TMI Blog2019 (11) TMI 620X X X X Extracts X X X X X X X X Extracts X X X X ..... ks from the date of this order as the Petition has been filed frivolously based on conjectures and surmises without proper documents being furnished consuming the valuable judicial time of this tribunal - petition dismissed. - IB-219/(ND)/2019 - - - Dated:- 20-9-2019 - MR R. VARDHARAJAN, MEMBER (JUDICIAL) AND MR K. K. VOHRA, MEMBER (TECHNICAL) For The Petitioners : Mr. Vipul Ganda, Mr. Shreya Jain Mr. Vishal Ganda, (Advocates) For The Respondent : Mr. Nikhil Kohli, Mr. Dipanshu Arora, (Advocates) ORDER 1. The Petition has been filed by Petitioner in the capacity of a Financial Creditor (FC) against the Corporate Debtor (CD) seeking for initiation of Corporate Insolvency Resolution Process (CIRP) under Section 7 of Insolvency and Bankruptcy Code, 2016 (IBC.2016). 2. Part-I of the Petition discloses that the Petitioner is a Company incorporated on 16th August, 1982 and is being represented by one Mr. Milan Aggarwal who has been authorized to file this Petition vide Board Resolution dated 18.12.2018. Part-ll of the Application details particulars of the CD, from which it is evident that CD ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... disbursed to the CD being the loan amount which was repayable on demand and despite the recall notice dated 2.1.2019, the same has not been paid giving rise to a default in terms of Section 3(12) of the IBC, 2016 and in the circumstances, this Petition seeking for initiation of CIRP of the CD filed under Section 7 of IBC, 2016 as applicable to a 'financial debt' and a 'financial creditor'. 5. Upon notice, reply has been filed by the CD which is as follow: The applicant and the respondent have entered into affirmative agreements, whereby there remain no amounts due by the respondent to the applicant, to the contrary it is the applicant who is accountable to the respondent for damages. The applicant and respondent had entered into a loan agreement dated March 10, 2014 wherein the applicant agreed to provide credit facilities to the respondent company in form of unsecured loans, by the Applicant. The parties further agreed that in case any amount stands due under the loan agreement as on March 31,2017, then the parties would mutually decide on the future course of action and treatment of such outstand ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ter dated 1 October, 2018 of its obligation to undertake Equity Investment in the respondent company as under the terms of MOU. No reply received from the applicant in respect of the Equity Investment, nor has the consent of the applicant been received for encashment of cheques, provided along with the MOU. The respondent company requested the applicant to provide written consent for encashment of the cheques within a period of 15 days from the receipt of the letter. The applicant, instead of adhering to the terms of MOU and the subsequent letter dated October 1,2018 sent a fictitious and an illegal recall notice dated January 2, 2019 to the respondent company, wrongly claiming an amount of ₹ 5,10,41,072/- from the respondent company. It is submitted that the aforementioned recall notice is not only illegal but also in breach of the terms of the MOU. The applicant never demanded any sort of monies from the respondent from March 31,2017 till December 2018 as the applicant was well aware of the terms of the MOU and the applicant may be put to strict proof regarding the same. Further the applicant in order to sway away from its liabilities under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CD, this Tribunal should consider the same as loan disbursed repayable on demand in the absence of any document and taking into consideration Form 26AS produced before this Tribunal disclosing the payment of interest and TDS deducted thereon and also in view of the same being recognized as a 'loan' in the balance sheet of the CD. Further, it is pointed out that a notice recalling the loan has also been sent to the CD on 02.01.2019 and that default has occurred and since the loan amount is repayable on demand as per the notice dated 2.1.2019 not being paid even on demand, default has arisen in terms of Section 3(12) of IBC, 2016. 12. On the contrary, Ld. Counsel for the CD brings into play the documents as filed along with reply of the CD, particularly the averments in relation to the agreement dated March 10, 2014 and subsequent MOU dated 3.4.2017 wherein applicant shall invest an amount of ₹ 2,65,00,000/- together with the amount already advanced by the applicant by the respondent, under the erstwhile loan agreement as on March 31, 2017 was ₹ 4,11,25,336/- towards equity investment in the respondent company. It was condition set by the MOU that t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tment, nor has the consent of the applicant been received for encashment of cheques, provided along with the MOU. The respondent company requested the applicant to provide written consent for encashment of the cheques within a period of 15 days from the receipt of the letter. The applicant, instead of adhering to the terms of MOU and the subsequent letter dated October 1, 2018 sent a fictitious and an illegal recall notice dated January 2, 2019 to the respondent company, wrongly claiming an amount of ₹ 5,10,41,072/- from the respondent company. It is submitted that the aforementioned recall notice is not only illegal but also in breach of the terms of the MOU. The applicant never demanded any sort of monies from the respondent from March 31,2017 till December 2018 as the applicant was well aware of the terms of the MOU and the applicant may be put to strict proof regarding the same. Further the applicant in order to sway away from its liabilities under the MOU, sent the aforementioned recall notice. Accordingly, it is clear that the recall notice was a mere after thought of the applicant to deny the respondent of its rightful monies. The present position is tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by way of bank statements to the CD but also the payments made by the CD, all of which dealt with in the earlier portion of this order. However, in the absence of a 'Financial Contract' what is the actual amount disbursable is in itself is in doubt. Next coming to the aspect of interest which is payable, to demonstrate in simplest terms that the amount claimed to have been disbursed by the FC to CD is against the consideration for the time value of money, in the absence of a 'Financial Contract' the FC seeks to rely on the balance sheets of the CD itself for the years ended 2014-15, 2015-16 and 2016-17 and its Form 26AS as available with the Income Tax Department website. The standalone balance sheet of the CD has only been produced, without any corresponding schedules being made available and even though certain amounts have been shown under the caption 'short term borrowings' however without any break-up details and in its absence it is not evident prima facie the amount disbursed as loan or the interest payable and that which can also be correlated by way of reverse calculation from Form 26AS, the rate of interest. It is also a moot point, in view of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reads as follows: Rule 12: 1) Every company giving loan or giving guarantee or providing security or making an acquisition of securities shall, from the date of its incorporation, maintain a register in Form MBP 2 and enter therein separately, the particulars of loans and guarantees given, securities provided and acquisitions made as aforesaid. 2) The entries in the register shall be made chronologically in respect of each such transaction within seven days of making such loan or giving guarantee or providing security or making acquisition. 3) The register shall be kept at the registered office of the company and the register shall be preserved permanently and shall be kept in the custody of the company secretary of the company or any other person authorised by the Board for the purpose. 4) The entries in the register (either manual or electronic) shall be authenticated by the company secretary of the company or by any other person authorised by the Board for the purpose. 5) For the purpose of sub-rule (4), the register can be maintained either manually or in electronic mode. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ling of investment Selling price (how the price was arrived at) Signatures and Remarks (12) (13) (14) (15) (16) (17) Signature: MD/Director/Secretary/Whole time Director. Place: Date: Thus while the production of Financial Contract prima facie establishes the essential agreement arrived at between the parties including its tenure and repayment period, the same can be corroborated by the production of the Board Resolution for granting loan duly passed by all the directors of the FC and as well as the production of register containing the essential terms of the loan. It is also required, in this regard to take into consideration correspondingly the provisions of Section 179 and Section 180 of the Companies Act, 2013 in relation to the power of the Board of the borrower company to borrow monies within certain limits and beyond its powers, to that of the general ..... X X X X Extracts X X X X X X X X Extracts X X X X
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