TMI Blog2021 (2) TMI 901X X X X Extracts X X X X X X X X Extracts X X X X ..... e to perform a legal or contractual duty. Suffice it to point that the word default , applies to a sum of money which was promised at a future date as against a sum now due and payable. It cannot be forgotten that Section 5(8) of the Insolvency Bankruptcy Code speaks of time value and these words are interpreted to mean compensation or the price paid for the length of time for which the money was disbursed. An existing obligation to pay a sum of money is the sine qua non of a financial debt . The Financial Creditor has a right to financial debt . Thus, the essence of any debt to be mentioned as financial debt is the time value of money , as borrowing money is for monetary transaction - To determine the plea of occurrence of default is the debt which must be due and become payable. An existence of debt and default are to be met for admission of an Application under section 7 of the Insolvency and Bankruptcy Code. A Debt is/was recoverable from the Corporate Debtor . There is no second opinion of an important fact that distinction between Deposits and Loans may not be a significant factor for interpreting the word, Deposit . One cannot igno ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aw Tribunal, New Delhi Bench-V) is directed to restore the Company Petition filed by the Appellants / Financial Creditors / Petitioner (under Section 7 of the Insolvency Bankruptcy Code ) to its file and admit the same and to proceed further in accordance with Law. - COMPANY APPEAL (AT) (Insolvency) No.684 of 2020 - - - Dated:- 22-2-2021 - Justice Venugopal M, Member(Judicial) and Kanthi Narahari, Member (Technical) For Appellant: Ms. Ranjana Roy Gawai Mr. Avinash Bhati, Advocates For Respondent: None JUDGEMENT The Appellant has filed the present appeal being dissatisfied with the order dated 12.3.2020 passed by the Adjudicating Authority (National Company Law Tribunal), New Delhi Bench-V in (IB)2978(ND)/2019. 2. The Adjudicating Authority (National Company Law Tribunal), New Delhi Bench-V, while passing the Impugned Order on 12.3.2020 in (IB)2978/ND/2019 filed by the Appellant / Financial Creditor and others (under Section 7 of the Insolvency Bankruptcy Code) read with Rule 4 of Insolvency Bankruptcy (Application to the Adjudicating Authority )Rules 2016, at Paragraphs 6 to 9, among other things had observed the following: . I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... here is a default in payment of debt. 9. As we have already held in the matter of Satish Chand Gupta vs. Servel India Private Limited (IB) 1886 (ND)/2019 and the present case is also covered with this decision, therefore, we are of the considered view that though the applicants have some other remedy under the law to recover the amount which they have deposited with the Corporate Debtor but so far initiation of the Section 7 of the IBC is concerned for the reasons discussed above, the present application is not maintainable, accordingly, we hereby, reject the prayer of the applicants to initiate the proceedings under Section 7 of the Code. and ultimately dismissed the Application, granting liberty to the Appellant to file an appropriate Application under Chapter V of the Companies Act, 2013. APPELLANT S SUBMISSIONS: 3. According to the Appellant /Financial Creditors of the Respondent/Corporate Debtor , and Application for initiation of Corporate Insolvency Resolution Process (herein after referred to CIRP ) under Section 7 of the Insolvency Bankruptcy Code, 2016 (herein after referred to IBC 2016) was filed against the Respondent/Corporate Debtor by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat the Respondent/ Corporate Debtor had not only failed to allot the land in favour of the Investors , but also failed to pay the amount payable on maturity together with interest and Assured return . Because of the failure of the Respondent / Corporate Debtor to offer allotment of land or pay the principal amount along with interest, resulted in default, thus leading to the filing of the Application before the Adjudicating Authority (National Company Law Tribunal), New Delhi. Besides this, the refusal of the Respondent / Corporate Debtor to honour the Promissory Notes issued by it in lieu of Assured returns clearly demonstrates the Respondent / Corporate Debtor s inability to repay its admitted debts. 6. The Learned Counsel for the Appellant contends that the Adjudicating Authority by the Impugned Order dated 12.3.2020 had rejected the Application / Petition of the Appellant on the basis that the claim of the Appellant does not come within the ambit of Sec.5(8) of the Insolvency Bankruptcy Code, 2016 or any Clause(a) to (i), because of the fact that all the Applicants therein is that they deposited the said amount under scheme and they had not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... receipt of money by way of deposit or loan or in any other form by a Company, but it does not include such categories of amount as may be prescribed in consultation with the RBI . Appellant s Case Laws: 13. The Learned Counsel for the Appellant cites the decision of Hon ble Supreme Court in Innoventive Industries Ltd. V ICICI Bank Another, reported in (2018) SCC 407, wherein it is observed that the Insolvency Bankruptcy Code over rides other Laws and the Claim included Disputed Claims and the Insolvency Process is triggered the moment the default is committed. 14. The Learned Counsel for the Appellant refers to the judgement of this Tribunal, in Nikhil Mehta Sons V AMR Infrastructure Ltd. (2017 SCC Online NCLAT 377), wherein it is held that money disbursed against time value of money is a Financial Debt . 15. The Learned Counsel for the Appellant refers to the judgement of this Tribunal, in Ms.Anju Aggarwal V Bombay Stock Exchange Others reported in (2019 SCC Online NCLAT P 789) wherein it is observed and held that Section 28A of the SEBI Act, 1992 , being inconsistent with Section 14 of the Insolvency Bankruptcy Code will prevail over ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Appellant that the investments made by the Financial Creditors mentioned in the Application before the Tribunal that the investments made by them under the Schemes of the Corporate Debtor matured in the year 2017-2018. But the Respondent / Corporate Debtor failed in its commitment to offer the allotment and/ or the possession of the plots of land as promised by it or pay the Assured Returns or repay the amounts collected by it along with interest on the maturity of the schemes. Hence, Joint Application under Section 7 was filed by the Financial Creditors before the Tribunal . 21. According to the Appellant, the total amount claimed to be due was ₹ 16,28,300/- (Rupees Sixteen Lakhs Twenty Eight Thousand and Three Hundred only) which includes a sum of ₹ 13,70,000/- (Rupees Thirteen Lakhs Seventy Thousand only) towards the amount payable by the Corporate Debtor at the maturity of the schemes invested in by the Financial Creditors and ₹ 2,58,300/- (Rupees Two Lakh Fifty Eight Thousand Three Hundred only), towards interest at the rate of 12% per annum from the date of expiry of the term under the Certificates till October 2019. 22. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... meaning than a Company as defined under the Companies Act, 2013 . 28. It cannot be forgotten that Section 5(8) of the Insolvency Bankruptcy Code speaks of time value and these words are interpreted to mean compensation or the price paid for the length of time for which the money was disbursed. An existing obligation to pay a sum of money is the sine qua non of a financial debt . The Financial Creditor has a right to financial debt . Thus, the essence of any debt to be mentioned as financial debt is the time value of money , as borrowing money is for monetary transaction. 29. To determine the plea of occurrence of default is the debt which must be due and become payable. An existence of debt and default are to be met for admission of an Application under section 7 of the Insolvency and Bankruptcy Code. A Debt is/was recoverable from the Corporate Debtor . 30. It is relevant to point out that a deposit is more than a loan of money. Significantly, deposit is given at the instance of an individual who is making a deposit. Under the Companies Act, 2013, the powers of Tribunal are of wide amplitude. Rule 17 of Companies (Acceptance of De ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s default in payment of the accepted amounts by the Respondent / Corporate Debtor . In short, the Respondent/ Corporate Debtor squarely comes within the ambit of definition of Financial Debt and the contra conclusions arrived at by the Adjudicating Authority (National Company Law Tribunal, New Delhi Bench-V) to the effect that the amount which the applicants deposited does not come under the definition of Debt and further that it was unable to accept the contention of the applicants that there was a default in payment of debt, are incorrect, invalid and the same is set aside by this Tribunal to secure the ends of justice. Likewise, the other observation made by the Adjudicating Authority in the impugned order that the applicants are at liberty to file an appropriate application under Chapter V of the Companies Act, 2013 is also set aside. Resultantly, the Appeal succeeds. 35. In fine, the present Appeal is allowed. However, there shall be no order as to costs. The Impugned Order of the Adjudicating Authority (National Company Law Tribunal, New Delhi, Bench-V) dated 12.3.2020 passed in C.P.No.(IB)2978/(ND)/2019 is set aside by this Tribunal for the reasons ..... X X X X Extracts X X X X X X X X Extracts X X X X
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