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2019 (1) TMI 1717

..... ment on record is prima-facie one of granting financial assistance to be repaid along with interest. Further, a financial debt as defined under Section 5(8)(f) includes any amount raised under any other transaction, including any forward sale or purchase agreement having the commercial effect of borrowing. The facts of this case squarely fall within the definition of Section 5(8)(f) to qualify as a financial debt, notwithstanding that it was a loan attracting interest. The execution of the demand promissory note, tender of cheques which bounced, acceptance of receipt of financial assistance against offer of security, execution of a specific Finance Agreement all point out to financial assistance availed to be liquidated against future purch .....

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..... the company, as well as in his personal capacity, acknowledging the liability under the said financial loan. By way of security, the Board of Directors of the Corporate Debtor offered to pledge shares worth ₹ 5 crores. To reduce the liability, the financial creditor also agreed to accept finished and manufactured goods of the Corporate Debtor. Additionally, a sister concern of the Corporate Debtor namely, Albus Conserves Pvt. Ltd. offered security by way of equitable mortgage of immovable property belonging to it. 3. As per submissions, the Corporate Debtor failed to repay the loan in terms of their agreement dated 04.04.2017. A notice dated 23rd February, 2018 was issued which was duly acknowledged by the Corporate Debtor. The Corpor .....

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..... respondent faced a liquidity crunch in the last quarter of 2016 and informed the applicant about its inability to supply the raw material. To tide over their financial crisis, the petitioner offered advance payments in consideration of future supply of material sought to be purchased from them. It is submitted that since the supply was taking more time than what was envisaged, on request of the petitioner, the respondent executed promissory notes, only by way of security. 5. The Corporate Debtor further seeks to dispute the transaction as a financial claim, by relying upon the terms of the agreement dated 04.04.2017, the sum and substance of which also includes that the petitioner would have the first right of procurement from the responde .....

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..... was a loan attracting interest. The execution of the demand promissory note, tender of cheques which bounced, acceptance of receipt of financial assistance against offer of security, execution of a specific Finance Agreement all point out to financial assistance availed to be liquidated against future purchases or be returned on demand. In view of the same, the objections raised on behalf of the Corporate Debtor do not merit any consideration. The petitioner/financial creditor is entitled to the prayer made. This Petition is therefore Admitted. 8. A moratorium in terms of Section 14 of Code comes into effect forthwith, staying: '(a) the institution of suits or continuation of pending suits or proceedings against the corporate debtor inc .....

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