TMI Blog2018 (1) TMI 443X X X X Extracts X X X X X X X X Extracts X X X X ..... ing of account and all other order(s) passed by the Adjudicating Authority pursuant to impugned order and action taken by the ‘Resolution Professional’, including the advertisement published in the newspaper calling for applications all such orders and actions are declared illegal and are set aside. The application preferred by Respondent under Section 433 and 434 stands abated. The Adjudicating Authority will now close the proceeding. The Corporate Debtor is released from all the rigour of law and is allowed to function independently through its Board of Directors from immediate effect. - Company Appeal (AT) (Insolvency) No. 234 - 235 of 2017 - - - Dated:- 13-12-2017 - Mr. S.J. Mukhopadhaya And Mr. Bansi Lal Bhat, JJ. For The Appellant : Shri Virender Ganda, Senior Advocate assisted by Shri Vipul Ganda, Shri Mohit Oommen and Ms. Shreya Jain, Advocates For The Respondent : Shri Yash Pal Gupta, Advocate JUDGMENT SUDHANSU JYOTI MUKHOPADHAYA, J. The appellant, Director/shareholder of M/s. Swan Aluminiums Private Limited has preferred these appeals against orders dated 4th September, 2017 and 18th September, 2017 both passed by the Adjudicating Authorit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 016, issued by Central Government under sub-section (1) and (2) of Section 434 of the Companies Act, 2013 read with sub-section (1) of Section 239 of the I B Code , the winding up cases were transferred from Hon ble High Court to the Tribunal/Adjudicating Authority. 7. The case of M/s. Swan Aluminiums Pvt. Ltd. (Corporate Debtor), was transferred to the Adjudicating Authority (National Company Law Tribunal), Chandigarh Bench. The application under Sections 433(e), 434 and 439 preferred by the respondent were treated to be application(s) under Section 7 of the I B Code and were admitted, as noticed above. 8. Learned counsel for the Appellant has brought to our notice the Central Government notification dated 7th December, 2016 issued from the Ministry of Corporate Affairs. By the said notification, in exercise of the powers conferred under sub-sections (1) and (2) of Section 434 of the Companies Act, 2013 read with sub-section (1) of Section 239 of the I B Code , the Central Government framed The Companies (Transfer of Pending Proceedings) Rules, 2016 . 9. Rule 5 relates to transfer of pending proceedings of winding up on the ground of inability to pay debts which are ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rational Creditor . He placed reliance on the balance-sheet of M/s. Swan Aluminiums Pvt. Ltd. (pages 322-355 of the paper book) wherein the details of unsecured loans/advances as on 5th December, 2013 has been shown and the name of M/s. Visa Drugs Pharmaceuticals Private Limited has been shown therein. It was submitted that the unsecured loan having been taken without any interest cannot be termed to be a financial debt within the meaning of sub-section (8) of Section 5 of the I B Code. 12. Financial Creditor is defined in sub-section (7) of Section 5, which means : any person to whom a financial debt is owed and includes a person to whom such debt has been legally assigned or transferred to . 13. Sub-section (8) of Section 5 defines financial debt , as follows: ( 8) financial debt means a debt alongwith interest, if any, which is disbursed against the consideration for the time value of money and includes- ( a) money borrowed against the payment of interest; ( b) any amount raised by acceptance under any acceptance credit facility or its de-materialised equivalent; ( c) any amount raised pursuant to any note p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n provided in Section 5 (7) and 5(8) and in the impugned judgement rightly observed:- 12. A perusal of definition of expression 'Financial Creditor' would show that it refers to a person to whom a Financial debt is owed and includes even a person to whom such debt has been legally assigned or transferred to. In order to understand the expression 'Financial Creditor the requirements of expression financial debt' have to be satisfied which is defined in Section 5(8) of the IBC The opening words of the definition clause would indicate that a financial debt is a debt along with interest which is disbursed against the consideration for the time value of money and it may include any of the events enumerated in sub-clauses (a) to (i). Therefore the first essential requirement of financial debt has to be met viz, that the debt is disbursed against the consideration for the time value of money and which may include the events enumerated in various sub-clauses. A Financial Creditor is a person who has right to a financial debt. The key feature of financial transaction as postulated by section 5(8) is its consideration for time value of money. In other words, the legi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... loan treated to have been given to the Corporate Debtor were disbursed against the consideration for the time value of money. In absence of any such evidence on record to suggest that the amount was disbursed against the consideration for the time value of money and was borrowed by the Corporate Debtor against the payment of interest, we hold that the respondent M/s. Visa Drugs and Pharmaceuticals do not come within the meaning of financial creditor . 17. The Adjudicating Authority having failed to notice the facts, we have no other option but to set aside the impugned orders dated 4th September and 18th September, 2017. 18. In effect, order(s) passed by the Adjudicating Authority appointing Resolution Professional declaring moratorium, freezing of account and all other order(s) passed by the Adjudicating Authority pursuant to impugned order and action taken by the Resolution Professional , including the advertisement published in the newspaper calling for applications all such orders and actions are declared illegal and are set aside. The application preferred by Respondent under Section 433 and 434 stands abated. The Adjudicating Authority will now close the proceedin ..... X X X X Extracts X X X X X X X X Extracts X X X X
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