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TMI Blog2019 (1) TMI 1185X X X X Extracts X X X X X X X X Extracts X X X X ..... btor. 2. The respondent-company-CBS International Projects P. Ltd. (CIN No. U45400 DL2007 PTC 307791) against whom the initiation of corporate insolvency resolution process has been prayed for, was incorporated on March 29, 2007 and presently has its registered office at S-2, Manish Chamber, LSC Plot No. 6, Mayur Vihar, New Delhi-110 001. Since the registered office of the respondent corporate debtor is in New Delhi, this Tribunal having territorial jurisdiction over the NCT of Delhi is the Adjudicating Authority in relation to the prayer for the initiation of corporate insolvency resolution process in respect of the respondent corporate debtor under sub-section (1) of section 60 of the Code. 3. It is appropriate to mention that Mr. Rajesh Malik, managing director of the applicant-company duly authorized by board resolution dated May 14, 2018 has preferred the present application on behalf of the applicant, M/s. Carnoustie Management India P. Ltd., for initiation of corporate insolvency resolution process against the respondent corporate debtor in terms of the provisions of the Code. A copy of the relevant board resolution of the applicant-company held on May 14, 2018 has been pl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he beginning of financial year following the moratorium period or upon demand by CMIPL, whichever was later, the determination of which was to be at the sole option of CMIPL. 7. It is further emphasized that the audited financial statement of the respondent corporate debtor for the financial year 2007-08 till 2015-16 had clearly acknowledged the debt owed by the corporate debtor to the financial creditor. The audited balance-sheet for the financial year 2015-16 has been placed on record which acknowledges the debt owned by the corporate debtor to the financial creditor under the head of "unsecured loans-other loans and advances as ICD", i.e., Rs. 34,05,50,365 (rupees thirty four crores five lakhs fifty thousand three hundred and sixty five only). 8. Subsequently on August 13, 2015 a share purchase agreement was signed between Mr. Sanjay Rastogi ; and the corporate debtor and the financial creditor wherein, the financial creditor had sold 100 per cent. shares in corporate debtor to Mr. Rastogi and his nominees. The financial creditor had disclosed all the liabilities of the corporate debtor in the share purchase agreement and the same was acknowledged by Mr. Rastogi. It is submitt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reply sent by the corporate debtor and reiterated its stand and rebutted all frivolous and malicious claims of the corporate debtor. It is alleged that since the issue of the notice dated March 28, 2018 the corporate debtor is raising one or the other contentions to avoid payment of the debt. 13. It is stated in the application that the total outstanding amount due comes to Rs. 34,31,87,965 (rupees thirty four crores thirty one lakhs seven thousand nine hundred sixty five only) excluding the interest of 12 per cent. per annum. 14. It is contended that as the corporate debtor failed to pay the applicant financial creditor the admitted financial debt, the financial creditor prays to initiate the insolvency proceedings against the corporate debtor. 15. The respondent-company in its reply filed on September 5, 2018 has raised objection that the debt claimed in the petition was not disbursed against interest or consideration for time value of money and therefore the claim of the applicant is not a financial debt. It is contended that no interest or time period for repayment was ever prescribed on the alleged transaction. 16. In support of the contention, the respondent has relied u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... applicant there was no mention of alleged loan agreement. 22. The respondent has also relied upon the handwriting expert opinion in support of its pleading that the loan agreement is a forged one. 23. It is submitted that with regard to the forged loan agreement an FIR is already lodged against the applicant. It is prayed that no reliance on such photocopy can be placed in the present summary proceedings. 24. It is further pointed out that the respondent-company was incorporated on March 29, 2007 and the alleged loan agreement was executed on May 11, 2007. It is alleged that as on May 11, 2007 the applicant was not even a shareholder of the respondent-company and as such there was no occasion to refer the respondent-company as a subsidiary company in the loan agreement. It is accordingly argued that when the respondent-company was not a subsidiary company of the petitioner on May 11, 2007 it is not clear how the loan agreement dated May 11, 2007 refers the respondentcompany as its subsidiary. 25. Learned counsel for the respondent relied upon the stamp paper of the alleged loan agreement, which was dated March 20, 2007 about 9 days before the incorporation of the respondent-co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... argued that the applicant is not a "financial creditor" and the debt claimed in the application does not come within the purview of "financial debt" and therefore the present application is not maintainable. 32. In connection with the maintainability of the application, it is necessary to note the scheme of the Code which provides for triggering the insolvency resolution process by three categories of persons namely, (a) Financial creditor, (b) Operational creditor, and (c) Corporate debtor itself. 33. The procedure in relation to the initiation of corporate insolvency resolution process by the "financial creditor" is delineated under section 7 of the Code, wherein only "financial creditor"/"financial creditors" can file an application. As per section 7(1) of the Code an application could be maintained by a financial creditor either by itself or jointly with other financial creditors. Section 7 of the Code thus mandates that the applicant "financial creditor" has to prove the default. In other words, even if there is a clear default, the application under section 7 of the Code is not maintainable in case the applicant is not a financial creditor. Therefore, in order to mai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ary letter of credit or any other instrument issued by a bank or financial institution ; (i) the amount of any liability in respect of any of the guarantee or indemnity for any of the items referred to in sub-clauses (a) to (h) of this clause." 35. A creditor in order to come within the meaning of "financial creditor" has to fulfil the following essential criteria : (i) A person to whom a "financial debt" is owned and includes a per son whom such debt has been legally assigned or transferred ; (ii) The debt along with interest, if any, is disbursed against the con sideration for time value of money and includes any one or more mode of disbursed as mentioned in clauses (a) to (i) of sub-section (8) of section 5. 36. Mere grant of loan and admission of taking loan will ipso facto not treat the applicant as "financial creditor" within the meaning of section 5(8) of the Code. 37. Precisely "financial debt" is a debt along with interest, if any, which is disbursed against consideration for time value of money. 38. In the present case the applicant has relied upon the loan agreement dated May 11, 2007 in support of the pleading that the loan was disbursed against consideration ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... said alleged loan agreement which is under investigation. 46. It is well-settled that the onus lies on the applicant to establish that the loan was given against the consideration for time value of money. When the respondent debtor disputes that there is no question of payment of interest at any point of time on the debt in question and also disputed the existence of the loan agreement, it becomes more onerous on the part of the applicant to prove that the amount was disbursed against the consideration for time value of money. Admittedly, original loan agreement has not been produced. Expert opinions have been placed in support of the pleading that the loan agreement is a forged one. In the facts discussed above and in the absence of the original loan agreement and in the light of serious dispute and allegation of fraud ; it appears that the matter requires proper trial and investigation. Admission of the application under the Code has serious civil consequences. Heavy onus lies on the applicant to prove the claim of interest component, date of default and as to when the repayment is due. Simply, relying upon the copy of a seriously disputed document would not suffice in the prese ..... X X X X Extracts X X X X X X X X Extracts X X X X
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