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TMI Blog2020 (7) TMI 678X X X X Extracts X X X X X X X X Extracts X X X X ..... Cas 320 (SC)., wherein it has been held that provisions of the IBC, 2016 prevailed over the Tea Act and the application under section 7/9 could be filed without permission of the Central Government. 3. C. A. No. 121/KB/2019 raises an issue regarding the recording of the utilisation of compensation which could be received on acquisition of a part of land in its tea estate owned by the corporate debtor which, in our opinion, is premature, hence, dismissed as such. C. P. (I. B.) No. 184/KB/2018 : 4. The facts, in brief, are that there are four financial creditors in the present case who are detailed as under : (i) Sangita Fiscal Services P. Ltd. (ii) Navnita Tradefin P. Ltd. (iii) Sudhir Credit P. Ltd. (iv) Ruchi Trades and Holdings P. Ltd. 5. The particulars of all the financial creditors have been given in Form I. First financial creditor, i. e., Sangita Fiscal Services P. Ltd., gave a loan of Rs. 4,70,00,000 in the following manner : Rs. 16-8-2014 20,00,000 23-12-2014 2,90,00,000 23-12-2014 75,00,000 24-12-2014 85,00,000 Second financial creditor, i. e., Navnita Tradefin P. Ltd., gave a loan of Rs. 2,10,00,000 in the following manner : Rs. 20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0,000 along with letter dated June 27, 2016. It was also submitted that proceedings under section 138 of the Negotiable Instruments Act, 1881 were also taken which were pending. Our attention was also drawn to the relevant clauses of the agreement as well as copies of the aforesaid letters and post-dated cheques. 9. As regards the second financial creditor, it was contended that a similar agreement dated February 18, 2015 had been executed whereby the corporate debtor was responsible to repay the entire loan by March 31, 2016. A post-dated cheque for Rs. 50,00,000 was sent vide letter dated February 20, 2015 ; another post-dated cheque for Rs. 2,50,00,000 was also sent along with letter dated February 26, 2015. Two post-dated cheques of Rs. 50,00,000 each were also given vide letter dated February 18, 2015. However, on failure to honour its commitment by the corporate debtor, the operational creditor on August 4, 2017 and August 11, 2017 sought confirmation of balance outstanding from the corporate debtor which was done, but interest liability was not confirmed. Fresh post-dated cheques were also given. Proceedings under section 138 of the Negotiable Instruments Act, 1881 vide not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of section 5(8) of the IBC, 2016. 15. He, thereafter, referred to page No. 30 of the paper book which contained a letter written by the corporate debtor on June 27, 2016 to the first financial creditor wherein it was specifically stated that "as agreed, the repayment and other terms will be as mutually decided upon". Thus, on the basis of this understanding, learned counsel vehemently argued that the loan had not become due and payable and, therefore, the first ingredient itself was not complied with to file this application. 16. As regards the third objection, he drew our attention to page No. 87 and contended that no board resolution/power of attorney/authorisation was given to file the application jointly. It was also contended that no seal of the company was affixed and, therefore, in the background of these facts, according to learned counsel, the application was defective and did not meet the filing requirements and consequently, the same was liable to be dismissed. In this regard, he placed reliance on the decision of the hon'ble National Company Law Appellate Tribunal in the case of Poloygit. 17. In the rejoinder, learned counsel for the financial creditor again emp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... time value of money as it results into an economic advantage to the borrower at free of cost over a period of time when the value of money decreases due to inflation. The transactions of loan/advance are specifically covered under section 5(8)(a) as these have been borrowed against interest. Even, considering the fact of repayment of loan to one of the financial creditors and other surrounding circumstances as well, such claim made by the corporate debtor appears to be of no help particularly when no other material/documentary evidence has been brought on record to show that the tenure of the loan has been extended. Thus, in the background of the facts and circumstances and applicable legal position, as discussed herein above, we are of the considered view that the transaction is of the nature of financial debt within the meaning of provisions of section 5(8) and 5(8)(a) of the IBC, 2016. 19. Although the nature of the transaction as of a financial debt based upon the interest element and other aspects has already been identified, yet we consider it pertinent to answer the contention raised by the corporate debtor that such transaction is in regard to the sale and purchase of tea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a shareholder may, in order to protect their legitimate interest be called upon to respond to the crisis and in order to save the company they may infuse funds without claiming interest. In such situation such funds may be treated as long-term borrowings. Once it is so, it cannot be said that the debt has not been disbursed against the consideration for the time value of the money. The interests of such stakeholders cannot be said to be in conflict with the interests of the company. Enhancement of assets, increase in production and the growth in profits, share value or equity ensures to the benefit of such stake holders and that is the time value of the money constituting the consideration for disbursement of such amount raised as debt with obligation on the part of company to discharge the same. Viewed thus, it can be said without any amount of contradiction that in such cases the amount taken by the company is in the nature of a financial debt." 21. We further hold that in view of the subsequent decision of the hon'ble Supreme Court in the case of Pioneer Urban Land and Infrastructure Ltd. v. Union of India reported in [2019] 217 Comp Cas 1 (SC) ; [2019] 8 SCC 416, the decis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er section 7 of the Insolvency and Bankruptcy Code, 2016 for initiating the corporate insolvency resolution process against the corporate debtor, Duncans Indus tries Limited, is hereby admitted. (ii) We declare a moratorium and cause public announcement in accordance with sections 13 and 15 of the IBC, 2016. (iii) Moratorium is declared for the purposes referred to in section 14 of the Insolvency and Bankruptcy Code, 2016. The IRP shall cause a public announcement of the initiation of the corporate insolvency resolution pro cess and call for the submission of claims under section 15. The public announcement referred to in clause (b) of sub-section (1) of section 15 of the Insolvency and Bankruptcy Code, 2016 shall be made immediately. (iv) Moratorium under section 14 of the Insolvency and Bankruptcy Code, 2016 prohibits the following : (a) The institution of suits or continuation of pending suits or proceedings against the corporate debtor including execution of any judgment, decree or order in any court of law, tribunal, arbitration panel or other authority ; (b) Transferring, encumbering, alienating or disposing of by the corporate debtor any of its assets or any legal ..... X X X X Extracts X X X X X X X X Extracts X X X X
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