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2022 (5) TMI 314 - AT - Insolvency and BankruptcyMaintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Debt - privity of contract between Petitioner and Corporate Debtor - HELD THAT:- The material on record evidences that the Supplementary Deed was executed between the ‘Tridhaatu Group’ and the ‘Prince Care Group’ and signed accordingly by their representatives. It is the main case of the Appellant that there is a privity of contract between the Appellant and the Corporate Debtor Company having regard to the principal outstanding amount being reflected in the Balance Sheet for the year ending March 2019; the Supplementary Retirement Deed executed by the continuing partners of the ‘Corporate Debtor’ recording the factum of unsecured loans and finally the cheques issued by the ‘Corporate Debtor’ in favour of the Appellant towards payment of the due amount - It is evident from the material on record that both the Retirement Deed dated 12/08/2016 and the Supplementary Retirement Deed dated 13/08/2016 were entered into between the ‘Tridhaatu Group’ and ‘Prince Care Group’, to which the ‘Corporate Debtor’ ‘Tridhaatu Aranya Developers LLP’ is not a party. The ‘Corporate Debtor’ is a Limited Liability Partnership incorporated under the provisions of the Limited Liability Partnership Act, 2008, and is a body incorporate independent of its partners. It is to be seen whether any debt/liability has been taken up by a partner in the name of the LLP. In the Application under Section 7 of the Code filed by the Appellant herein the ‘Corporate Debtor’ is described as an LLP, and as a part of the ‘Tridhaatu Group’. The ‘Corporate Debtor’ is a distinct legal entity and the aforenoted ‘Deeds’ do not construe any privity of contract between the ‘Corporate Debtor’ and the Appellant and further establishes that mere issuance of these 2 cheques does not construe ‘liability’ having consideration for ‘time value of money’. Further, the LLP Retirement Deed refers to a lumpsum amount of Rs.45,08,08,384/- to be paid by the ‘Tridhaatu Group’. It is the case of the Respondent that out of this sum, a sum of Rs.6,13,34,457/- is towards miscellaneous expenses and the remaining amount is not bifurcated and is towards ‘One Time Settlement’ - It is an admitted fact that there were disputes between the Appellant and continuing partners of the Respondent LLP. It is also evident from the Supplementary Deed which records that the parties may exchange ownership of facts to settle their obligations. It is pertinent to mention that the Appellant has for the first time, in this Appeal has pleaded that the partners can bind the LLP and relies on cheque copies and the Balance Sheet reference. The onus to establish that the amount which is ‘due and payable’ falls within the ambit of the definition of ‘Financial Debt’, as defined under Section 5(8) of the Code, is on the Appellant herein. There is no ascertained sum crystallised as ‘due and payable’. To reiterate, there is no documentary evidence filed to prove that the two cheques amount to acknowledgement of any ‘Financial Debt’, especially in the light of the fact that the Retirement Deed and the Supplementary Retirement Deeds have been entered into between the ‘Tridhaatu Group’ and ‘Prince Care Group’, for which the Respondent/‘Corporate Debtor’ is not a party - the ‘amounts’ do not possess the essential ingredients of ‘Financial Debt’ as defined under Section 5(8) of the Code. This Tribunal has also observed in a catena of Judgements that IBC is not a ‘recovery’ proceeding or a Code for settlement of collateral disputes. Appeal dismissed.
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