TMI Blog2019 (11) TMI 1522X X X X Extracts X X X X X X X X Extracts X X X X ..... 9,800,4,480. The MOU provides for payment of ₹ 50.00 lacs as first instalment; second instalment of ₹ 2.50 crores, vide cheque No. 486626 dated 23.04.2015 drawn on Indian Overseas Bank, Delhi Branch; another instalment of ₹ 3.00 crores by 20.05.2015; and balance payment to be made within six months from the date of signing the agreement subject to the compliance of the aforesaid comments of the MOU. Therefore, the amounts of ₹ 50.00 lacs and ₹ 2.50 crores supra is not an amount raised under a real estate agreement. In the present case, the whole project of affordable group housing is to be transferred by Victory Buildestates to S-Tech. The amounts received are therefore, not in the nature of advance given by the home buyer to a real estate developer for temporary use i.e. for use in the construction project. The project is to be sold to S-Tech. The funds of ₹ 3.00 crores are not given by S-Tech to Victory Buildestates for any use by Victory Buildestates in the project of affordable group housing at Rewari. The MOU is in respect of a sale of a project of affordable group housing and would not have the commercial effect of a borrowing. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 77; 4,95,80,137 and the date on which default occurred is stated to be 16.03.2017. 5. Vide order dated 12.09.2019, it was stated that the MOU i.e. Annexure A-4 basing on which the instant CP has been filed by S-Tech, describing itself to be a financial creditor of the respondent/corporate debtor, prima facie appears that the same is not covered under Section 5(8)(f) of the Code and opportunity was given to S-Tech to explain the said fact. 6. During the course of the hearing, the learned authorised representatives for S-Tech were heard. Reliance was placed by them on the judgement of Hon'ble Supreme Court in Pioneer Urban Land and Infrastructure Ltd. and Anr. Vs. Union of India Ors. Writ Petiton (Civil) No. 43 of 2019 dated 09.08.2019 as well as the decisions of Hon'ble National Company Law Appellate Tribunal (NCLAT) in Shailesh Sangani Vs. Joel Cardoso Ors. Company appeal/AT)/(Insolvency) No. 616 of 2018 dated 30.01.2019 and Gaurav Aggarwal Vs. TUF Metallurgical (P) Ltd. and Ors. Company Appeal (AT)/(Ins.) No. 212 of 2019 dated 04.09.2019 and it was pleaded that the provisions of Section 5(8)(f) of the Code would subsume within it amounts raised under transactions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rowing. It was further held that sub-clause (f) Section 5(8) thus read would subsume within it amounts raised under transactions which are not necessarily loan transactions, so long as they have the commercial effect of a borrowing. In para No. 67, the Hon'ble Supreme Court held as under:- A perusal of these definitions would show that even though the Petitioners may be right in stating that a borrowing is a loan of money for temporary use, they are not necessarily right in stating that the transaction must culminate in money being given back to the lender. The expression borrow is wide enough to include an advance given by the home buyers to a real estate developer for temporary use i.e. for use in the construction project so long as it is intended by the agreement to give something equivalent to money back to the home buyers. The something equivalent in these matters is obviously the flat/apartment. Also of importance is the expression commercial effect . Commercial would generally involve transactions having profit as their main aim. Piecing the threads together, therefore, so long as an amount is raised under a real estate agreement, which is done with p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt of ₹ 2.50 crores, vide cheque No. 486626 dated 23.04.2015 drawn on Indian Overseas Bank, Delhi Branch; another instalment of ₹ 3.00 crores by 20.05.2015; and balance payment to be made within six months from the date of signing the agreement subject to the compliance of the aforesaid comments of the MOU. 12. Therefore, the amounts of ₹ 50.00 lacs and ₹ 2.50 crores supra is not an amount raised under a real estate agreement. In the present case, the whole project of affordable group housing is to be transferred by Victory Buildestates to S-Tech. The amounts received are therefore, not in the nature of advance given by the home buyer to a real estate developer for temporary use i.e. for use in the construction project. The project is to be sold to S-Tech. The funds of ₹ 3.00 crores are not given by S-Tech to Victory Buildestates for any use by Victory Buildestates in the project of affordable group housing at Rewari. The MOU is in respect of a sale of a project of affordable group housing and would not have the commercial effect of a borrowing. 13. The learned authorized representatives for S-Tech have relied on Shailesh Sangani vs. Joel C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y 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 . 14. It has therefore, been held by Hon'ble NCLAT that it is manifestly clear that money advanced by a promoter, Director or a shareholder of the corporate debtor as a stakeholder to improve financial health of the company and boost its economic prospects would have the commercial effect of borrowing on the part of the corporate debtor not withstanding the fact that no provision is made for interest thereon. However, in the present case, the alleged debt is not advanced by a promoter, Director or shareholder of the corporate debtor as a stakeholder. The purpose of the alleged debt is not for improving the financial health of the company and boosting its economic prospect. On the other hand the purpose is to purchase the project of affordable group housing at Rewari. 15. The learned authorized representatives of S-Tech have relied on Gaurav Aggarwal Vs. TUF Metallurgical (P) Ltd. and Ors. supra. It was held in para No. 10 thereof that when the financial creditor gave advance to keep the corpo ..... X X X X Extracts X X X X X X X X Extracts X X X X
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