2022 (2) TMI 624 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , PRINCIPAL BENCH , NEW DELHI

Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Debt or not - Appellant submits that the ‘Claim’ of the 1st Respondent/Financial Creditor is not ‘Debt’ in any manner, as the transaction is not a ‘Loan Transaction’ - Appellant takes a plea that at the time of issuing the letter terminating the alleged understanding, the ‘Debt’ was barred by Limitation - HELD THAT:- An ‘Adjudicating Authority’ is subjectively satisfied as to the existence of ‘Default’ and in the event of the Section 7 application being complete in all respects, then no other criteria can be looked into by the ‘Adjudicating Authority’ for admitting an application under the I&B Code. To put it precisely, the function of the ‘Adjudicating Authority’ is to decide whether the application is complete, whether there is any ‘Debt’ or ‘Default’. An ‘Adjudicating Authority’ as a first step is to take necessary steps for ‘resolution’ of the ‘Corporate Debtor’. An ‘Adjudicating Authority’ is not a Court of Law. The proceedings under I&B Code are summary in nature.

A Financial Creditor is to establish the existence of the ‘Debt’ and the ‘Corporate Debtor’s Default’. A cumulative reading of Section 7 of the Code alongwith Rule 4(1) of the Insolvency & Bankruptcy (Adjudicating Authority) Rule, 2016 exhibits that the form and manner of the application has to be the one specified - In the instant case on hand, the Corporate Debtor in its reply to CP No.1347/2019 had admitted that the ‘Financial Creditor’ had paid a sum of ₹ 5,35,00,000/- on 27.10.2009 to it but the ‘Corporate Debtor’ had taken a stand that no payment was ever made towards interest by it. Further, the claim of the 1st Respondent/Financial Creditor is repudiated by the ‘Corporate Debtor’ by stating that the total consideration agreed to be paid for by the 1st Respondent/Financial Creditor towards the purchase of FSI and its entitlement to consume the same on the said portion was ₹ 10 crores only of which only a sum of ₹ 5,35,00,000/- was paid by the Financial Creditor to it.

Even though pleas are advanced on behalf of the Appellant that for the alleged ‘Default’ which occurred from the time the interest was not paid viz 2010 or 2011 and from 2009 till date the interest accrued every quarter was not paid by the ‘Corporate Debtor’ and further that no action was taken, no claim was made from the company or no steps for recovery of interest was made by the 1st Respondent/Financial Creditor till 2018 when the 1st letter was issued to the ‘Corporate Debtor’ demanding the amount with interest. In the instant case, the ‘Debt’ of the Corporate Debtor is supported from the confirmation of accounts dated 01.04.2011, 01.04.2017 and 01.04.2018. Further, on 13.04.2018 the 1st Respondent/Financial Creditor had called upon the ‘Corporate Debtor’ to repay the facility availed and that the Corporate Debtor had through a Reply dated 07.06.2018 had mentioned that the sum of ₹ 5,35,00,000/- was only provided as an ‘advance’ for acquiring from the Corporate Debtor Floor Space Index of 15,500 sq mtrs etc. and not as loan. The 1st Respondent/Financial Creditor through its letter dated 28.03.2019 had reiterated that the sum in question was an advance as and by way of loan and that the same was repayable on demand alongwith interest @ 18% on quarterly rests. As such, the Section 7 application filed before the ‘Adjudicating Authority’ in CP No. 1347/MB/CII/2019 (NCLT Mumbai Bench II) is well within the period of limitation.

Keeping in mind the attendant facts and circumstances of the instant case in a conspectus fashion and also this ‘Tribunal’ on going through the impugned order passed by the Adjudicating Authority comes to a resultant conclusion that the admission of Section 7 application by the ‘Adjudicating Authority’ is free from any flaws - Appeal dismissed.