide details of security interest, the value of the security, and the date it was given) (iii) Amount of claim covered by guarantee, if any (Please provide details of guarantee held, the value of the guarantee, and the date it was given) (iv) Name and address of the guarantor(s) (i) Total claim: Rs.518,28,98,356 Principal: Rs.424,25,19,253 Interest: Rs.92,13,86,995 TDS Recoverable: Rs.1,89,92,111 (ii), (iii), (iv)- NIL 5. Details of claim, if it is made against corporate debtor as guarantor: (i) Amount of clan (ii) Amount of claim covered by security interest, if any (Please provide details of security interest, the value of the security, and the date it was g ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e. information and belief and no material facts have been concealed therefrom. 4. In respect of the said sum or any part thereof, neither I, nor any person, by my order, to my knowledge or belief, for my use, had or received any manner of satisfaction or security whatsoever. 5. I undertake to update the clam as and when the claim is satisfied, partly or fully, from any source in any manner, after the insolvency commencement date. 6. Kesoram Industries Limited is not a related party of the corporate debtor, as defined under section 5 (24) of the Code. Date: 16th May, 2022. Place: Kolkata For Kesoram Industries Ltd. Company Secretary (Signature of the claimant) VERIFICATION 1, Gautam Ganguli, on behalf of Kesoram Industries Limited, the claimant, hereinabove, do hereby verify that the contents of this proof of claim are true and correct to my knowledge and belief and no material fact has been concealed therefrom. Verified at Kolkata on this 16th day of May, 2022 For Kesoram Industries Ltd. Company Secretary (Signature of claimant) 8. The above form clearly mentions the manner in which debt was incurred i.e. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under any other transaction, including any forward sale or purchase agreement, having the commercial effect of a borrowing; [Explanation. -For the purposes of this sub-clause, - (i) any amount raised from an allottee under a real estate project shall be deemed to be an amount having the commercial effect of a borrowing; and (ii) the expressions, allottee and real estate project shall have the meanings respectively assigned to them in clauses (d) and (zn) of section 2 of the Real Estate (Regulation and Development) Act, 2016 (16 of 2016);] (g) any derivative transaction entered into in connection with protection against or benefit from fluctuation in any rate or price and for calculating the value of any derivative transaction, only the market value of such transaction shall be taken into account; (h) any counter-indemnity obligation in respect of a guarantee, indemnity, bond, documentary letter of credit or any other instrument issued by a bank or financial institution; (i) the amount of any liability in respect of any of the guarantee or indemnity for any of the items referred to in sub-clauses (a) to (h) of this clause; 10. The Hon bl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rying, or corresponding to, or at least having some traces of disbursal against consideration for the time value of money. ( Emphasis Added ) 11. It was held that the requirement of disbursal against the consideration for time value of money remains an essential part. Thus, disbursement against the consideration for time value of money has to be proved for a financial debt. 12. Learned Counsel for the Respondent has referred to the e-mail dated 28.12.2022 sent by the Appellant to the Resolution Professional. In response to the e-mail dated 27.12.2022 by which the Resolution Professional asked the Appellant to give the relevant documents to prove its financial debt. It is useful to notice the e-mail dated 28.12.2022 sent by the Resolution Professional to the Appellant, which is as follows:- On Wed. Dec 28, 2022 at 5:34 AM Pratim Bayal wrote: Dear Sir, This email communication is in response to your email dated 27 December 2022. You are already aware the Hon'ble NCLT replaced the erstwhile IRP, Mr. Seikh Abdul Salam with the undersigned as the Resolution Professional ( RP ) of the Corporate Debtor vide order dated 31.10.2022. Please note tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... admitted claim pursuant to powers derived from Regulation 14(2) on the basis of additional information warranting such revision and not otherwise The authority of RP towards the duty cast on him under Section 20(1) of the IBC on protecting and preserving the value of the property of the corporate debtor and managing the operations of the corporate debtor as a going concern are spelt out in Section 20(2) of IBC and the same too do not empower the RP to recheck and/or reverify and/or relook into an admitted claim Our admitted claim is reflected in the books of accounts of the corporate debtor as also confirmed by the corporate debtor. Plus the fact that you admit the corporate debtor was a business division of our company in itself is testimony to the fact that there could not have been a loan agreement or disbursement to the corporate debtor, and that your instant requisition is made mechanically and without application of mind and does not appear to be bona fide. It is also to be noted that the Hon'ble Supreme Court has observed in several cases that the RP has no adjudicating powers and accordingly you cannot seek to embark upon an inquiry which is not permissible ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rate Debtor for the financial year 2021-22 is attached hereto marked P-6 , and the debt of the Applicant is recorded in the said balance sheet at internal page no 95 thereof. 16. Financial Statement on which much reliance has been placed by the Appellant has also been filed along with the Appeal. We need to notice certain parts of the financial statement for the year ended 31.03.2022. Counsel for the Appellant has relied on Note 13 and Note 14 which need to be noted for considering the submission. Note 13 deals with borrowings . Under the heading borrowings , there is clause (a) secured and clause (b) unsecured . Clause (b) contains a heading Inter Corporate Deposit is of Rs.4,164.57 Lakhs as on 31.03.2022. This Inter Corporate Deposit as reflected in the balance sheet does not sync with the claim which was submitted by the Appellant in Form C. Much reliance has been placed on Note 14 which deals with other financial liabilities . Learned Counsel for the Appellant submits that under Note 14 on Other Financial Liabilities under the heading current , payable to demerged company amount of Rs.52,119.06 Lakhs has been mentioned which is a clear acknowledgment of fi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ry contained in any other law for the time being in force, the National Company Law Tribunal shall have jurisdiction to entertain or dispose of (a) any application or proceeding by or against the corporate debtor or corporate person; (b) any claim made by or against the corporate debtor or corporate person, including claims by or against any of its subsidiaries situated in India; and (c) any question of priorities or any question of law or facts, arising out of or in relation to the insolvency resolution or liquidation proceedings of the corporate debtor or corporate person under this Code. 19. The Adjudicating Authority in exercise of its jurisdiction under subsection (5) of Section 60 having adjudicated the claim as submitted by the Appellant, the question to be answered in this Appeal is as to whether the order of the Adjudicating Authority adjudicating the claim of the Appellant is sustainable or not. Adjudicating Authority after noticing the judgment of the Hon ble Supreme Court in Anuj Jain vs. Axis Bank Limited- (2020) 8 SCC 401 has held that the applicant has failed to prove the transaction as a deposit of money or a loan from the applicant s acco ..... X X X X Extracts X X X X X X X X Extracts X X X X
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