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TMI Blog2024 (5) TMI 852X X X X Extracts X X X X X X X X Extracts X X X X ..... cial Creditors) filed an application under Section 7 of the Insolvency and Bankruptcy Code, 2016 (in short 'Code') r/w Rule 4 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016 (in short 'Rules') against Shree Sai Baba Infra Projects Pvt. Ltd. (Corporate Debtor) bearing CP No. (IB) - 32/Ald/2021 before the National Company Law Tribunal, Allahabad Bench (in short 'Tribunal') has been dismissed on that ground that there is no relationship of financial creditor and the corporate debtor and there was no transaction in the nature of financial debt between the parties but liberty was granted to take recourse to their other remedies in accordance with law if so advised. 2. In brief, the Appellants advanced a loan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e, the Appellants issued legal notice on 19.03.2023 but despite receipt of notice, the payment was still not made, therefore, Section 7 of the Code was filed. 5. It is submitted that the Appellants are entitled to the amount in terms of clause 35 of the sale deed but the Tribunal has erred in dismissing the application. In this regard, he has referred to the findings recorded by the Tribunal which read as under:- "15. We have considered the submissions made by both sides and perused material on record. At the very outset, it is noted that the amount of loan has been disbursed to Sparkspell Homes Pvt. Ltd which was earlier known as Proplarity Home Pvt. Ltd. (PHPL). In this arrangement, the respondent herein is neither a party in any capac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er emails in correspondence between the respondent herein and the Resolution Professional of Sparkspell Homes Pvt. Ltd which was earlier known as Proplarity Home Pvt. Ltd. (PHPL) and in our view this letter also cannot be considered as creating a legal obligation to repay the loan which was taken by the vendor. 17. As regard the amount being given by the Financial Creditors to the respondent herein, it is noted that it has been given on 29.04.2017 just a day prior to the execution of sale deed dated 1st May, 2017, which fact lends credence to the claims made by the respondent that such money was* given to the respondent to execute the sale deed. 18. In this regard, we may further add that the Financial Creditors have not been able to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it to PHPL. It is further submitted that since PHPL was unable to pay the debts to the Appellants, therefore, it decided to sell part of the project, namely, Pratham to Respondent and the consideration of amount of the sale was agreed to be paid to the Appellants and not to PHPL. It is submitted that the allegation of the Appellants is that the said money has not been paid by Respondent to the Appellants whereas, according to Respondent, the money was received which is so recorded in clause 35 of the sale deed. He has also submitted that for the purpose of establishing a relationship of a financial creditor with the Corporate Debtor, it is necessary to prove the existence of debt between the parties which is conspicuous by its absence in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s financial creditor for the purpose of Part II of the Code. 46. Expounding yet further, in our view, the peculiar elements of these expressions "financial creditor" and " financial debt", as occurring in Sections 5(7) and 5(8), when visualised and compared with the generic expressions "creditor" and "debt" respectively, as occurring in Sections 3(10) and 3(11) of the Code, the scheme of things envisaged by the Code becomes clearer. The generic term "creditor" is defined to mean any person to whom the debt is owed and then, it has also been made clear that it includes a 'financial creditor', a 'secured creditor', an 'unsecured creditor', an 'operational creditor', and a 'decree-holder'. Similarly, a "debt" means a liability or obligation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat the vendee shall pay to the confirming party and it is mentioned in so many words in the sale deed that the money has already been paid by the vendee to the confirming party but the allegation of the Appellants is that the said money has not been paid to them by the vendor. 10. In such circumstances, it is not a case which would fall within the provisions of the Code to trigger CIRP, invoking Section 7 of the Code and therefore, the Tribunal has rightly dismissed the application, however, liberty has been granted to the Appellants to pursue his other remedy for the purpose of recovery. It would also be not out of place to mention that the regime of the Code is not for recovery but for the resolution of debt by maximisation of the asset ..... X X X X Extracts X X X X X X X X Extracts X X X X
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