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TMI Blog2024 (9) TMI 1421X X X X Extracts X X X X X X X X Extracts X X X X ..... Counsel for the IRP accepts notice. Respondents may file reply within three weeks. 2. Learned Counsel for the IRP submits that the publication has been issued, claim has been received and CoC has already been constituted. 3. Let CoC may proceed but no decision shall be taken with regard to any resolution plan. 4. List the appeal on 16.05.2024." 3. Reply has been filed by Respondent No. 1. Both the Parties were heard on 05.09.2024. Both the Parties have also filed their Written Submissions. 4. Brief facts necessary to be noticed for deciding the Appeal are: i. M/s. Kalibre Associates Pvt. Ltd., advanced an amount of Rs.1,00,00,000/- to the Corporate Debtor, M/s. West Star Constructions Pvt. Ltd. on 20.11.2010. ii. The Corporate Debtor was engaged in business operation relating to providing consultancy services in real estate business. iii. Insolvency Proceedings, commenced against M/s. Kalibre Associates Pvt. Ltd. by Order dated 18.01.2019. iv. Mr. Mohan Lal Jain was Resolution Professional (`RP') of M/s. Kalibre Associates Pvt. Ltd. v. Resolution Professional sent a letter dated 18.07.2019 to the Corporate Debtor stating that an amount of Rs.1,00,00,000/- is due p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... state business. The Respondent No. 1 Company approached the Corporate Debtor seeking the services of the Corporate Debtor in October 2010. Respondent No. 1 Company, agreed to pay Rs.1,00,00,000/- of the security amount for research in market. In result amount of Rs.1,00,00,000/- was paid by Respondent Company to the Corporate Debtor on 20.11.2010. The Corporate Debtor issued a Performa Invoice dated 15.12.2012 of Rs.1,20,00,000/-. Tax invoices were not issued subsequently an amount of Rs.1,00,00,000/- was shown as security in the books of the Corporate Debtor. It is submitted that no loan was extended by Respondent Company to the Corporate Debtor nor there was any Loan Agreement or any other document to prove a financial transaction. The Liquidator of the Respondent No. 1 Company without any basis proceeded to file Section 7 Application against the Corporate Debtor. It is submitted that leave was taken by Liquidator from the Adjudicating Authority to take steps for recovery of the amount of M/s. Kalibre Associates Pvt. Ltd., which did not entitled the Liquidator to file Section 7 Application, proceeding under Section 7 are not proceeding for recovery of any debt and Liquidator has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... error in relying on the NeSL Certificate in holding the debt and default. The Corporate Debtor has not shown to have render any kind of services to the Corporate Debtor for payment of amount of Rs.1,00,00,000/- which was paid by the Financial Creditor to the Corporate Debtor on 20.11.2012. It is submitted that in the Balance Sheet of the Corporate Debtor, also the amount of Rs.1,00,00,000/- is reflected as "other long-term liabilities" which also clearly proves existence of the Financial Debt. 8. We have considered the submissions of the Counsel for the Parties and perused the record. 9. There is no dispute between the Parties that amount of Rs.1,00,00,000/- was transferred by M/s. Kalibre Associates Pvt. Ltd. to the Corporate Debtor on 20.11.2010. Part IV of Section 7 Application contains the particulars of debt in following words : "Part - IV PARTICULARS OF FINANCIAL DEBT 1. TOTAL AMOUNT OF DEBT GRANTED DATE(S) OF DISBURSEMENT That as per the records of the Corporate Debtor available with the Liquidator an amount of Rs. 1,00,00,000/- (Rupees One Crore Only) was disbursed by the Financial Creditor as loans and advances to the Corporate Debtor on 20.11.2010 vide Cheque No. 3 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nter into issue as to whether Notices were served on the Appellant or not? Fact remains that Order passed by the Adjudicating Authority was an Ex-Parte Order. 12. First submission which has been pressed by the Counsel for the Appellant is that Liquidator of M/s. Kalibre Associates Pvt. Ltd. has no jurisdiction to file Section 7 Application against the Corporate Debtor. He had taken leave from the Adjudicating Authority to recover the dues of the Company in Liquidation i.e., M/s. Kalibre Associates Pvt. Ltd. It ought to have taken steps for recovery and not to file Application under Section 7. 13. The above submissions have been refuted by the Counsel for the Liquidator and submitted that in the Application filed by Liquidator, a specific prayer was made seeking prior approval to institute suits/legal proceedings on behalf of the Corporate Debtor, including filing of the Section 7 of the Code. The Appellant has brought on the record copy of the Order dated 21.02.2022 passed in the Liquidation Proceedings of M/s. Kalibre Associates Pvt. Ltd. in I.A. No. 5846/2021, which was filed by the Liquidator following Order was passed: " IA-5846/2021- By filing this IA, the applicant has pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has been brought on record as (Annexure A-2) to the Appeal, which Performa Invoice is as follows: 16. Section 7 Application which was filed by the Liquidator claimed debt as a Financial Debt and it was pleaded in Part IV that amount of Rs.1,00,00,000/- was disbursed by the Financial Creditor as loans and advance to the Corporate Debtor on 20.11.2020. The Balance Sheet of the Financial Creditor has been brought on the record in the Balance Sheet of 2017-18 under the heading short terms loans and advances, name of Corporate Debtor is mentioned in the end where an amount of Rs.1,00,00,000/- was mentioned both as on 31.03.2017 as and on 31.03.2018. The same amount of Rs.1,00,00,000/- is further reflected in the provisional Balance Sheet as on 18.01.2019, whereunder Para 2.12 short-term loans and advances amount of Rs.1,00,00,000/- was mentioned against the name of Corporate Debtor as on 18.01.2019. From the Balance Sheet, it is clear that loans and advances are grouped under the same heading. 17. There being no dispute that amount of Rs.1,00,00,000/- was transferred to the Corporate Debtor on 20.11.2010 and from the Balance Sheets, annual Financial Statements of the M/s. Kalibre Ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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." 20. The Notice which was issued by the RP to the Corporate Debtor prior to filing of the Section 7 Application has also been brought on record which was issued by the RP Mohan Lal Jain, who is now working as a Liquidator. In the said Demand Notice, the claim was made of Rs.1,00,00,000/- plus interest and subsequent in Notice dated 20.07.2020 which was issued on behalf of the Liquidator payment of Rs.1,00,00,000/- with 12% interest was claimed. 21. When we look into Part IV of the Section 7 Application, it is clear that in the amount claimed, no interest is demanded. Thus, it is now admitted case of the Respondent Company that there was no interest payment. When it is admitted that there was no interest payment of Rs.1,00,00,000/- burden was on the Respondent, i.e., Applicant before the Adjudicating Authority to prove that debt is a Financial Debt. The Liquidator who ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... - - - (b) Others Audit Fees Payable 227,506.00 199,926.00 227,506.00 199,926.00 Total Provisions 227,506.00 199,926.00 24. When we look into the Financial Statement of the Corporate Debtor, it is clear that long-term borrowings are separately provided for and other long- term liabilities are separately mentioned in Note 4 and with regard to two entries under other long-term liabilities, it is mentioned as: NOTE - 4 As at As at OHER LONG TERM LIABILITIES 31.03.2020 31.03.2019 Security Received from NIIT 26100000.00 26100000.00 Kaliber Associates 10000000.00 10000000.00 Total 36,100,000.00 36,100,000.00 25. The above entry indicates that Corporate Debtor in its Balance Sheet has not shown the amount as borrowing rather the said amount has been shown as security receipt from M/s. Kalibre Associates Pvt. Ltd. 26. Learned Counsel for the Respondent relying on the Judgment of the Hon'ble Supreme Court in the matter of `Global Credit Capital Ltd. & Anr.' Vs. `Sach Marketing Pvt. Ltd. & Anr.' reported in 2024 SCC OnLine SC 649, submits that even the security can be treated to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er 2017 addressed by the corporate debtor to the first respondent. We have perused a copy of the said letter annexed to the counter. By the said letter, the corporate debtor informed the first respondent that for the year 2016-2017, the corporate debtor had provided the interest amounting to Rs. 18,06,000/- in the books of the corporate debtor and that the sum will be credited to the account of the first respondent on the date of payment of TDS. In paragraph 21 of the impugned judgment, it is held that the financial statement of the first respondent for the Financial Year 2017-2018 shows revenue from the interest on the security deposit. It is also held that the amounts were treated as long-term loans and advances in the financial statement of the corporate debtor for the Financial Year 2015-2016. Moreover, in the financial statement of the corporate debtor for the Financial Year 2016-2017, the amounts paid by the first respondent were shown as "other long-term liabilities". Therefore, if the letter mentioned above and the financial statements of the corporate debtor are considered, it is evident that the amount raised under the said two agreements has the commercial effect of borr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... een mentioned under two different heads. Hence, non-mention of the amount of Rs.1,00,00,000/- under the heading long-term borrowing has to be given some meaning and purpose. Long-term liabilities can be different kind of liabilities which may be an Operational Debt, Financial Debt or any other nature of debt. However, the real nature of transaction between the parties needs to be examined and adjudicated by the Adjudicating Authority before admitting Section 7 Application. 30. In the present case, the Corporate Debtor unfortunately could not appear before the Adjudicating Authority to raise his defence, hence in the facts of the present case, we are of the view that ends of justice be served in remitting the matter before the Adjudicating Authority for fresh consideration with liberty to the Appellant to file its Reply within three weeks. We are satisfied that there is no appropriate consideration of the real nature of transaction on basis of which Section 7 Application was filed by the Adjudicating Authority. 31. Learned Counsel for the Respondent has also placed reliance on the Judgment of this Tribunal in the matter of `Arunkumar Jayantilal Muchhala' Vs. `Awaita Properties Pvt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g to the Balance Sheets of the Corporate Debtor, Adjudicating Authority has admitted Section 7 Application relying on only NeSL Report. 33. Learned Counsel for the Respondent has also relied on the Judgment of this Tribunal in the matter of `Vipul Himatlal Shah & Anr.' Vs. `Teco Industries & Anr.' in Comp. App. (AT) (Ins.) No. 470/2022. This Tribunal in Paragraph 16 has observed that the Adjudicating Authority or Appellate Authority are not required to further examine the record maintained by the Information Utility, more so when the record on the Information Utility is deemed authenticated and no dispute or refutation of the said record has been done by the Corporate Debtor earlier. In the present case as noticed above, Appellant unfortunately, could not appear before the Adjudicating Authority and case proceeded Ex-Parte against him. Undoubtedly Report of the NeSL is relevant evidence, but it cannot be conclusive proof for nature of transaction. A three Member Bench of this Tribunal in the matter of `Dheeraj Wadhawan' Vs. `Yes Bank Ltd. & Anr.' in Comp. App. (AT) (Ins.) No. 953 of 2021, decided on 16.03.2022, while dealing with information recorded in the Information Utility had ..... X X X X Extracts X X X X X X X X Extracts X X X X
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