Home Case Index All Cases Insolvency and Bankruptcy Insolvency and Bankruptcy + AT Insolvency and Bankruptcy - 2021 (3) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2021 (3) TMI 1120 - AT - Insolvency and BankruptcyMaintainability of application - initiation of CIRP - amounts paid by the first Respondent on behalf of the ‘Corporate Debtor’ to the Lender Bank for compliance of the terms of the OTS - Financial Debt or not - Whether the first Respondent being a ‘Purchaser’ under an Agreement to Sell, executed pursuant to an OTS can claim to be a ‘Financial Creditor’ as defined under Section 5(7) of the Code? - HELD THAT:- There are no illegality or infirmity in the observation made by the Learned Adjudicating Authority that issuance of Notice prior to Section 7 Application is not mandatory as per the provisions of the Code as noted by the Hon’ble Supreme Court in ‘Innoventive Industries Ltd.’ Vs. ‘ICICI Bank and Anr.’ [2017 (9) TMI 58 - SUPREME COURT]. Further, the first Respondent has got issued a legal Notice in October, 2018 prior to filing of the Section 7 Application and the same has not been denied by the Appellant herein - It is evident that though money has been paid under an Agreement to Sell, it is seen that the same was paid by the first Respondent to the Lender Bank only on behalf of the ‘Corporate Debtor’ and furthermore in the event of the failure on the part of the ‘Corporate Debtor’ to adhere to the terms of the Agreement, the said consideration amount was to be repaid by the ‘Corporate Debtor’ alongwith interest in the event the transaction did not materialize. It is seen from the record that a Right to Payment accrued to the first Respondent in terms of Clause 11 of the Agreement. The consideration for the purchase of the Scheduled Property structure together with the plant and machinery standing thereon shall move to the Lender from the first Respondent, at the instance of the ‘Corporate Debtor’. Hence, it is seen from the clauses that the Agreement to Sell emanates from the One Time Settlement entered into between the ‘Corporate Debtor’ and the Lender Bank and it is only in lieu of the consideration paid by the first Respondent to the Lender Bank on behalf of the ‘Corporate Debtor’, that the Agreement of Sale for the subject property was executed. Therefore, the contention of the Learned Counsel appearing for the Appellant that the money was not utilized by the ‘Corporate Debtor’, but paid to the Lender and as the utilization of money by the ‘Corporate Debtor’ is a sine qua non and therefore, the ‘debt’ does not fall within the definition of ‘Transaction’ as defined under Section 3(33) or under ‘Financial Debt’ as defined under Section 5(8)(f), is untenable. The debt in question is a ‘Financial Debt’. It was also pleaded that the specific intention of the first Respondent was to take over the land with the structures and the plant and machinery so as to commence the business for which purpose the land was initially allotted by TSIIC. Hence, it can be safely construed that the first Respondent cannot be said to be having only a security interest over the assets of the ‘Corporate Debtor’. Appeal dismissed.
|