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2018 (12) TMI 417 - Tri - Insolvency and BankruptcyCorporate insolvency process - admitted Financial Liability - amount advanced by the Financial Creditors is an amount advanced as Loan - Whether the amount claimed by the Financial Creditors is an Investment or it is an amount advanced as a Loan? - Whether the amount claimed by the Financial Creditors is discharged as on date or is still in continuance? Held that:- Bench has examined the TDS Certificate i.e. Form – 26AS which is placed on record by the Financial Creditors. By going through the same it is noticed that the Debtor had deposited the TDS amount of ₹ 14,000/-, ₹ 10,500/- and ₹ 10,500/- respectively for 1st, 2nd and 3rd Financial Creditor. This TDS was deducted by the Debtor U/s. 194A of the Income Tax Act, 1961 and the same has been deposited also with the Income Tax Department. It is noticed that the S. 194A stands for the Tax on Interest other than the Interest on Securities. Since, the TDS is deducted U/s. 194A it cannot be towards the distribution of profits and therefore a conclusion can be drawn that the Debtor has paid the amount to the 1st to 3rd Financial Creditors towards the Interest Amount of Loan. In light of above observation to answer the above framed first question it can be stated that ‘the amount advanced by the Financial Creditors is an amount advanced as Loan’. Moreover the Debtor has not made out a case of disbursement of any ‘Dividend’ or ‘Profit’ so as to demonstrate the impugned transaction at all related to an Investment. Though there is pending dispute, prior to institution of the Petition U/s. 7 of the Code, the Adjudicating Authority need not to look into that dispute for the adjudication of the S. 7 Petition. In this case, the Bench has also perused the Orders of the Hon’ble Bombay High Court in the said Civil Suit and noticed that the Hon’ble Bombay High Court, in any way, has not restricted this Bench from proceeding in this case. At the cost of repetition, the issues in that Suit are altogether different and do not relate the question of default in repayment of an admitted Financial Debt. As far as the question of the ‘default’ is concerned, it has already been established supra. Hence, to conclude the discussion it can be stated that the Petition under Adjudication deserves Admission. The facts of the case have already established that the amount claimed is ‘Financial Debt’ as defined U/s. 5 (8) of the Code and there is a Default in the re-payment of the Debt as defined U/s. 3 (12) of the Code. As a consequence, keeping admitted facts in mind that the Financial Creditor had not received the outstanding Debt from the Corporate Debtor and that the formalities as prescribed under the Code have been completed by the Financial Creditor the Bench is of the conscientious view that this Petition deserves ‘Admission’.
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