TMI Blog2022 (8) TMI 323X X X X Extracts X X X X X X X X Extracts X X X X ..... erein contained in any other Law for the time being inforce or any instrument having effect by virtue of any such Law. Besides this, to put it pinpointedly, the Execution and Transfer of Money in terms of Inter-Corporate Deposit cannot be disputed. Viewed in that perspective, the emphatic plea taken on behalf of the Corporate Debtor is not acceded to by this Tribunal. Likewise, the stand of the Corporate Debtor that the 1st Respondent/Petitioner/Financial Creditor in its Balance Sheets from 2011-12 to 2018-19 had described the sum in issue as other investments but had not mentioned specifically as ICD, is a futile one, besides, the same being unworthy of acceptance. The twin aspects of Debt and Default as against the Principal Borrower/M/s. Lepakshi Science and Technology Park Private Limited was established clinchingly on the side of the 1st Respondent/Petitioner/Financial Creditor and further in the teeth of the Corporate Guarantee being executed by the 2nd Respondent/Corporate Debtor (M/s. Lepakshi Heritage Wellness Village Pvt. Ltd.) to and in favour of the 1st Respondent/Petitioner/Financial Creditor guaranteeing the repayment of the sum transferred by the 1st Respondent/Pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .07.2021 (vide Page No.98 of Vol. I in CA (AT) (CH) (INS) No. 216 of 2022) and looking at from that angle, the main CP (IB)/98/BB/2021 is not barred by limitation. This Tribunal comes to an inescapable and inevitable conclusion that the 1st Respondent/Petitioner/Financial Creditor had established the aspect of subsisting Debt and Default which are the pre-requisites for an admission of an Application filed under Section 7 of the I B Code, 2016 - The proceedings under the I B Code, 2016, are not adversarial in character and in the instant case, the Adjudicating Authority cannot determine the default sum as per Section 4 of the I B Code, 2016. Looking at from any point of view, the instant Appeal sans merits - Appeal dismissed. - Company Appeal (AT) (CH) (INS) No. 214 of 2022 & Company Appeal (AT) (CH) (INS) No. 216 of 2022 - - - Dated:- 2-8-2022 - [ Justice M. Venugopal ] Member ( Judicial ) And [ Kanthi Narahari ] Member ( Technical ) For the Appellant : Mr. Y. Suryanarayana , Advocate For the Respondent No.1/ : Mr. Dhyan Chinnappa , Senior Advocate Financial Creditor Respondent No. 2 / : Mr. Dweep Joshi , Advocate Resolution Professional ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which defines claim to mean a right to payment even if it is disputed. The Code gets triggered the moment default is of rupees one lakh or more (Section 4). The corporate insolvency resolution process may be triggered by the corporate debtor itself or a financial creditor or operational creditor. A distinction is made by the Code between debts owed to financial creditors and operational creditors. A financial creditor has been defined under Section 5(7) as a person to whom a financial debt is owed and a financial debt is defined in Section 5(8) to mean a debt which is disbursed against consideration for the time value of money. As opposed to this, an operational creditor means a person to whom an operational debt is owed and an operational debt under Section 5 (21) means a claim in respect of provision of goods or services. 28. When it comes to a financial creditor triggering the process, Section 7 becomes relevant. Under the explanation to Section 7 (1), a default is in respect of a financial debt owed to any financial creditor of the corporate debtor it need not be a debt owed to the applicant financial creditor. Under Section 7(2), an application is to be made under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... red to be seen by this Adjudicating Authority, is whether the application filed within the period of limitation and whether the Petitioner/Financial Creditor proved the debt and default thereon. 17. It is the settled principle of law that the amount given under an Inter Corporate Deposit is a financial debt. The Learned Counsel appearing for the Respondent/Corporate Debtor while not disputing the said principle, however, mainly contended that the subject Inter Corporate Deposit was given by the Petitioner/Financial Creditor to the Respondent/Corporate Debtor as a part of the investment made and hence it cannot be treated as a financial debt and the C.P. should be dismissed. The Learned Counsel, in order to substantiate this submission drawn our attention to various Clauses of the Memorandum of Understanding dated 07.01.2012 executed between M/s. Lepakshi Knowledge Hub Private Limited and Global Emerging Markets India Limited i.e., the Petitioner/Financial Creditor in the instant C.P. Accordingly, it is submitted that the true nature of the transaction was to invest in the Respondent/Corporate Debtor Company, and to purchase the shareholding. Advancing the money through the Int ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Deposit within the specified period, the Financial Creditor/Petitioner recalled the Inter Corporate Deposit amount along with 18% interest from the Corporate Debtor/Respondent vide recall letter dated 19.09.2020. The instant C.P. was filed on 13.10.2021. The Corporate Debtor/Respondent has acknowledged the receipt of Rs.5,00,00,000/- (Rupees Five Crores only) from the Financial Creditors/Petitioners in its Balance Sheets from the Financial Years 2011-2012 to 2018-2019. Hence, the C.P. is well within the period of limitation. 22. The various decisions, on which the Learned Counsel for the Respondent/Corporate Debtor placed reliance, have no relevance to the facts of the present case. 23. The application filed in the prescribed Form No.1 is found to be complete. 10. Since the debt and default against the Principal Borrower was already held to be proved and since the execution of the Corporate Guarantee by the Corporate Debtor and the invocation thereof was also proved, the instant C.P. is also liable to be admitted. 11. It is relevant to state here that the Hon ble NCLAT in the case of State Bank of India vs. Athena Energy Ventures Private Limited, C.A. (AT) ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... only one part of a bouquet of documents executed in furtherance of a larger transaction. 7. According to the Learned Counsel for the Appellantthe Memorandum of Understanding and other agreements including the ICD are part of the same composite transaction with the Memorandum of Understanding , being the Principal Agreement that it was only pursuant to the Memorandum of Understanding that the subject land was transferred from the Appellant to the Corporate Debtor and LHW , that the amount of Rs.5 Crores advanced was part of the series of reciprocal promises that were to be performed between the parties and the amount was not advanced by the 1st Respondent in its capacity as a Bank or Financial Institution and that it was the 1st Respondent who abandoned all its obligations after complying firstly with the payment of Rs.5 Crores, that the 1st Respondent had not paid a single rupee of the promised Rs.238.5 Crores after the land was transferred to the Corporate Debtor and LHW and deliberately backed out from the transaction and that it was the 1st Respondent s own stand was that the Rs.5 Crores was a short term arrangement to be adjusted in the sum, to be paid b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Respondent claimed that it is 100% Shareholder of the 2nd Respondent. After the IPL s Resolution Professional cogently responded to the false claims made by the Petitioner/the 1st Respondent filed an urgent interim relief Petition before the Hon ble High Court of Delhi which was later transferred to the Arbitration Tribunal and thereafter, the Arbitration began. 14. The Learned Counsel for the Appellantprojects a plea that even the purported document of the Information Utility exhibiting the debt was registered by the 1st Respondent on 08.07.2021 after filing of the Section 7 Application under the I B, Code, 2016 in July 2021, while litigious correspondence and the litigation was proceeding from December 2019. 15. The Learned Counsel for the Appellant submits that the 1st Respondent/Financial Creditor deliberately had not pleaded the material facts or filed any material relating to the true scope of the transaction and the penalty under Section 75 of the I B Code, 2016, should have been imposed and further, prayed for an imposition of stringent penalty under Section 65 of the Code, to maintain the sanctity of the Insolvency Jurisdiction . 16. The other contention a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it (iii) the receipt of Recall Notice dated 19.09.2020 and (iv) non-payment of Inter-Corporate Deposit sum together with interest. 21. It is the categorical stand of the 1st Respondent/Financial Creditor that the Inter-Corporate Deposit sum was recorded as a liability in all the 2nd Respondent s Financial Statements from the Year 2012 till its recent filings in the Year 2019 and further that the Default on the Inter-Corporate Deposit Amount and accrued interest was reflected in the record of the Information Utility relating to R2/M/s.Lepakshi Science and Technology Park Private Limited) - L1 in CA (AT) (CH) (INS) No. 216 of 2022and R2 / M/s. Lepakshi Heritage Wellness Village Private Limited) L2 in CA (AT) (CH) (INS) No. 214 of 2022. 22. The Learned Counsel for the 1st Respondent/ Financial Creditor points out that the Borrower in its Balance Sheet filed with the Ministry of Corporate Affairs for the Financial year 2011-2012 to 2018-2019 had admitted the liability in respect of the Financial Creditor and further that the Outstanding Interest payable on the unpaid debt sum, as on 26.06.2021, by the Corporate Debtor amounts to Rs.20,84,94,000/- and added fu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xpatiating his submission, the Learned Counsel for the 1st Respondent/Financial Creditor projects an argument that the Nominee Director of the 1st Respondent, as per the terms of the Memorandum of Understanding Mr. Gulshan Jhurani, remained Director of the 2nd Respondent/Company till the passing of the impugned order and he had filed an Affidavit in January 2022, wherein at paragraphs 2 to 5, he had averred as under: 2. That on 19.03.2012, Global Emerging Markets Ltd and Lepakshi Science and Technology Pvt Ltd had executed an Inter Corporate Deposit (ICC) by which a loan amount to the tune of Rs.5 Crore was forwarded to M/s. Lepakshi Science and Technology Park Pvt Ltd. The term of ICD was set as 06 months with an interest of 18% per annum till repayment date. 3. Further on 29.03.2012, Lepakshi Heritage Wellness Village Pvt Ltd had executed a corporate guarantee in favour of Global Emerging Markets Ltd guarantying repayment of amount transferred to M/s. Lepakshi Science and Technology Park Pvt Ltd. 4. I state that the amount received through ICD was used for payment of stamp duty for transfer of 2000 acres of Land to Lepakshi Science and Technology Park Pvt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... steps for recovery of its dues, despite the fact that the Enforcement Directorate had launched criminal investigations into the Appellant / Company s Affairs and its Associated Entities . Evaluation (in CA (AT)(CH) (INS) No. 214 of 2022: 33. It is pertinently point out by this Tribunal in the Application in C.P.(IB)/107/BB/2021 filed by the 1st Respondent/Financial Creditor before the Adjudicating Authority ( National Company Law Tribunal , Bengaluru Bench), under Section 7 of the I B Code read with Rule 4 of the Insolvency, Rules, 2016, under Colum Part IV , Particulars of Financial Debt , it is mentioned as under: 1. Total amount of debt granted date(s) of Disbursement On 29.03.2012 Lepakshi Heritage Wellness Village Pvt Ltd (``Corporate Debtor ) had executed a corporate guarantee (``Guarantee ) in favour of the Financial Creditor guarantying repayment of the amount transferred by the Financial Creditor to Lepakshi Science and Technology Park Private Limited (``Borrower ) . On 19.03.2012 the Financial Creditor and the Borrower had executed an Inter Corporate Deposit (``ICD ) agreement by which an amount of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sh Government had proposed to cancel the MoA given to the Project Proponent. Consequently no definitive agreement was entered into. The Project Proponent continuously assured the Financial Creditor that all disputes will be resolved and obligations under the MoU will be honoured. At the request of the Project Proponent, the Corporate Debtor and the Borrower the Financial Creditor refrained from recalling the ICD. Finally the Financial Creditor was constrained to recall the ICD on 19.09.2020 when a notice was issued to the Project Proponent, Corporate Debtor and Borrower calling upon return of Rs.5,00,00,000/- along with compound interest amounting to Rs.17,97,00,000/-. On 07.10.2020 a joint response was received by the Financial Creditor from the Project Proponent, Corporate Debtor and Borrower denying liability on unsustainable grounds. It is to be noted that the Borrower has in its Balance Sheet filed with the Ministry of Corporate Affairs from the financial year 2011-12 to 2018-19 admitted to the liability towards the Financial Creditor. 2. Amount claimed to be in default and the date on which the default occurred (Attach th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... OF FINANCIAL DEBT. THE AMOUNT AND DATE OF DETAULT: Memorandum of Agreement dated 22.12.2008 between the Government of Andhra Pradesh and Lepakshi Knowledge Hub Pvt Ltd the Project Proponent Memorandum of Understanding dated 07.01.2012 between Financial Creditor and Lepakshi Knowledge Hub Pvt Ltd the Project Proponent. Inter Corporate Deposit dated 19.03.2012 executed by the Financial Creditor and Lepakshi Science and Technology Park Private Limited the Borrower. Guarantee dated 29.03.2012 issued by the Corporate Debtor in favour of the Financial Creditor. Escrow Agreement dated 16.04.2012 between the Financial Creditor. Lepakshi Knowledge Hub Pvt Ltd the Project Proponent and IndusInd Bank Ltd. Balance Sheet of Lepakshi Science and Technology Park Private Limited the Borrower - from the Financial Years 2011-12 to 2018-19. Recall letter issued by Financial Creditor to the Corporate Debtor, Project Proponent and Borrower dated 19.09.2020. 35. Before the Adjudicating Authority , the 2nd Respondent / Lepakshi Heritage Wellness Village Private Limited in its Reply had averred that it is a fully ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reading of Clause 4, specifically Clause 4.1 to 4.3 will point out the Order of Performance , as under: Within a period of 5 days from the execution of the MoU, Petitioner should transfer an amount of Rs. 5 crores to LST towards the cost of land transfer from LKH to LST and LHW. After the transfer of Rs.5 Crores, LKH was to transfer the subject land to LST and LHW through registered sale deeds. After the transfer of land from LKH to LST and LHW, the Petitioner was required to pay the first tranche of the sale consideration (Rs. 25 crores) along with definitive agreements towards first tranche of share purchase (26% of the paid-up shareholding of LST and LHW). 40. Moreover, it is represented on behalf of the 2nd Respondent ( LHW ) that during the Year 2012, after the execution of the Memorandum of Understanding , the 1st Respondent/Petitioner/Financial Creditor had transferred Rs.5 Crores to the 2nd Respondent ( LST ) in CA AT (CH) (INS) No. 216 of 2022 and later the Appellant / LKH had transferred the subject land to M/s. Lepakshi Science and Technology Park Private Limited and Appellant / LHW. 41. Besides this, the next obligation on the part of the 1st ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r, as originally envisaged in the MOU all the Directors in 2nd Respondent / LST in CA (AT) (CH) (INS) No. 216 of 2022 were to resign and only Mr. Balaji and Mr. Gulshan Jhurani were to be on the Board of LST / LHW. But the Board of LST / LHW consistently had another Directors which demonstrate that the Parties gave no credence to the Memorandum of Understanding as it had not fructified into any definitive Agreements because of 1st Respondent/Financial Creditor s non-performance. 45. As a matter of fact, the Central Bureau of Investigation had filed a Charge Sheet dated 17.09.2013 in respect of the subject Project and was followed by the Enforcement Directorate issuing a Provisional Attachment Order dated 25.03.2015, attaching the total land, including the subject land in the Year 2015. Before the Adjudicating Authority , the Provisional Attachment Order was contested followed by an Appeal before the Appellate Authority , which is presently pending. 46. The stand of the 2nd Respondent/LHW is that the 1st Respondent/Petitioner had not addressed a single correspondence to the Central Bureau of Investigation or Enforcement Directorate claiming any proprieto ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion 3 (11) of the I B Code, 2016, defines Default meaning non payment of Default when whole or any part or instalment of the amount of Debt has become due and payable and is not (paid) by the Debtor or the Corporate Debtor , as the case may be. 53. It cannot be forgotten that the gist of any Debt to be described as Financial Debt is the time value of money, as borrowing is a money for money transaction .In this regard, this Tribunal pertinently points out that the term Time Value is defined to mean the Price associated with the length of time that an Investor must wait until an Investment matures or related income is earned (vide Black s Law Dictionary 9th Edition). Financial Creditor: 54. A Financial Creditor (as per Section 5 (7) of the Code) is any person to whom the Financial Debt is owed and includes a person to whom such a Debt has been legally assigned or transferred to. In fact, a Financial Creditor is an individual whose relationship with the entity is a pure financial contract , such as a loan or debt security . That apart, a Financial Creditor is a person who has a right to Financial Debt . A Financial Cr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 61. In fact, the Financial Statements must reveal in Balance Sheet or Profit Loss Account and the Cash Flow Statement, all relevant information in such manner that the financial position and the working results are shown as they are existing. There should neither be an Overstatement nor an Understatement . Hon ble Supreme Court Decision: 62. At this stage, this Tribunal worth recollects and recalls the Judgment of the Hon ble Supreme Court of India in J K Industries and Another V Union of India Others (vide Civil Appeal No. 3761 of 2007 dated 19.11.2007), wherein it is observed that the annual financial statements should convey an overall fair view and should not give any misleading information or impression and further, the information to be disclosed should be in consonance with the fundamental accounting assumptions and commonly accepted accounting policies. Dispute: 63. As per Section 5 (6) of the Code, the word Dispute includes a Suit or Arbitration proceedings relating to- (a) the existence of the amount of debt; (b) the quality of goods or service; or (c) the breach of a representation or warranty; 64. It is to be remembered ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rs and Share Purchase Agreement to be executed between the Parties to the MoU , as set out in Clause 4.3. 69. On going through the Memorandum of Understanding dated 07.01.2012 executed between the Appellant / Lepakshi and the 1st Respondent / Financial Creditor / Petitioner (GEM), it is crystalline and clear that the Appellant/Lepakshi had approached the 1st Respondent/Financial Creditor/GEM to purchase 100% of the Equity Shareholding of both new CO1 and new CO2 and the Appellant / GEM had agreed to purchase 100% of the entire Equity Shareholding of each of new CO1 and new CO2 for a total aggregate consideration of Rs.238,50,00,000/- to be paid in tranches on the terms and conditions, mentioned therein. 70. At this juncture, this Tribunal relevantly points out that on 19.03.2012, the Inter-Corporate Deposit was executed by the 1st Respondent/Financial Creditor and the Borrower (Lepakshi Science and Technology Park Private Limited), wherein among other things mentioned that the 1st Respondent/GEM had agreed to forward a sum of Rs.5 Crore only through a Secured Inter-Corporate Deposit ( ICD ) to Lepakshi Science and Technology Park Private Limited (Borrower) and the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1st Respondent/Petitioner/Financial Creditor to the Project Proponent (M/s. Lepakshi Knowledge Hub Private Limited) and the Corporate Debtor (M/s. Lepakshi Heritage Wellness Village Private Limited). 76. It is to be pointed out that an Acknowledgement is to be made before the expiry of prescribed period of limitation, in terms of Section 18 of the Limitation Act, 1963. In this regard, this Tribunal pertinently points out the decision of the Hon ble Supreme Court of India in A.V. Murthy V Nagabasavanna, reported in AIR 2002 SC Page 985, wherein it is observed that if the sum borrowed by the Respondent is shown in the Balance Sheet, it may amount to an Acknowledgment and the Creditor might have a fresh period of limitation, from the date of which an Acknowledgment was made. 77. When the main CP (IB)/107/BB/2021 dated 05.07.2021 (vide Vol. I - Page 78, Form I Annexure A2) was filed before the Adjudicating Authority ( National Company Law Tribunal , Bengaluru Bench) and when the 2nd Respondent/Corporate Debtor had acknowledged the receipt of Rs.5 Crores, from the 1st Respondent/Petitioner/Financial Creditor in its Balance Sheets beginning from the Financial years ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urt of India in M/s. Innoventive Industries Ltd. vs. ICICI Bank Anr. in Civil Appeal Nos.8337-8338 of 2017 observed as under: 27. The scheme of the Code is to ensure that when a default takes place, in the sense that a debt becomes due and is not paid, the insolvency resolution process begins. Default is defined in Section 3 (12) in very wide terms as meaning non-payment of a debt once it becomes due and payable which includes non-payment of even part thereof or an instalment amount. For the meaning of debt , we have to go to Section 3(11), which in turn tells us that a debt means a liability of obligation in respect of a claim and for the meaning of claim , we have to go back to Section 3(6) which defines claim to mean a right to payment even if it is disputed. The Code gets triggered the moment default is of rupees one lakh or more (Section 4). The corporate insolvency resolution process may be triggered by the corporate debtor itself or a financial creditor or operational creditor. A distinction is made by the Code between debts owed to financial creditors and operational creditors. A financial creditor has been defined under Section 5(7) as a person to wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the adjudicating authority. Under sub-section (7), the adjudicating authority shall then communicate the order passed to the financial creditor and corporate debtor within 7 days of admission or rejection of such application, as the case may be. 15. Section 7 (5)(a) of the Code is as follows:- 5) Where the Adjudicating Authority is satisfied that- (a) a default has occurred and the application under sub-section (2) is complete, and there is no disciplinary proceedings pending against the proposed resolution professional, it may, by order, admit such application . 16. As per the enunciation of law by the Hon ble Apex Court, in an Application under Section 7 of the IBC, 2016, what is required to be seen by this Adjudicating Authority, is whether the application filed within the period of limitation and whether the Petitioner/Financial Creditor proved the debt and default thereon. 17. It is the settled principle of law that the amount given under an Inter Corporate Deposit is a financial debt. The Learned Counsel appearing for the Respondent/Corporate Debtor while not disputing the said principle, however, mainly contended that the subject Inter Corporate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ebt and default by placing reliance on various documents enclosed to the instant company petition. 21. The other issue for consideration is whether the present application is filed within limitation. The subject, Inter Corporate Deposit was dated 19.03.2012 and tenure of the same was for the period of 6 (six) months and was interest free during the said term. It was further provided that if the Inter Corporate Deposit is not repaid within the said term, the Corporate Debtor undertakes to repay Rs.5,00,00,000/- (Rupees Five Crores only) along with interest at the rate of 18% per annum to the Financial Creditor/Petitioner. As the Corporate Debtor admittedly not repaid the amount received under Inter Corporate Deposit within the specified period, the Financial Creditor/Petitioner recalled the Inter Corporate Deposit amount along with 18% interest from the Corporate Debtor/Respondent vide recall letter dated 19.09.2020. The instant C.P. was filed on 13.10.2021. The Corporate Debtor/Respondent has acknowledged the receipt of Rs.5,00,00,000/- (Rupees Five Crores only) from the Financial Creditors/Petitioners in its Balance Sheets from the Financial Years 2011-2012 to 2018-2019. Henc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y had ignored the modification to the note at the end of liability removing reference to Inter-Corporate Deposit and Interest from the Financial Year 2016-17. 86. The Learned Counsel for the Appellant urges before this Tribunal that the Adjudicating Authority should not have considered only one of the transactions, from and out of the web of documents, but examine the whole gamut of agreements/documents to come to the conclusion whether there was a Default and the Debt was due and payable . 87. The Learned Counsel for the Appellant expatiating his submission points out that Rs.5 Crores was the cost of the Land Transfer in respect of stamp duty and registration charges from the Appellant / Lepakshi Knowledge Hub Private Limited to the 2nd Respondent / M/s. Lepakshi Science and Technology Park Private Limited and M/s. Lepakshi Heritage Wellness Village Private Limited. 88. The clear cut stand of the Appellant is that but for the transaction and promise of the 1st Respondent/Financial Creditor/Petitioner to pay Rs.238.5 Crores there would have been no necessity to transfer the subject land from LKH to LST and LSW (requiring Rs.5 Crores) and further that af ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , which was, admittedly, not honoured, the entries remained as they were due to accounting compulsion . 93. The Learned Counsel for the Appellant advances an argument that if an earlier Entry / Caption is changed and the New Entry does not retained the character of an Old Entry and a note in the Old Entry is removed, it constitutes an Emphatic Denial of any Liability . 94. The Learned Counsel for the Appellant contends that the 1st Respondent/Financial Creditor s claim before the Arbitral Tribunal was not only terminated , but an Appeal was preferred by the 1st Respondent/Financial Creditor/Petitioner under Section 34 of the Arbitration and Conciliation Act, 1996, unless the Hon ble High Court set aside the award , the 1st Respondent/Petitioner s claim was dismissed, the 1st Respondent/Financial Creditor is precluded from claiming the Sum . 95. The Learned Counsel for the Appellant submits that the 1st Respondent/Financial Creditor had not pleaded the material facts or filed any material relating to the true ambit of transaction and that penalty as per Section 65 and 75 should have been imposed, to maintain the sanctity of the Insolvency Jurisdiction fr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... should transfer an amount of Rs.5 Crores to LST towards the cost of land transfer from LKH to LST and LHW. (ii) After the transfer of Rs. 5 Crores, LKH was to transfer the subject land to LST and LHW through registered sale deeds. (iii) After the transfer of land from LKH to LST and LHW, the Petitioner was required to pay the first tranche of the sale consideration (Rs. 25 Crores) along with definitive agreements towards first tranche of share purchase (26% of the paid-up shareholding of LST and LHW). 100. It is the version of the 2nd Respondent/LST that in 2012, subsequent to the execution of the Memorandum of Understanding , the 1st Respondent/Financial Creditor/Petitioner had transferred Rs.5 Crore to the 2nd Respondent/LST. Later, the Appellant had transferred the subject land to the 2nd Respondent/LST and the Appellant. 101. Furthermore, it is the stand of the 2nd Respondent/LST that the 1st Respondent/Financial Creditor s obligation was to transfer the initial payment in respect of initial closing along with the definitive agreements and that the 1st Respondent/Financial Creditor/Petitioner had not taken the transaction forward by fulfilling its part of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al rights in 2nd Respondent/LST or the Appellant / LKH. 106. The Learned Counsel for 2nd Respondent / LST adverts to the fact that because of the LST s business was in standstill all along, without any regular operations, an entry made contemporaneous to the Memorandum of Understanding in the Year 2012 remained in the books and indeed, any reference to the Inter-Corporate Deposit qua, Rs. 5 Crore was removed after the Financial Year 2016-17 and that Rs.5 Crore subsisted as an other liability , as a balancing entry in respect of the cost of land transfer which was incurred as capital expenditure . Further, as the 2nd Respondent/LST had incurred this expense because of the Claimant s promise to pay the initial tranche, which was not honoured, the entries, because of the Accounting compulsion remained as they were. 107. The Learned Counsel for 2nd Respondent / LST brings it to the notice of this Tribunal that no sale consideration was paid till date to the Appellant from the 2nd Respondent/LST or LHW, which was to be paid from the consideration promised to be paid by the Petitioner. In reality, the sale between the Appellant, 2nd Respondent/LST and LHW itself is void ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d by the 1st Respondent/Financial Creditor before the Adjudicating Authority ( National Company Law Tribunal , Bengaluru Bench), under Section 7 of the I B Code read with Rule 4 of the Insolvency, Rules, 2016) seeking to initiate Corporate Insolvency Resolution Process against the 2nd Respondent / M/s. Lepakshi Science and Technology Park Private Limited under Part IV ( Particulars of Financial Debt ), it is mentioned as under: 1. Total amount of debt granted date(s) of Disbursement On 19.03.2012 the Financial Creditor and Lepakshi Science and Technology Park Private Limited ( Corporate Debtor ) executed an Inter Corporate Deposit ( ICD ) agreement by which an amount of Rs.5,00,00,000/- (Rupees Five Crores) was forwarded by the Financial Creditor to the Corporate Debtor The ICD was executed in furtherance of Memorandum of Understanding dated 07.01.2012 ( MoU ) that the Financial Creditor had entered into with Lepakshi Knowledge Hub Pvt Ltd ( Project Proponent ) Under the MoU the Financial Creditor was investing in the project undertaken by the Project Proponent. The Project Proponent had entered into a Memora ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Financial Creditor that all disputes will be resolved and obligations under the MoU will be honoured. At the request of the Project Proponent, the Corporate Debtor and the Guarantor the Financial Creditor refrained from recalling the ICD. TheFinancial Creditor was constrained to recall the ICD on 19.09.2020 when a notice was issued to the Project Proponent, Corporate Debtor and Guarantor calling upon return of Rs.5,00,00,000/- along with compound interest amounting to Rs.17,97,00,000/- On 07.10.2020 a joint response was received by the Financial Creditor from the Project Proponent, Corporate Debtor and Guarantor denying liability on unsustainable grounds. It is to be noted that the Corporate Debtor has in its Balance Sheet filed with the Ministry of Corporate Affairs from the financial year 2011-12 to 2018-19 admitted to the liability towards the Financial Creditor. 2. Amount claimed to be in default and the date on which the default occurred (Attach the workings for computation of amount and dates of default in tabular form) The total outstanding principal amount due and payable by the Corpor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nce Sheets the money in question was not described as Inter-Corporate Deposit , but only mentioned under the caption other investments has no legs to stand, in the considered opinion of this Tribunal . 115. In so far as the pleas of the 2nd Respondent/LST pertaining to the ArbitrationLis, they have no bearing in deciding the Section 7 Application filed under the I B Code, 2016. Since the 2nd Respondent/Corporate Debtor had not repaid the amount received as per Inter-Corporate Deposit dated 19.03.2012 with interest at 18% per annum (for six months period, interest free), through a Letter dated 19.09.2020, the 1st Respondent/Financial Creditor had recalled the amount received from the 2nd Respondent/LST. 116. In the instant case, considering the fact that the receipt of Rs. 5 Crores was tacitly admitted by the 2nd Respondent/LST by way of an acknowledgement as per the Balance Sheets of the 1st Respondent/Financial Creditor for the period from 2011-12 to 2018-19, the main CP(IB)/98/BB/2021 filed by the 1st Respondent/Financial Creditor/Petitioner, before the Adjudicating Authority ( National Company Law Tribunal , Bengaluru Bench), is maintainable in Law , based on ..... X X X X Extracts X X X X X X X X Extracts X X X X
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