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TMI Blog2019 (12) TMI 566X X X X Extracts X X X X X X X X Extracts X X X X ..... f Rs. 1,29,50,000/- (Rupees One Crore Twenty nine Lakhs Fifty Thousands) to the Company between 18.12.2007 and 27.03.2008, which was payable on demand. 2. The Petitioner demanded repayment in April 2016 but to no avail. The Company however made a payment of Rs. 5,00,000/- (Five Lakhs) on 29.06.2016. It failed to make any further payment despite several requests and approaches. More so, following the death of K. Vijaya Kumar in August, 2017. The Petitioner issued Demand Notice on 19.04.2018 seeking repayment of the balance amount of Rs. 1,24,50,000/- with interest at the rate of 12% per annum w.e.f. 01.04.2016 till payment. The Respondent Company issued a reply denying the liability. The Petitioner then came up with the present petition on 13.11.2018 seeking CIRP. 3. Upon notice the Respondent appeared and contested the petition by filing a counter denying its averments. It is contended that the petitioner upon the request of his nephew Sri K. Vijay Kumar had given Rs. 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 Rs. 1,25,000/- (Rupees One Lakh Twenty-Five Thousand) on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 06.2016 is towards unsecured loan dated 30.12.2013. The amount, according to him, was paid towards the interest of the principal amount. Since the payment of Rs. 5,00,000/- (Rupees Five lakhs) was against the loan amount, the petition would not be time barred. 5. Basing on the rival pleadings the following issues emerged for determination. I. Whether an amount of Rs. 1,29,50,000/- (Rupees One Crore Twenty-Nine Lakhs Fifty Thousand) paid by the petitioner to the Respondent Company is a financial debt? II. Whether the Respondent had committed default in paying the said amount? III. Whether the amount is due and payable to the petitioner? IV. To what relief(s) the petitioner is entitled? Issue Nos. I & II: 6. These issues being inter linked 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 Rs. 1,25,000/- on 23.09.2003. In addition, he had also given Rs. 1,29,50,000/- under Cheque No. 904470 dated 15.12.2007 (Rs. 50,00,000/-), Cheque No. 904474 dated 11.02.2008 (Rs. 25,00,000) and Cheque No. 904475 dated 26.03.2008 (Rs. 54,50,00 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or of the Respondent Company." 9. The Petitioner has not pleaded to have paid an amount of Rs. 1,25,000/- on 23.09.2003. Despite admission by the Respondent, the amount need not be taken into consideration in the present lis. However, from the materials discussed above it is clear that the petitioner had paid Rs. 1,29,50,000/- to the Respondent Company to meet its fund requirements. 10. Financial debt is defined under Section 5 (8) of the Code as follows: "Financial debt" means a debt along with interest, if 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 re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... It is nowhere pleaded that such understanding included the payment of interest against the loan and the rate thereof. There is also no pleading that the payment was made against the issue of shares at a future date. The advancement of the said loan accordingly is not covered under any of the clauses of the definition. There is also no material on record to show that the amount was disbursed against the consideration for the time value of the money. 13. The Respondent pleaded that it availed an unsecured loan of Rs. 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 Rs. 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 Rs. 1,29,50,000/-. More so when the petitioner has credited this amount against the principal amount of Rs. 1,29,50,000/- and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tation Act became applicable to the proceedings under the IBC by insertion of section 238A w.e.f. 06.06.2018. 16. The Hon'ble Apex Court in B. K. Educational Services (P) Ltd. v. Parag Gupta and Associates [2018] 98 taxmann.com 213/150 SCL 293 held as follows. 'It is thus clear that since the Limitation Act is applicable to applications 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 c ..... X X X X Extracts X X X X X X X X Extracts X X X X
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