TMI Blog2018 (8) TMI 1786X X X X Extracts X X X X X X X X Extracts X X X X ..... which means a loan or a liability which is required to be payable by the corporate Debtor to the Financial or Operational Creditor, need not bear any interest. That simply means a loan advanced even without interest is a Financial Debt. Now, to call the same as loan advanced/disbursed against consideration for the time value of money, the point to be considered here is that there can be a mutual understanding between the parties to waive the right to receive interest and for the possible growth of the value of shares and to meet business requirement etc. It is a fact that there were certain business obligations between both the parties and the above said amount is arrived at after the parties mutually agreed and then the same is reflected in the books of the Corporate Debtor under the head 'Long Term Borrowings'. So, it cannot be said that the same is not a financial debt just because there is no interest payable nor there is any consideration for the time value of money. As the debt is admitted and is reflected in the books of account of the Corporate Debtor as loan which clearly clinches the case on hand. This Bench having been satisfied with the Petition filed by the O ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n reply to the said notice stated that the Petitioner and the Directors of the Corporate Debtor were Partners, Promoters and Associates in various ventures incorporated by both and they trusted each other and they had cross holdings in some companies which were more like glorified partnerships. Due to various inter se issues between the parties the Petitioner unilaterally decided to quit all the business ventures. The email sent by the Petitioner to the Director of the Corporate Debtor show that he is not interested to continue with the business ventures incorporated by the Director of the Respondent in any manner and 21.12.2010 be taken as an exit date. It is further stated in the reply though there were attempts to sort out the issues amicably including the loan of ₹ 1.45 crore, the same could not be fructified. It was in the month of August, 2006 the Petitioner had sent an E-mail stating that he was advised by his doctors not to meet, talk or conduct any business and stop all the communications from all quarters and hence the allegations leveled against the Corporate Debtor through the notice are false, frivolous and malicious. The main contention of the Corporate Debtor t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 12.2017 from the Statutory Auditor of the Corporate Debtor, Mr. Ganesh Mehta of M/s. Ganesh and Rajendra Associates who had categorically stated that an amount of ₹ 1,45,36,475/- is the unsecured loan standing in the name of the Applicant in the books of the Corporate Debtor. Viewing the case from the above angle as contained in the above exhibits, it is clear that the said amount is clearly reflected in the books of the Company as an Unsecured Loan. 6. Another interesting argument advanced by the Counsel for the Corporate Debtor is that since there is no consideration prescribed for the time value of the money and the amount was not borrowed by the Corporate Debtor against the payment of interest, the Applicant cannot be called as a 'Financial Creditor' and hence, there is no Financial Debt as defined u/s. 5(8) of the Code. Further, the Corporate Debtor had relied upon the following cases decided by the Hon'ble NCLAT: (i) Innoventive Industries Ltd. V/s ICICI Bank Anr., AIR 2017 SC 4084 wherein it was stated that A financial creditor has been define under Section 5(7) as a person to whom a financial debt is owed and a financial debt is defined in Sect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assigned or transferred to; Section 5 (8) defines 'Financial Debt' means a debt along with interest, if any, which is disbursed against the consideration for the time value of money and includes; (f) Any amount raised under any other transaction, including any forward sale or purchase agreement, having the commercial effect of a borrowing; The above reference to the provisions of the Code clearly brings about the following: (i) Since the amount of default as shown in the Exhibit-D and E are admitted and constitute a debt as defined under the Code and hence the same is to be treated as a debt due to the financial Creditor to whom a debt is owed and admitted as per the books of account of the Corporate Debtor. (ii) Further to say that the same is a financial Debt, the most important words that are required to be considered in the definition is 'interest, if any' which means a loan or a liability which is required to be payable by the corporate Debtor to the Financial or Operational Creditor, need not bear any interest. That simply means a loan advanced even without interest is a Financial Debt. (iii) Now, to call the same as loan advanced/disbursed a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... enating or disposing of by the corporate debtor any of its assets or any legal right or beneficial interest therein; any action to foreclose, recover or enforce any security interest created by the corporate debtor in respect of its property including any action under the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002; the recovery of any property by an owner or lessor where such property is occupied by or in the possession of the corporate debtor. (ii) That the supply of essential goods or services to the corporate debtor, if continuing, shall not be terminated or suspended or interrupted during moratorium period. (iii) That the provisions of sub-section (1) of Section 14 shall not apply to such transactions as may be notified by the Central Government in consultation with any financial sector regulator. (iv) That the order of moratorium shall have effect from 31.08.2018 till the completion of the corporate insolvency resolution process or until this Bench approves the resolution plan under sub-section (1) of section 31 or passes an order for liquidation of corporate debtor under section 33, as the case may be. (v) ..... X X X X Extracts X X X X X X X X Extracts X X X X
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