TMI Blog2020 (2) TMI 392X X X X Extracts X X X X X X X X Extracts X X X X ..... ich is defaulted. This Bench under Insolvency Code is not constituted to settle Civil disputes. Only in respect of a defined and unambiguous debt the Insolvency Proceedings are to be commenced. In the past on several occasions the alleged claim of this Applicant had already been rejected by several Judicial Forums, therefore, respectfully following the reasoning of rejection already assigned therein, we hereby conclude that this transaction has rightly been rejected by the RP and as a consequence this Application is also rejected - Application rejected. - MA NOS. 1387/2018 & 2163/2019, CP NO. 2051/I&BC/NCLT/MB/MAH/2018 - - - Dated:- 9-12-2019 - M.K. Shrawat, Judicial Member And Chandra Bhan Singh, Technical Member Aayesh Gandhi for the Applicant. Zal Andhyarujina, Faran Khan, Ishani Khanvilkar and Harshad Gada for the Respondent. ORDER (A) MA-1387/2018 M.K. Shrawat, Judicial Member. This Application is submitted by Nityank Infrapower Multiventures Private Limited (hereinafter in short 'Nityank') on 16.11.2018 and the main prayer which is argued is reproduced below :- (a) That this Hon'ble Tribunal be pleased to direct the Respo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r was listed on 20.06.2018 and partly heard. Thereafter the matter was listed on 21.06.2018 i.e. today. 4. Today before the Petition could be heard on merits a Learned Senior Counsel Mr. Janak Dwarkadas objected the adjudication on this Petition and informed that against this Corporate debtor a Petition is pending for disposal filed by Financial Creditor stated to be M/s. Nityank Infra Power and Multiventures Pvt. Ltd. (C.P.No.1238/2018). The said Petition is stated to be submitted under section 7 of the Code against the Financial Debtor Dome-Bell Electronics India Pvt. Ltd. for the financial debt of ₹ 1626,00,00,000/- (Rupees One Thousand Six Hundred and Twenty-six Crores only). The Respondent debtor in that case before Court Room No. 1 has sought adjournment, however, in Court Room No. 2 appeared without raising any objection of this Petition or without intimating that matter is sub-judice before another Bench. 5. One more Order is placed bearing M.A. No. 357/2018 in CSP-462/2017 CSP-471/2018 (MB) dated 26.04.2018 wherein the name of the parties are Dome-Bell Electronics India Pvt. Ltd. v. Dish TV India Ltd. Ors. under section 230-232 of the Companies Act which st ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Corporate Debtor. 4.1 In the Miscellaneous Application it is stated that a Petition has been filed under section 7 of the code to initiate insolvency proceedings by the Applicant (Nityank) against Respondent (Dome-Bell). This Misc. Application moved from the side of the alleged Intervener has also referred a Misc. Application No.377 of 2018 (informed that pending for adjudication in Court Room No.1) therein also Nityank is the Applicant and the Respondent Parties are: Dome-Bell Electronics (R.1), ECL Finance Ltd. (R.2), Hindustan Oil Ventures Ltd. (R.3) and Dish TV India is (R.4.). In the impugned Application further it is informed that there was a fraudulent share pledge transaction entered into by the M/s. Invex Pvt. Ltd. (Financial Creditor) in favour of the M/s. Dome-Bell (Corporate Debtor) with the intent to defeat the legitimate claim of the Applicant against the First Respondent (Invex). There is reference of a Third entity i.e. Hindustan Oil Ventures, Chennai Tamil Nadu. Narrating the facts in brief, it is a Public Limited Company engaged in the business of oil extraction. With the purpose to raise finances the Hindustan Oil proposed to issue on private placement 16,260 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ltd. The said scheme provides for allotment of certain number of equity shares of the Dish TV to the shareholders of the erstwhile Videocon D2 is limited. Subsequent to the execution of said transaction document, the Hindustan Oil committed defaults in its payment obligation. The details of the impugned defaults have also been elaborated in this miscellaneous application. Due to occurrence of events of defaults notices were issued and other correspondence was made. Despite reminders the Hindustan Oil as well as the Dome-Bell failed to pay the amount due in contravention of payment obligation in relation to the said debentures. In a reminder notice once again called upon to pay the outstanding sum of ₹ 1873,39,20,000/-. In view of the said default and in view of the indebtedness of the M/s. Dome-Bell, the Applicant/Nityank was constrained to file a company Petition. In this Application further information is given that the Dome-Bell was the owner of 4,08,90,000 shares of Videocon D2H. Pursuant to an oral agreement it was agreed that the Dome-Bell shall issue additional security to the Applicant of those identified shareholding. It was found by the Applicant that the M/s. Dome- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 872 vide Section 17 Fraud means and includes an act committed by a party to a contract with his connivance to deceive another party or to induce another party to enter into a contract. These allegations are serious in nature. A heavy burden to establish is on the person who is raising these serious allegations. These allegations should not be expected to be raised lightly or in an irresponsible manner. Transactions which were recorded among the parties, as discussed at some length in the foregoing paragraphs are in the nature of a complex business transaction involving few parties. Those parties are expected to be vigilant at the time of entering into the contract. A normal business decision having several cross-transactions not to be alleged as a 'fraudulent transaction' if both the sides are watching their interest legally. It is a common feature of a business model to have cross-holdings among several companies as an independent entity. It is a well-known view of the Hon'ble Courts, specially in Tax matters that a business transaction among related parties if transacted at arm's length must not be held as a transaction to evade tax. So a trite law is that every ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tuation he is a stranger to the Litigation being not permitted to join the Litigation. As a result, at present being an unconnected outsider, not entitled for a copy. Otherwise also, financial dealings always have a clause of confidentiality , either written or implied. The proceedings under Insolvency Code fall within this ambit. Parties to the Lis under the Insolvency Code are Financial Creditor or Operational Creditor on one hand, and on the order hand Corporate Debtor. Until a Petition is not admitted either under section 7, 9 or section 10 of The Code, the condition of confidentiality is implied. But once a Petition is admitted, then upon commencement of CIRP, public at large is informed through advertisement. Since the Insolvency Code has provided this mechanism, therefore, at this stage, prior to admission an Intervener being not a party to the Lis so far, not legally authorized, hence must not demand a copy. 6.3. to 6.5.** ** ** 6.6 As far as the two case laws submitted from the side of the Intervener are concerned, both have been carefully perused and found to be distinctive on facts as well as on Law. In case of M/s. Jeevan Credi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dated 04.10.2018 on the ground that in respect of the Corporate Debtor Insolvency Proceedings have already commenced in CP No. IB/2051/NCLT/(MB)/2018 (supra) Order dated 21.08.2018. While dismissing this Applicant's Petition it was held as under :- Order Sheet dated 04.10.2018 in C.P. No. (IB) 1238(MB)/2018 (MA-377/2018) Shri V.P. Singh Member (J) Shri Ravikumar Duraisamy Member (T) Nityank Infrapwoer Multiventures Pvt. Ltd. V/s Dome-Bell Electronics India Pvt. Ltd. Ors. ORDER 16. MA-377/2018 IN C. P. No. (IB) 1238(MB)/2018 (MA-377/2018) Ld. Counsel for the Financial Creditor and Ld. Counsel for the Corporate Debtor is present in the Court. Ld. Counsel for the Financial Creditor has informed that after filing this Petition in the Court, another Petition against the same Corporate Debtor was filed in the Court which was later admitted against which Company Appeal (AT) (Insolvency) No. 499/2018 is pending in the Hon'ble NCLAT. Ld. Counsel for the Financial Creditor has submitted that his claim has not been admitted by the Resolution Professional. Since the Corporate Debtor is undergoing CIRP, this Petition is not maintainable against the same ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed Eighty-three Crores Sixty-three Lakhs Eight Thousand Seven Hundred Seventy-five only) which was remitted to the Applicant in partial discharge of its dues. The Applicant entered into a separate transaction with Edelweiss for acquiring the debentures under the Edelweiss DTD by making a payment of approximately ₹ 303.81 Crore to Edelweiss on 31st May, 2018. The Applicant has, thus, stepped into the shoes of Edelweiss and has become absolutely and completely entitled to the amounts due under the Edelweiss DTD and the said Shares, which were pledged/agreed to be pleaded by and under a Deed of Pledge dated 5th January 2018 to secure the payment obligations under the Edelweiss DTD. 21.06.2018 - The Applicant subsequently and fortuitously became aware of the captioned Company Petition, which was filed by the Petitioner as a purported Financial Creditor of the Corporate Debtor. The Applicant, therefore, filed an Application in the captioned Company Petition, being Miscellaneous Application No. 695 of 2018, under sections 65 and 75 of the Code for inter alia dismissing the captioned Company Petition. 21.08.2018 - This Hon'ble Tribunal was pleased to reject the Appli ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Plaintiff in the said suits. In the said suits, the Corporate Debtor has challenged the same transactions, on the basis of which the Applicant has tried to lodge the claim. It is apparent from the perusal of documents, deeds, date of execution and after going through the pleadings and communications exchanged between the parties the alleged claim of the applicant is not the loan advanced to the respondent company but for some other transactions, details of which are pleaded in the said suits which are pending for adjudication before Hon ble Delhi High Court and Hon'ble Bombay High Court. 5. The Corporate debtor, apparently, since inception has been disputing the alleged debt of Applicant on various grounds as mentioned in the said suits, which are presently sub-judiced and pending before the Hon'ble Delhi High Court and the Hon'ble Bombay High Court. 6. It is important to note that vide an order dated August 2, 2018, passed in the said Suit No. 1056 of 2018, the Hon'ble Delhi High Court has recorded a prima facie finding that the transaction entered into inter alia between the Applicant and the Corporate Debtor is not in the nature of debt. The Applicant h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ue and payable, and therefore the Corporate Debtor is liable for such amounts ( Claim A ). The second claim arises in respect of a share pledge agreement executed by the Corporate Debtor in respect of certain debentures issued by Goldenarch Digital Solutions Private Limited ( GDSPL Debentures ) ( Claim B ). According to RP in the Reply it is stated that Claim A and Claim B do not constitute Financial debt . In respect of Claim A the statement of accounts submitted were not verifiable despite several opportunities given to the claimant. In respect of Claim B because the Corporate Debtor had not provided any guarantee or indemnity in respect of GDSPL Debentures, therefore, Claim-B do not fall within any of the categories of debt as set out in Section 5(8) of the Code. Rather the Corporate Debtor had pledged shares in favour of Debenture Trustee to secure the GDSPL Debentures pursuant to a Share Pledge Agreement . The said Share Pledge Agreement does not constitute a contract of Guarantee or Indemnity but is merely a contract of Pledge. 5.3 Besides above reasons, Learned RP has also drawn our attention through a Reply in writing that Nityank itself had filed a Misc. Application ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Respondents. 4. The Applicant in the intervention application alleged that there was a fraudulent share pledge transaction entered into by the 'M/s. Invex Pvt. Ltd.' - ('Financial Creditor') in favour of Dome-Bell Electronics India Pvt. Ltd. '(Corporate Debtor') with the intent to defeat the legitimate claim of the Applicant against the 1st Respondent - M/s. Invex Pvt. Ltd.' There is reference of a third entity i.e. 'Hindustan Oil Ventures', Chennai, Tamil Nadu. 5. According to the Applicant, it is a Public Limited Company engaged in the business of oil extraction. With the purpose to raise finances the 'Hindustan Oil' proposed to issue on private placement 16,260 nonconvertible debentures of ₹ 10 Lakhs each having aggregate nominal value of ₹ 1626 Crores. In the said transaction the 'Hindustan Oil Trusteeship Ltd.' (the debenture trustee) executed a 'Debenture Trust Deed' dated 30th December 2016 (debenture trust deed). Pursuant to the said 'Debenture Trust Deed', the 'Hindustan Oil' issued nonconvertible debentures having face value of ₹ 10 Lakhs each at par aggregating to ₹ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted 27th July, 2017, the National Company Law Tribunal approved a scheme of arrangement for amalgamation of 'Videocon D2H' and 'M/s. Dish TV India Ltd.' The said scheme provides for allotment of allotment of certain number of equity shares of the Dish TV to the shareholders of the erstwhile 'Videocon D2' limited. Subsequent to the execution of said transaction document, the 'Hindustan Oil committed defaults in its payment obligation. The details of the impugned defaults have also been elaborated in the Misc. Application. Due to occurrence of event of defaults notices were issued and other correspondence was made. Despite reminders the 'Hindustan Oil' as well as the 'M/s. Dome-Bell Electronics India Private Limited'- (Corporate Debtor') failed to pay the amount due in contraventio0n of payment obligation in relation to the said debentures. In a reminder notice once again called upon to pay the outstanding sum of ₹ 1873,39,20,000. In view of the said default and in view of the indebtedness of M/s. Dome-Bell Electronics India Pvt. Ltd. ' (Corporate Debtor'), the Applicant - 'Nityank Infrapower Multiventures Pvt. Ltd.& ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ipt of the shares, 'M/s. Dome-Bell Electronics India Private Limited'- ('Corporate Debtor') may alienate shares or deal with those shares to defeat the recovery. In the light of the aforementioned background, the application was moved so that the Applicant be made an Intervener, or in the alternate, prayer was made that the Debtor Company be restrained not to pledge 3,40,00,000 shares in 'Videocon D2H' in favour of the 'ECL Finance Ltd.' 7. The Adjudicating Authority by impugned order dated 21st August, 2018 while admitted the application under Section 7 filed by 'Invex Pvt. Ltd.'- ('Financial Creditor') and initiated 'Corporate Insolvency Resolution Process' against 'M/s. Dome-Bell Electronics India Private Limited'- ('Corporate Debtor'), rejected the allegation of 'collusiveness', the Appellant having failed to establish the same. 8. The Appellant was the Intervener had taken plea that the copy of the petition under Section 7 was not served on it, but such submission cannot be accepted. The Adjudicating Authority has rightly rejected the plea as the law is settled law is that only after being ad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urity. He has referred to order dated 27th July, 2017 passed by the National Company Law Tribunal, Mumbai, sanctioning the Scheme of Arrangement for Amalgamation of 'Videocon D2H Ltd.' into and with 'Dish TV India Ltd.' Due to defaults in repayment of the debentures, the debenture trustee sent a demand notice to 'Hindustan Oil Ventures Limited' on 20th December, 2017. All those facts were brought on record but the Appellant has failed to suggest that an application under Section 7 was filed by 'Invex Private Limited' fraudulently or with malicious intent, for the purpose of rejecting the application or for imposing penalty under Section 65 of the 'I B Code'. 13. In view of the findings aforesaid and in absence of any merit, no relief can be granted. The appeal is dismissed. No costs. 6. In the Rejoinder filed by one of the Director of Nityank/Applicant it is reiterated that the Applicant being a Debenture Holder for which the Corporate Debtor had stood surety therefore the claim is nothing but financial debt . The Civil Suits filed by the Corporate Debtor are false and merely a moonshine. In the rejoinder it is denied that there was e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Good Value Financial Services (P.) Ltd. [CP(IB) No. -429/(MB)/2018, dated 25-11-2019] as under :- 9. On hearing this case as well as on due examination of other precedents one thing is clear that all type of money transaction could not be held as financial debt as defined under section 5(8) of the I B Code. Mere transfer of money from one bank account to the account of another party ipso facto not a financial debt. There should be corroborative evidence to establish that the transaction in fact was between a lender on one hand and borrower on the other hand. This relationship of lender and borrower is mandatory. To establish that a particular transaction is a financial debt some specific document or corroborative evidence is a must. On the other hand, if a transaction is related to a business deal or it pertains to a joint venture having the element of profit/loss must not compulsorily be treated as financial debt . One of the fundamental requirement is that the money borrowed must be against the payment of interest. Facts of this case are complex as well as depending upon various terms and conditions or happening of certain events, therefore, in plain terms the transactio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f money'. 10. A 'business' deal or transaction has an ingredient of joint contribution to enter into a joint venture where the parties are required to perform their respective part of performance so as to earn profit jointly. Repayment on an Investment in a business venture is not the responsibility or duty of any of the party, but the earning of profit is an outcome of joint effort of the parties who have joined hands to run the business. Moreover there is also an element of risk involved in a business. It is suffice to add that an investment is of two types (i) business investment, or (ii) financial investment. So in a business investment it is not a must that the money put-in should get a fixed return in the form of interest or dividend. By joint effort profit is to be earned. It may be a loss sometimes. As against that, in a pure financial transaction an investor simply put-in his money but do not participate in any activity to earn dividend or interest. Investment of funds automatically itself earn interest. Such investor is not even concerned about the business profit or loss of the borrower, but only concerned about his time value of money lent. A fine line of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lowing the reasoning of rejection already assigned therein, we hereby conclude that this transaction has rightly been rejected by the RP and as a consequence this Application is also rejected. (B) MA-2163/2019 1. Almost on the same lines this Applicant viz. Balmukh Goldjewel and Multitrading Private Limited has filed this Misc. Application on 13.02.2019 for the relief that the Respondent i.e. Resolution Professional be directed to admit the claim of ₹ 348,43,00,000/- as per claim lodged dated 07.09.2018 as a financial debt . 2. The Applicant through a Debenture Trustee subscribed non-convertible debentures amounting ₹ 1684,10,00,000/- issued by HOVL under Debenture Trust Deed ( DTD ) dated 01.02.2018. In order to guarantee HOVL's payment obligation under the said DTD the Corporate Debtor Dome-Bell Electronics India Pvt. Ltd. had executed a Corporate Guarantee Deed in favour of the Applicant. Thereafter there was a Share Pledge Agreement ( SPA ) executed on 01.02.2018 entered into between Debenture Trustee and Share Holder of Videocon D2H Ltd. As per the SPA the Corporate Debtor had pledged 50,900 equity shares of Videocon D2H Limited in favour of the Deb ..... X X X X Extracts X X X X X X X X Extracts X X X X
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