Home Case Index All Cases Insolvency and Bankruptcy Insolvency and Bankruptcy + AT Insolvency and Bankruptcy - 2023 (1) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2023 (1) TMI 303 - AT - Insolvency and BankruptcyRejection of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Creditors or not - real nature of the transactions between the parties is of loan transaction or not - HELD THAT:- The submission of learned counsel for the Appellant that the mention of Capital Advance was only an inadvertent error which was corrected in 2019-20 and 2020-21, cannot be accepted. The Section 7 application itself was filed by the Appellant in the year 2019 and Appellant has contemporaneous records which have their own relevance and value. The Appellant who was Assignee of IFIN when itself described the amount of Rs.210 Crores as Capital Advance, it is clear that it was understood even by the Assignee that the amounts were in the nature of Capital Advance for the purposes of supply and services. The Balance Confirmation which was issued by the Borrower in the year 2017, which is part of the Reply filed by the Corporate Debtor, also mentions the amount as project advance. When the Corporate Debtor has challenged the very nature of the financial debt, the Adjudicating Authority was required to look into the nature of transactions to decide as to whether the transactions falls within the meaning of Section 5 Sub-section (8) of the I&B Code. Hon’ble Supreme Court in ES KRISHNAMURTHY & ORS. VERSUS M/S BHARATH HI TECH BUILDERS PVT. LTD. [2021 (12) TMI 683 - SUPREME COURT] has held that if the Adjudicating Authority is satisfied that default is occurred it has to admit the application. There can be no dispute to the proposition as laid down by the Hon’ble Supreme Court in the above case. The present is not a case where default in payment of debt is an issue. The principal issue which was raised by the Corporate Debtor in its Reply was that the transaction itself is not a financial debt. Further, there can be no dispute that in law a Guarantor is a Corporate Person and if the Corporate Debtor committed default in payment of debt, application under Section 7 can very well be filed against the Corporate Guarantor but the question in the Section 7 application before the Adjudicating Authority was very nature of the transaction. The Corporate Debtor has questioned the very nature of the transaction pleading that it was not a financial debt not disbursed for time value of the money and it was for the purposes of only arranging the advance payment which was to be made by the IL&FS entities in favour of WWIL and its subsidiaries. The Adjudicating Authority has also noticed that the Appellant who had filed Section 7 application has not filed in rejoinder refuting the various pleadings and materials brought on record by the Corporate Debtor in its detailed reply alongwith Annexures. The Adjudicating Authority after considering all the relevant facts and circumstances has rightly come to the conclusion that application under Section 7 did not deserve admission - Appeal dismissed.
|