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2022 (9) TMI 631 - AT - Insolvency and BankruptcyInitiation of CIRP - Assignment of debts - Financial Creditors - NCLT admitted the application - disputes regarding the term-loans by engaging in settlement discussions with Mr. Rana Kapoor and other HDIL Promoters - illegal attachment of loans - HELD THAT:- Merely because there is a ‘debt’ and a ‘default’ it cannot be construed that a Section 7 Application is required to be admitted. The Adjudicating Authority ought to have examined the ‘nature of these financial transactions’ having regard to the Investigation Reports which were filed by the Appellant herein, the violation of the Articles of Association and assessed whether the transactions were collusive in nature or not and used its discretion whether to admit such an Application or not, keeping in view the scope and objective of the Code. It is appropriate at this juncture, to rely on the Judgement of the Hon’ble Supreme Court in M/S EMBASSY PROPERTY DEVELOPMENTS PVT. LTD. VERSUS STATE OF KARNATAKA & OTHERS [2019 (12) TMI 188 - SUPREME COURT], in which the Hon’ble Apex Court has clearly noted that the Adjudicating Authority has the jurisdiction to enquire into allegations of fraud when there is a prima facie case of fraudulent initiation of CIRP. The Assignment to Suraksha is not a bona fide one, peculiar to the facts of the attendant case and the loan amounts do not satisfy the essential requisites of a ‘Financial Debt’ as envisaged under the Code. This Tribunal observed that the fundamental scope & objective of IBC is ‘Resolution’ and ‘Maximization of Assets’ and not ‘Recovery’ of loans which do not strictly fall within the definition of ‘Financial Debt’ as defined under Section 5(8) of the Code. Appeal allowed.
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