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2022 (10) TMI 384 - AT - Insolvency and BankruptcyMaintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Creditors - discrepancy in the debt amount which is payable - pending litigation due to family dispute between two groups of the Data Family and after division in the family assets, the issue of this loan is being used to settle scores - demand notice was issued by the Appellant after assignment of the loan in 2007 till 2018 - HELD THAT:- Part-IV of section 7 application filed by the financial creditor Deepak Vegpro Pvt. Ltd., the amount of financial debt claimed to be default is Rs.412.52 crores, which according to the Appellant is the amount due to it by way of principal amount, interest, penal interest and liquidated damages. It is quite clear from a note in the balance sheets for the FY 2008-09 onwards that even the principal amount of Rs. 4.50 crores which is the loan taken by the corporate debtor from IDBI is settled by the assignee Deepak Vegpro Pvt. Ltd. and thereafter a loan amount of Rs.1.35 crores is shown in the balance sheets for the successive years but significantly no interest amount pertaining to the debt is shown as being outstanding and liable to the purported financial creditor. Quite obviously the principal amount of loan gets changed due to the settlement entered into by the corporate debtor with its secured creditors including Deepak Vegpro Pvt. Ltd. When there is discrepancy between the amount appearing in the balance sheets itself from one year to another, and in addition, there is a huge discrepancy between the amount claimed in default in section 7 application and the amount appearing as purported debt, the existence of debt as claimed and the jural relationship are very much doubtful - In the present case, it is found that the amount of loan given by IDBI, which was in default in the year 1998. This loan was taken over by SASF for a total consideration of Rs.2.50 crores by an Assignment Deed executed on 17.1.2007, the alleged loan was assigned by SASF to Deepak Vegpro Pvt. Ltd., after a no objection by the corporate debtor. The claim of the appellant that the loan was due and payable by the corporate debtor is contested by the Respondent by stating that after the assignee of IDBI/SASF loan to Deepak Vegpro Pvt. Ltd., the remaining amount of Rs. 1.35 crores is considered as an investment and not any loan transaction. For an applicant to be a financial creditor, a debt along with interest should be disbursed against the consideration time value of money, whereas in the present case the entries in the balance sheets by which the acknowledgment of debt claimed to be in limitation, do not show any interest accruing on the claimed loan amount, even the Assignment Agreement dated 17.1.2007 executed between SASF and Deepak Vegpro Pvt. Ltd. makes ‘the procedure full and absolute legal owner and the only person legally entitled to financial assets or any part thereof” - A plain reading of the above-stated provision under section 7 and the use of the word ‘may’ in clause (a) of sub-section (2) of section 7 makes it clear that the Adjudicating Authority has the discretion to either admit it or reject the application, of course depending on the facts of the case and whether such facts and circumstances call for admission of the section 7 application. The language of section 7 can be contrasted with the language of section 9 where no word such as ‘may’ is used in sub-section (5) of section 9 and an exhaustive list of conditions given in clause (i) of sub-section (5) of section 9 are satisfied. The said loan or its part thereof is not proven to be a financial debt, and the section 7 application is also barred by limitation since the acknowledgements do not provide for unequivocal and unambiguous acknowledgement of the alleged debt as claimed in the section 7 application - the Impugned Order does not suffer from any error in holding that section 7 application does not deserve to be admitted. Appeal dismissed.
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