2023 (1) TMI 551 - AT - Insolvency & Bankruptcy

Initiation of CIRP - Financial debt or not - application dismissed on the ground that the Appellant has failed to establish the terms of advancing the money, the repayment of money and default by the Respondent - existence of debt and dispute or not - HELD THAT:- There is no denial of the fact that the parties to the lis entered into an agreement dated 31.08.2012, as per which the Respondent as an owner asked the Appellant as a developer, to develop a piece of land in a residential area. The owner was to get Rs. 4 Crores in the form of a non-refundable deposit, 42% of the total sales from saleable area whereas the developer was to get 58% of the total sales from saleable areas. There is a clause of loan in the said agreement as per which the developer was to provide additional loan of Rs. 11 Crores to the owner which shall carry interest @24% per annum. The owners have represented that the said loan shall be used for acquisition of additional land and decided to pay monthly interest failing which compounding interest of loan was to be adjusted by the developer through the escrow account till such time the entire interest is repaid/adjusted out of the owner share of revenue of the saleable areas - The evidence is there on record of the transfer of the amount in question from the account of the developer to the account of the owner and also the payment of interest by the owner to the developer. It is also a fact on record that the owner stopped the payment of interest and as a matter of fact the amount advanced by the Appellant to the Respondent, used for the purpose of purchasing the land by the owner in its name and the project has not been started at all because the owner failed to take necessary licence for change of land use, triggered the application filed under Section 7 of the Code for resolution of the amount of Rs. 6 Crores advanced as a loan and Rs. 1 Crores as refundable security.

The definition of debt and default which is the only thing required for the purpose of maintaining the application under Section 7 of the Code, is satisfied - the Adjudicating Authority has committed a patent error in misreading and mis-appreciating the evidence available on record while dismissing the application, filed by the Appellant for the initiation of CIRP of the Corporate Debtor/Respondent.

Appeal allowed.