TMI Blog2019 (12) TMI 566X X X X Extracts X X X X X X X X Extracts X X X X ..... definition of a financial debt, though it is admitted that the petitioner had advanced this amount to meet the fund requirements of the Company - answered in the negative. Whether the Respondent had committed default in paying the said amount? - HELD THAT:- The Respondent Company had not paid back the amount to the petitioner. More so when the payment of ₹ 5 lakhs is not admitted against the loan amount but against an independent unsecured loan. In that view of the matter it is to be held that there has been a default by the Respondent in repayment of the debt, though not financial - issue answered in affirmative. Whether the amount is due and payable to the petitioner? - HELD THAT:- The Application under Section 7 of the IBC is not a suit. Suits relating to money needs to be filed within three years when the amount became due. In the instant case admittedly, there was no time limit agreed upon between the parties for repayment of the amount advanced. The amount payable on demand pleaded by the petitioner could not be extended for an uncertain period. In the absence of any contract between parties the amount needed to be repaid within three years from the date when the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng a counter denying its averments. It is contended that the petitioner upon the request of his nephew Sri K. Vijay Kumar had given ₹ 1,29,50,000/-(Rupees One Crore Twenty-Nine Lakhs Fifty Thousand only) under cheques dated 15.12.2007, 11.02.2008 and 26.03.2008. In addition, he has also paid ₹ 1,25,000/- (Rupees One Lakh Twenty-Five Thousand) on 23.09.2003 to meet the fund requirement of the Company. The petitioner in his letter dated 28.03.2008 addressed to Sri K. Vijay Kumar had authorised the latter to transfer the amount to his account in the Company's records and on such transfer the Company would be fully discharged of all the liabilities to him in full settlement of the dues. Based on such letter and the discussions that followed, the Company in 2008 itself had transferred the amounts to the account of Sri K. Vijay Kumar the then Managing Director of the Company in full discharge of all the liabilities and settlement of the dues. In addition, the Company allotted 20,81,467 equity shares of ₹ 10/- each to Sri K. Vijay Kumar on 12.02.2011. Subsequent to the demise of K. Vijay Kumar one Mr. A. V. Kishore the majority shareholders of the Company was appoint ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inked are taken up together. The Respondent in its counter has admitted that the petitioner being the maternal uncle of Sri K. Vijay Kumar, then Managing Director of the Respondent, had given an amount of ₹ 1,25,000/- on 23.09.2003. In addition, he had also given ₹ 1,29,50,000/- under Cheque No. 904470 dated 15.12.2007 (₹ 50,00,000/-), Cheque No. 904474 dated 11.02.2008 (₹ 25,00,000) and Cheque No. 904475 dated 26.03.2008 (₹ 54,50,000/-). The same is also evident from the statement of accounts filed by the petitioner. These amounts have been debited from his account respectively on 18.12.2007, 11.02.2008 and 27.03.2008. 7. The Respondent had relied upon a letter dated 28.03.2008 allegedly written by the petitioner to Sri K. Vijay Kumar to the following effect. From K. Narayana Rao Chiluvuru Post, Tenali Taluk, Guntur Dist. Andhra Pradesh To K. Vijay Kumar, Door No.7/2, Binny Road, Poes Garden, Chennai - 600 086 Dear Vijay, I had given the following amounts as per your requests to Avanti Leathers Ltd, to meet the fund requirements of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any, which is disbursed against the consideration for the time value of money and includes- (a) money borrowed against the payment of interest' (b) any amount raised by acceptance under any acceptance credit facility or its de-materialised equivalent; (c) any amount raised pursuant to any note purchase facility or the issue of bonds, notes, debentures, loan stock or any similar instrument; (d) the amount of any liability in respect of any lease or hire purchase contract which is deemed as a finance or capital lease under the Indian Accounting Standards or such other accounting standards as may be prescribed; (e) receivables sold or discounted other than any receivables sold on non-recourse basis. (f) any amount raised under any other transaction, including any forward sale or purchase agreement, having the commercial effect of a borrowing; Explanation. - For the purposes of this sub-clause, - (i) any amount raised from an allottee under a real estate project shall be deemed to be an amount having the commercial effect of a borrowing; and (ii) the expressions, allottee and real estate project shall have ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion for the time value of the money. 13. The Respondent pleaded that it availed an unsecured loan of ₹ 5,00,000/- (Rupees Five lakhs) from the petitioner on 30.12.2013. The same is manifest from page 47 of its Annual Report of 2013-14. Admittedly, the amount was repaid on 29.06.2016 as apparent from the account statement filed along with the petition. According to the petitioner he did not make any payment during 2013-14 which the audited annual report of the Respondent Company shows as unsecured loan of ₹ 5,00,000/-. The report is not in dispute. Therefore, its repayment could not be taken as the payment towards interest of the loan amount of ₹ 1,29,50,000/-. More so when the petitioner has credited this amount against the principal amount of ₹ 1,29,50,000/- and showed a default of ₹ 1,24,50,000/-. Besides the petition is completely silent as indicated before that the loan was advanced against an agreed interest. Taking all these aspects into consideration it is accordingly clear, for the purpose of this case, that the amount would not come within the definition of a financial debt, though it is admitted that the petitioner had advanced this ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cations filed under Sections 7 and 9 of the Code from the inception of the Code, Article 137 of the Limitation Act gets attracted. The right to sue , therefore, accrues when a default occurs. If the default has occurred over three years prior to the date of filing of the application, the application would be barred under Article 137 of the Limitation Act, save and except in those cases where, in the facts of the case, Section 5 of the Limitation Act may be applied to condone the delay in filing such application'. 17. The Application under Section 7 of the IBC is not a suit. Suits relating to money needs to be filed within three years when the amount became due. In the instant case admittedly, there was no time limit agreed upon between the parties for repayment of the amount advanced. The amount payable on demand pleaded by the petitioner could not be extended for an uncertain period. In the absence of any contract between parties the amount needed to be repaid within three years from the date when they were respectively advanced. The amounts accordingly would have been due and payable on or before 14.12.2010, 10.02.2011 and 25.03.2011 respectively. There is no materi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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