9911796707
TMI Blog2024 (4) TMI 632X X X X Extracts X X X X X X X X Extracts X X X X ..... ief facts of the case to be noticed for deciding the Appeal are:- 2.1. The Directors of the Appellant incorporated a Company in USA by the name of M/s. Selma Precision Technologies, NC, LLC (hereinafter referred to as "SPT") with purpose to participate in bidding process for the auction of a U.S Company namely M/s. Sona BLW Precision Forge INC, 500 Oak Tree Drive, Selma LC 27576, USA. On 23.12.2017, a letter of intent was issued between the Financial Creditor- 'Surya Testing Services Limited' and Corporate Debtor- 'Warm Forging Pvt. Ltd.' agreeing for equal participation to restructure the entity M/s. Selma Precision Technologies, NC, LLC. A new company was proposed in the name M/s. MV Forge Inc. (MVF) or such other name as may be mutually agreed to take over the assets of M/s. Selma Precision Technologies. Financial Creditor- 'Surya Testing Services Limited' agreed to pay a token amount to M/s. Warm Forging Pvt. Ltd. for exploring and participating in business activity. The funds for the token amount of $ 1,00,000/- for the business evaluation process was to be transferred through the HDFC Bank account of M/s. Warm Forgings Pvt. Ltd. Letter of Intent further provided that the clo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m 1 by Reckon Industries Ltd., Claim 2 by Amit Rajput, Claim 3 by Anamika Jain, Virat Jain, Ajay Jain, Surya Testing Services Ltd. and other two claims. The Receiver submitted a Report-1 disallowing the portion of the Jain Claim based on purported contributions of Surya to SPT. Certain recommendations was made in the report submitted by the receiver dated 21.09.2020. Supplement of claim was submitted by Jain Group including Surya on which further report dated 14.10.2020 was submitted by receiver. Receiver's report was responded by Jain Group. Jain Group thereafter did not participate in the proceeding and default judgment was delivered by Superior Court Judge dated 01.08.2023. 2.4. A Section 7 application CP No.(IB)- 92/7/JPR/2021 was filed by Surya Testing Services Limited against Warm Forging Pvt. Ltd. claiming debt and default of Rs.1,60,00,000/-. Date of default being mentioned as 22.05.2018. Application claimed the financial debt on the basis of amount transferred to Warm Forging Pvt. Ltd. totalling Rs.1,85,00,000/-. Receipt of the amount of Rs.25,00,000/- was also acknowledged on 27.05.2018 and hence, for balance due Rs.1,60,00,000/-, application under Section 7 was filed. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the appellant has been described as sundry debtor. There is no mention of any long-term loan and advances being given to the Appellant. When Jain Group failed to make an investment of $ 5.2 million, a complaint was filed by Amit Rajput and his family members against Ajay Kumar Jain etc. in the General Court of Justice, Superior Court Division, State of North Carolina where claims were invited by receiver. Receiver has observed that 15% ownership interest was held by Anamika Jain on 28.03.2018. As per contract dated 14.07.2018 amount of $ 0.8 million were never received by M/s. Warm Forging Pvt. Ltd. from 'Selma Precision Technologies NC, LLC', hence, there was no occasion for refund of amount of Rs.1,95,00,000/- as mentioned in the agreement dated 14.07.2018. The Financial Creditor has again submitted supplement to claims which claims have not been accepted. It is submitted that the U.S Court passed a default judgment in favour of the Plaintiff where it was observed that Anamika Jain holds a 15% ownership interest in SPT by virtue of payments made by 'Surya Testing Services Limited'. It is submitted that the judgment referred by this Tribunal in Reckon Industries is concerned, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Kumar Jain, the financial creditor was not party to any of the agreements. Understanding as reflected in the letter of intent dated 23.12.2017 having not been fulfilled and was abandoned, a new agreement was entered on 14.07.2018. Agreement dated 14.07.2018 also records undertaking by the corporate debtor that it shall return amount of Rs.3.5 Crores to Reckon Industries and Rs.1.95 Crores to financial creditor. 6. Coming to the receiver report relied by Counsel for the Appellant. It is submitted that the receiver did not accept the claim of the financial creditor holding that there is no proof of any payment by financial creditor to U.S Company 'Selma Precision Technologies NC, LLC' and the claim on the basis of payments made to Warm Forging Pvt. Ltd. cannot be accepted. The rejection of the claim of financial creditor by receiver was also upheld by U.S Court. It is submitted that the Adjudicating Authority relying on the relevant documents filed before it has rightly come to the conclusion that the application filed under Section 7 is maintainable and there is no ground to reject Section 7 application as prayed by the corporate debtor. 7. We have considered the submissions of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ontention between the parties is regarding the nature of such disbursement. Appellant's case is that the said disbursement was made by the financial creditor for obtaining equity in the U.S Company M/s. Selma Precision Technologies, NC, LLC and the said was not a financial debt extended by financial creditor to the corporate debtor. Both the parties have advanced various submissions in support of their respective case. There are several documents and materials brought on record by both the parties which need to be noticed for finding out the nature of transaction. We have already noticed the letter of intent dated 23.12.2017 entered between the corporate debtor and the financial creditor. It is useful to extract the entire letter of intent which is as follows:- "Date: December 23, 2017, Letter of Intent (LOI) for M/s. MY FORGE Inc., Selma, NC, USA This LOI is between: 1. M/s. Surya Testing Services Ltd., 23/3 East Patel Nagar. New Delhi 110008. * Represented by: Mr. Ajay Kumar Jain & Mr. Virat Jain. 2. M/s. Warm Forgings Pvt. Ltd., Bhiwadi, Rajasthan, India. * Represented by: Mr. Amit Rajput, Mrs. Anupam Chauhan & Mayank Rajput The salient points of this LOI ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Mrs. Anupam Chauhan Mr. Mayank Rajput" 10. It is the case of the financial creditor that it could not obtained permission from RBI to send money abroad, hence, the money could not be transferred by the financial creditor abroad. Admittedly, the money was disbursed to the corporate debtor which disbursement has already been noted above and accepted by the Adjudicating Authority. There are two other subsequent agreements which have been referred to and relied which need to be noticed. The agreement dated 14.02.2018 was entered between SPT, Amit Rajput and Ajay Kumar Jain. The said agreement was to acquire 50% ownership of 'Selma Precision Technologies NC, LLC' by third party i.e. Ajay Kumar Jain. The amount of 2 million USD was to be remitted by the third party and its family members and relatives within six months from February, 2018 to August, 2018. The said investment was to be made in 'Selma Precision Technologies NC, LLC'. Agreement dated 14.02.2018 is as follows:- "Agreement This agreement is executed at Gurgaon on this 14th day February 2018 in continuation of understanding entered on December 23rd, 2017, by and between 1. Se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the first party, the third party or his relatives, associates or his companies have agreed to invest 2.25 million USD in the First party. 2. That further, this 2 million USD has to be remitted by the third party and his family members and relatives within six months as per the following schedule By Feb 2018 500000 USD March 2018 500000 USD April 2018 250000 USD May 2018 250000 USD June 2018 250000 USD July 2018 250000 USD August 2018 250000 USD 3. That the First Party, on receiving the funds as stated above, will utilize funds as under- (A) For repayment of existing short-term loansas stated above. (B) For Electricity connection USD 175000 (C) For payment of Expenses USD 50000 for repayment of EMI of Utica Lease Co. (D) That the future funds, if required by first party for working capital or running Expenses shall be send / remitted by Second and Third party in equal proportions till the time working capital loan is granted by any Bank /Financial Institute in USA to the first party. 4. That total contribution for getting 50% holding in the company is settled at 2.25 million USD. 5. That the said consideration is required to be send t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in relation to any matters, dispute arising under this Agreement. 12. This Agreement constitutes the entire agreement between the parties hereto with respect to the subject matter hereof, and supersedes any prior oral or written agreements, commitments or understandings with respect to the matter provided for herein. 13. That this agreement is executed in duplicate and each party shall retain one original copy." 11. From the above agreement, it is clear that the financial creditor i.e. 'Surya Testing Services Limited' was not a party to the said agreement and the said agreement was between three different parties which are neither the financial creditor nor the corporate debtor. The amount to be invested by third party in the U.S. Company namely 'Selma Precision Technologies NC, LLC'. Paragraph 12 of the agreement, as noted above, is as follows:- "12. This Agreement constitutes the entire agreement between the parties hereto with respect to the subject matter hereof, and supersedes any prior oral or written agreements, commitments or understandings with respect to the matter provided for herein." 12. Agreement, thus, supersedes any prior oral or written agreements, comm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (collectively, the "Indemnified Persons"), from and against any and all claims, actions, suits, proceedings, costs, damages, judgments, amounts paid In settlement and expenses (Including - without limitation reasonable attorneys' fees and reasonable disbursements at actual) (collectively, "Loss") asserted against or incurred by the Indemnified Persons, to the extent directly suffered (excluding consequential or special losses), as a result of, arising from, or in connection with or relating to any matter inconsistent with, or any breach or Inaccuracy of any representation, warranty, covenant or agreement made or failure to perform (whether in whole or part) any obligation required to be performed by them under this Agreement or non-observance/non-compliance of any applicable laws, rules and regulations. 3. Neither Party shall be liable to the other for any delay or failure in the performance by It of any obligation under the MOU to the extent affected, delayed or prevented by an event of Force Majeure, provided that the Party that is affected by the Force Majeure shall notify the other Party as soon as practicable. 4. That the Second Party shall replace the Corporate Guar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ne Crores Eighty-Five Lakhs Only). It is an admitted fact that later, the Corporate Debtor returned the amount of Rs. 25,00,000/- (Rupees Twenty-Five Lakhs Only) on 22.05.2018, hence, the same is not reflected in the Balance Sheet for the year ending on 31.03.2018. The said disbursal is corroborated by bank entries filed by the Financial Creditor. Moreso, the Corporate Debtor has not denied the receipt of the amount by the Financial Creditor. 17. Combined reading of the Agreement dated 14.07.2018, as well as Balance Sheet for the year 2017-18 and the Bank statements, make it clear that the net amount of Rs. 1,60,00,000/- (Rupees One Crore Sixty Lakh Only) which was disbursed by the Financial Creditor to the Corporate Debtor was a 'Financial Debt'. In this context, we may refer to Section 5(8) of the Code which reads as below : '5(8) "financial debt" means a debt along with interest, if any, which is disbursed against the consideration for the time value of money and includes a) money borrowed against the payment of interest: b) any amount raised by acceptance sunder any acceptance credit facility or its de materialised equivalent, c) any amount raised pursuan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve groups of the claim in which Claim No.3, name of Surya Testing Services Ltd. has also been noticed. Paragraph 7 of the receiver's report as follows : - " 7. The Receiver received five groups of claims. These claims include the following : a. Claim No. 1: Reckon Industries, Ltd. ("Reckon"), J.P. Aggarwal, Sandeip Aggarwal, and Sumitra Aggarwal (collectively, the "Reckon Group") in the amount of $6,809,124 based upon contributions by them for an equity interest in SPT, demands for refund of those contributions, conversion, fraud and Unfair and Deceptive Trade Practice allegations ( the "Reckon Claim") ; b. Claim No. 2: Amit Rajput, Anupam Chauhan, Mayank Rajput, and Kartik Rajput and Warm Forgings Pvt. Ltd. ("Warm Forgings") (collectively, the "Rajput Group") seek enforcement of a contract dated July 14, 2018 providing for payment of $800,000 to Warm Forgings by July of 2019 in liquidation of their interest in SPT and otherwise seek loan balances and prepayment balances due and owing to Warm Forgings plus any residual liquidation value (the Rajput Claim"); c. Claim No. 3: Anamika Jain, Virat Jain, Ajay Jain, Himani Jain. V.P. Industries, Ltd. ("V.P."), Surya Testing Ser ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... P. Industries Ltd. $10,000 Disallow Surya Testing Services Ltd. $300,000 Disallow Meghna Venhateshwar $6,879 Disallow Mettu Venkateshwar $20,163 Disallow Akhil Nigam $16,587 Disallow Rinki Jain $26,100 Allow Vikas Jain $152,414 Allow Manish Jain $38,350 Disallow Pooja Jain $35,500 Disallow Anamika Singhal $24,100 Allow Divyank Goswami $31,021 Allow Gerhard Schicktanz $66,500 Allow Warm Forgings $500,000 Allow, but subordinate Warm Forgings $482,599 Allow, but subordinate 22. In the conclusion of paragraph 5, following has been observed:- "5. Anamika Jain holds a 15% ownership interest in SPT by virtue of payments made by Surya Testing Services Ltd. in furtherance of a December 23, 2017 Letter of Intent with Warm Forgings, and by Anamika Jain pursuant a February 14, 2018 agreement with SPT." 23. The receiver report as noticed above did not allow the claim of Surya Testing Services Ltd. with respect to M/s. Selma Precision Technologies, NC, LLC although 15% ownership interest of Anamika Jain was accepted in M/s. Selma Precision Technologies, NC, LLC. The facts on the record thus, clearly indicate ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
