2023 (3) TMI 175 - AT - Insolvency & Bankruptcy

Rejection of claims by Resolution Professional - privity of contract between the Appellant and the Corporate Debtor or not - business loan for expansion of their business - Financial Debt or not - HELD THAT:- It is seen from the record that the erstwhile Promoter has brought in funds in his personal capacity which were permitted as Director loans and the same was already informed to the Appellant that they were treated accordingly in the Books of Accounts of the Corporate Debtor. There is no rebuttal by the Appellant to the submissions made by the Respondent that loans from Directors are allowed as per the provisions of the Companies Act, 1956 & 2013, subject to certain conditions and that in the instant case, the amount that was brought in by the Promoter into the Corporate Debtor, was deemed as Directors loans and treated accordingly in the Books of Accounts.

From the Resolutions relied upon by the Counsel for the Appellant, it is clear that Dr. AM Arun in his capacity as Managing Director was authorized to sign the documents and to conclude the money in his personal name and deposit the same into Company’s Account and the Board approved that the repayment is to be made by Company only. There are no substantial reasons given as to why the amounts, if meant for the purpose of rendering the operations of the Company, and the Company has a distinct Bank Account, the amount was disbursed to the Personal Account of the Managing Director. The Adjudicating Authority has given a finding that there was no copy of any Notice convening the Board Meeting or the relevant extract of the attendance of the other Directors on the Board, having been produced before the Adjudicating Authority.

The documents relied upon by the Appellant with respect to the Promissory Note, the Confirmation Letter dated 31.03.2019, the Statement of the Account (Annexure-5) do not establish that the amounts were lent directly to the Corporate Debtor, though the amounts have been linked to the Promoter of the Corporate Debtor, in his personal capacity, the same cannot be treated as Financial Debt, as defined under Section 5(8) of the Code, specifically in the absence of any documents, supporting the transactions, namely, the Bank Accounts of the Corporate Debtor to substantiate that the amounts were directly lent by the Appellant into the coffers of the Corporate Debtor meant for the business purposes of the Corporate Debtor - merely because the Promoter had acknowledged the debt does not tantamount to the same being classified as a Financial Debt under the IBC, specially, in the absence of Loan Agreements, terms of repayment, payment of interest, tenure of loan, etc., more so keeping in view the Independent Auditor’s Report for three consecutive Financial Years.

This Tribunal does not find any illegality or infirmity in the well-reasoned Order of the Adjudicating Authority, National Company Law Tribunal, Division Bench – I, Chennai) in observing that the Applicant/Appellant herein is to seek his/its remedy against the said Promoter and not against the Corporate Debtor - Appeal dismissed.