TMI Blog2018 (12) TMI 417X X X X Extracts X X X X X X X X Extracts X X X X ..... ed 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 que ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mbai, Maharashtra 400002. 3. In the requisite Form, under the head Particulars of Financial Debt the total amount of Debt in default is stated as ₹ 1,18,24,017/- which includes the Principal amount of ₹ 61,70,000/- plus Interest @ 18 % p.a. amounting to ₹ 56,54,017/- as on 01.04.2017. The date of default is stated as 01.04.2017. The bifurcation of the claimed amount is as follows : Financial Creditor Outstanding Amount/Claimed Amount (Principal) 1st Financial Creditor ₹ 20,00,000/- 2nd Financial Creditor ₹ 15,00,000/- 3rd Financial Creditor ₹ 15,00,000/- 4th Financial Creditor ₹ 11,70,000/- Total ₹ 61,70,000/- 4. Brief Background : 4.1. The 1st Financial Creditor has disbursed an Unsecured Loan amounting to ₹ 52,00,000/- in total during the Financial Years 2011-12 to 2014-15. However, the Debtor has repaid the amount of ₹ 32,00,000/- towards the principal amount an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has disbursed the amount as mentioned below : Sr. No. Amount Disbursed Date Cheque No./Ref. No. 1. ₹ 10,00,000/- 31.12.2011 000025 2. ₹ 5,00,000/- 31.01.2012 000033 3. ₹ 10,00,000/- 03.04.2012 000044 4. ₹ 5,00,000/- 05.07.2012 000003119026 5. ₹ 2,00,000/- 24.03.2014 000013423308 6. ₹ 5,00,000/- 19.05.2014 000014626366 7. ₹ 5,00,000/- 19.05.2014 000014627607 8. ₹ 5,00,000/- 19.05.2014 000014633378 9. ₹ 5,00,000/- 19.05.2014 00 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8377; 33,00,000/- The Ledger Account of the Debtor in books of the Financial Creditors evidences the above mentioned transaction. The copies of Ledger Accounts are annexed with the Petition. 5.6. It is further submitted that the Debtor had only repaid to the 3rd Financial Creditor an amount of ₹ 20,74,017/- in total which includes the amount of ₹ 2,74,017/- towards the Interest. 5.7. It is further stated that the 4th Financial Creditor has disbursed the amount of ₹ 11,70,000/- in single tranche through Cheque no. 000089 dated 21.10.2015. The Ledger Account of the Debtor in books of the Financial Creditors evidences the said transaction. The copies of Ledger Accounts are annexed with the Petition. It is also stated that the Debtor has not repaid any amount to the 4th Financial Creditor. 5.8. It is further submitted that the Debtor has issued a TDS Certificates i.e. Form 26AS for the TDS deducted U/s. 194A of the Income Tax Act which is TDS for the payment of Interest, to the 1st, 2nd and 3rd Financial Creditors. Copies of the TDS Certificates are annexed with the Petition. Hence, pleaded that deduction ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... th use of fabricated documents, have transferred Shares of various other companies controlled by the Directors of the Debtor. And when this fact had brought to the notice of the Directors of the Debtor, the Directors have filed the Civil Suit bearing no. 227/2017 before the Hon ble Bombay High Court, alleging the said fraud committed by the Directors of the Financial Creditors. 6.5. It is further submitted that in defence in the said Civil Suit the Directors of Financial Creditors have taken a stand that the Shares were transferred in favour of them in discharge of the Debt as recorded in the Exhibit F of the said Civil Suit. It has also brought to the notice that the Exhibit F to the said Civil Suit reflects the Principal Amounts claimed by the Financial Creditors. 6.6. In light of this Submission it is pleaded that the Hon ble High Court of Bombay is now bound to adjudicate the issue whether the Debt got discharged or Debt continues and therefore this Bench does not have Jurisdiction to entertain this Petition. 6.7. The Learned Advocate has vehemently pleaded that the Financial Creditors cannot aprobate and reprobate on the same time. It is stated that the Financ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e impugned transaction at all related to an Investment. 7.6. To answer the second question it is necessary to examine the position of the Civil Suit filed before the Hon ble Bombay High Court. From the submissions by both sides it is noticed that the said Civil Suit is not yet decided by the Hon ble Bombay High Court and it is presently under Adjudication on the issue un-related to the Financial Debt in question. It is further noticed that the Directors of the Debtor has alleged the Fraud over the Directors of the Financial Creditors in the said Civil Suit. 7.7. It is also noticed that the Debtor, in this Petition, has took the defence that, the amount claimed by the Financial Creditors stands discharged, in light of Transferring of Shares in the names of the Directors of the Financial Creditors. However, it is noticed that the Learned Advocate for the Debtor has failed to establish this stand, as there is nothing on record which proves that the Shares has been transferred in the names of the Directors of the Financial Creditors. 7.8. It is also noticed that the Civil Suit is still to be adjudicated hence, the Fraud, as upon the Debtor committed by the Directors of Finan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n seven days of receipt of such notice from the Adjudicating Authority. 7.14. The above provision makes it clear that the Adjudicating Authority can dismiss a S. 7 Petition when either the Debt is not due and payable or the default in repayment is not arrived. The factual matrix of this case reveals that, as the Debtor had paid interest in the past, the question that the Debt not became payable yet; does not arises. Further, as the Financial Creditors did not received any amount after 31.08.2016 towards re-payment of the advanced loan, the Default, as defined U/s. 3 (12) of the Code, is clearly established. Further, despite the receipt of the notice, calling upon the loan, the Debtor had not made the payment is also evidence of Default. 7.15. It is also to be clarified that the Petition filed U/s. 7 if incomplete in procedural formalities then also the Adjudicating Authority can dismiss the Petition. However, by going through the Petition it is noticed that the Petition under consideration is complete in its all procedural aspects. 7.16. Further, it is worth to place a reliance on the judgement, as cited by the Learned Representative of the Financial Creditors, given by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... roposed IRP and noticed that, against him no disciplinary proceedings are pending. Consequently, the IRP proposed by the Financial Creditor, Mr. Saket Shantilal Jain, O/at. Office No. 70, 2nd Floor, Empire Building, Above Macdonald, 134, D N Road, Mumbai, Maharashtra 400001, E-mail : cajainsaket@gmail.com, having Registration no. IBBI/IPA-001/IP-P00065/2017-18/10151 is hereby appointed as Interim Resolution Professional to initiate the Insolvency Resolution Process. 7.22. Having admitted the Petition, the provisions of Moratorium as prescribed under Section 14 of the Code shall be operative henceforth with effect from the date of order and shall be applicable by prohibiting institution of any Suit before a Court of Law, transferring/encumbering any of the assets of the Debtor etc. However, the supply of essential goods or services to the Corporate Debtor shall not be terminated during Moratorium period. It shall be effective till completion of the Insolvency Resolution Process or until the approval of the Resolution Plan prescribed under Section 31 of the Code. 7.23. That as prescribed under Section 13 of the Code on declaration of Moratorium the next step of Public Annou ..... X X X X Extracts X X X X X X X X Extracts X X X X
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