TMI Blog2019 (9) TMI 968X X X X Extracts X X X X X X X X Extracts X X X X ..... eved by the order dated 25th October, 2018 passed by the Adjudicating Authority (NCLT, Division Bench, Chennai) preferred this appeal. The Appellants have raised various grounds in the appeal in its support contending that the Adjudicating Authority should not have rejected the application preferred by them under Section 7 of Insolvency and Bankruptcy Code, 2016 (in short IBC). The Adjudicating Authority passed the following order: ORDER The Tribunal observes that there are disputes between the petitioners and the Respondent and there are proceedings against them in various forums in matters relating to the present petition. In this case, the Tribunal observes that, in the statements of accounts, the M/s Colorhomes, the sole proprietorship concern and M/s Colorhome Developers Pvt Ltd, the Respondent herein is used interchangeably. There is no segregation of the amounts paid by both the undertakings from which the liability can be drawn clearly. In view of the above, the Tribunal observes that the petition is liable to be dismissed under Section 5(6) and Section 5(6)(a) of the IBC, 2016 as there is a civil suit pending and there exists a d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... disbursed by the Second Applicant on 28.09.2012. the total amount claimed to be default was ₹ 10,14,53,750/-. In Part-V, the particulars of financial debt, documents, records and evidence were given. As per the said particulars, the Corporate Debtor had given a Promissory Note dated 01.12.2012 for a sum of ₹ 8.20 crores in favour of the First Appellant and Promissory Note dated 28.09.2012 for a sum of ₹ 2 Crores in favour of the Second Appellant. Further the Corporate Debtor i.e., M/s Colorhome Developers Pvt Ltd executed Deed of Mortgage dated 05.06.2015 in favour of the First Appellant. Thus, we find that there is ample proof that the Appellants had disbursed the debt to the Corporate Debtor and the Corporate Debtor, towards security, executed Mortgage Deed and also issued Promissory Notes. 5. We have perused the Promissory Notes issued by the Corporate Debtor i.e., M/s Colorhome Developers Pvt Ltd dated 01.12.2012 for a sum of ₹ 8.20 Crores in favour of First Appellant (at page 37 of Paper Book, Volume-I) and ₹ 2 Crores dated 28.09.2012 in favour of Second Appellant and also the Mortgage Deed executed on 05.06.2015 in favour of the Appellan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aying that M/s Colorhome Developers Pvt Ltd had not borrowed any money is concerned, we are of the view that one cannot escape from the liability having admitted the fact that the debt is payable. Further the Adjudicating Authority was of the view that the petition was liable to be dismissed under Section 5(6)(a) of the IBC is concerned, we hold that the provision cannot be made applicable in the present case. The said provision of law is extracted herein below for better appreciation: Section 5(6) defines dispute includes a suit or arbitration proceedings relating to: (a) The existence of the amount of debt; (b) The quality of goods or service; or (c) The breach of a representation or warranty; 9. The Adjudicating Authority while rejecting application held that there is a civil suit pending and there exist a dispute in the amount of debt between both the parties and also under Section 7(5)(b) of the IBC for being incomplete in details. Section 7 of the IBC deals with initiation of Corporate Insolvency Resolution Process by Financial Creditor. Sub-section(5) of the said Section reads as under: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat they have borrowed hand loan from the Appellants in various parts vide cheque/wire transfer to the tune of ₹ 4 Crores along with 12% interest per annum for its business needs the same is to be repaid in various instalments. The respondent contends that some of the amounts have been paid to the Appellants is concerned, we are not determining any quantum of claim of the Appellants in this appeal. 12. In view of the above reasons, we are of the view that the amounts borrowed by the Respondent is a debt due and payable and it is borrowed against a time value of money. The Hon ble Supreme Court in the matter of Innoventive Industries Ltd. Vs. ICICI Bank and Anr. (2018)1 SCC 407 , in paragraphs 27, 28, 29 30 held which read as under: 27 . The scheme of the Code is to ensure that when a default takes place, in the sense that a debt becomes due and is not paid, the insolvency resolution process begins. Default is defined in Section 3(12) in very wide terms as meaning nonpayment of a debt once it becomes due and payable, which includes non-payment of even part thereof or an instalment amount. For the meaning of debt , we have to go to S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ust do within 14 days of the receipt of the application. It is at the stage of Section 7(5), where the adjudicating authority is to be satisfied that a default has occurred, that the corporate debtor is entitled to point out that a default has not occurred in the sense that the debt , which may also include a disputed claim, is not due. A debt may not be due if it is not payable in law or in fact. The moment the adjudicating authority is satisfied that a default has occurred, the application must be admitted unless it is incomplete, in which case it may give notice to the applicant to rectify the defect within 7 days of receipt of a notice from the adjudicating authority. Under subsection (7), the adjudicating authority shall then communicate the order passed to the financial creditor and corporate debtor within 7 days of admission or rejection of such application, as the case may be. 29 . The scheme of Section 7 stands in contrast with the scheme under Section 8 where an operational creditor is, on the occurrence of a default, to first deliver a demand notice of the unpaid debt to the operational debtor in the manner provided in Section 8(1) of the Code. Under Secti ..... X X X X Extracts X X X X X X X X Extracts X X X X
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