TMI Blog2021 (5) TMI 314X X X X Extracts X X X X X X X X Extracts X X X X ..... and characteristics of the transaction governed by the said High Seas Sale Agreement such transaction cannot be re-christened as Financial Debt. As evidenced by the source document namely High Seas Sale Agreement, written submissions and pleadings, the Applicant cannot be treated as Financial Creditor and there is no Financial Debt, this application is liable to be dismissed. Application dismissed. - IBA/1087/2019 - - - Dated:- 27-4-2021 - Sucharitha R., Member (J) And Anil Kumar B., Member (T) For the Appellant : Thriyambak J. Kannan and E.N. Hareepriya, Advocates for Assentio Legal For the Respondents : K. Surendran and Pradeep Dhaiya, Advocates ORDER Anil Kumar B., Member (T) 1. It is an Insolvency and Bankruptcy Application (in short IBA ) filed under Section 7 of the Insolvency and Bankruptcy Code, 2016 (in short, IB Code, 2016) r/w Rule 4 of the Insolvency and Bankruptcy (Application of Adjudicating Authority) Rules, 2016 (for brevity, AAA Rules, 2016) by M/s. Shakti International Private Limited (hereinafter referred to as ( Financial Creditor ) for initiation of Corporate Insolvency Resolution Process (in short CIRP ) against M/s. Pandi Dev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ulk for and on behalf of the Corporate Debtor for a consideration of USD 1191.25 per Metric Ton. In order to secure the interest of the Financial Creditor, the Corporate Debtor pledged his movables in an Agreement for Pledge dated 03.05.2012. The Financial Creditor had granted a loan amount of ₹ 1,84,00,000/- (Rupees One Crore Eighty Four Lakh) to the Financial Creditor vide an agreement (also referred to as Loan Agreement ) dated 09.04.2012. The said loan Agreement was renewed vide a Loan Renewal and Working Capital Loan Agreement dated 21.03.2013 executed between the parties, and the repayment period was extended until 30.06.2013. Further, the Financial Creditor also agreed to grant a further loan to meet the working capital requirements of the Corporate Debtor to the extent of ₹ 71,00,000/- (Rupees Seventy One Lakh). b) The said loan amount as provided under the Loan Agreement would carry an interest at 2.5% per month. The terms of interest and repayment by the Corporate Debtor are provided for at clauses 22 of the Loan Renewal and Working Capital Loan Agreement. c) The Financial Creditor initiated arbitration proceedings against the Corporate Debtor and b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... akh Sixty Nine Thousand Seven Hundred and Sixty Nine only) (also referred to as the 'Total Amount Due and Payable ). The detailed tabular working is provided below: 5. The learned counsel for the Corporate Debtor filed counter on 22.11.2019 and submitted as follows: a) The Counsel for the Respondent/Corporate Debtor states that the present reply is being filed by the Respondent/Corporate Debtor without prejudice to its rights and contentions and without prejudice to the fact that the above captioned insolvency Petition filed by the Applicant/Financial Creditor is not maintainable. Nothing contained in this reply shall be deemed to be an admission on the part of the Respondent of the contents of the captioned Petition. It is submitted that each and every submission in the present reply is independent of and without prejudice to the other submissions as stated herein. b) It is submitted by the Counsel for the Respondent/Corporate Debtor that the Applicant has filed the present application under Section 7 of the Code claiming itself to be a financial creditor by virtue of the High Seas Sale Agreement dated 23.04.2012. The said High Seas Sale Agreement was ente ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... into between the parties, it is submitted that the Applicant has wrongly placed reliance on the same to prove itself to be a financial creditor of the Respondent. The above captioned Petition filed by the Applicant is ripe with utmost malafide on the part of the Applicant. It is submitted that the Respondent had not taken any loan of ₹ 1,84,00,000/- (Rupees One Crore Eighty Four Lakh only) from the Applicant. It is submitted that it is the Applicant who owed a sum of ₹ 1,84,00,000/- to the Respondent with respect to some past business transactions between the parties, which was transferred into the bank account of the Respondent. Since the Applicant was facing some difficulties in closing his books of accounts due to the transfer of large amounts from its bank account, the Applicant requested the Respondent to sign a loan agreement dated 09.04.2012. It is to be noted that the said loan agreement was signed by the Respondent in good faith and at the request of the Applicant that all the account would be cleared by him by the close of the financial year. An amount of ₹ 39,00,000/- standing in our credit in the account of Shakti Enterprises a firm owned by the promot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ered between the parties and the Arbitration Award was communicated to the parties vide the Procedural Order Sheet of the arbitration proceedings dated 30.07.2015. The Corporate Debtor preferred a petition to set aside the arbitral award under section 34 of the Arbitration and Conciliation Act, 1996. The Hon'ble High Court of Bombay dismissed the above petition by way of an order dated 17.02.2017. Therefore, the award has become final and is binding on the Corporate Debtor. d. Further, the Corporate Debtor sent an email dated 22.02.2018 acknowledging the debt on 10.05.2018 and 18.05.2018 to settle the dispute. The total outstanding financial debt is ₹ 11,09,69,769/-. e. The Respondent contended that as per the letter dated 16.12.2020 of Karur Vysya Bank confirming transfer of the funds from the Respondent to the Petitioner the entire debt due has been paid. It is evident from the fact that the parties entered into the consent terms based on which the arbitral award was passed after such payment was made on 18.03.2015. If such payment was already made by the Respondent, the Respondent need not have entered into consent terms with the Petitioner for further paymen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2012 and alleged loan renewal and working capital loan agreement dated 21.03.2013, there was no debt due to the Applicant. e. The Applicant is not a 'financial creditor' for the amount claimed under the award dated 18.03.2015 as per the judgement on 09.12.2019 passed by the Hon'ble NCLAT in Company Appeal (AT) (Insolvency) No. 1329 of 2019; and judgement dated 14.08.2020 by the Hon'ble NCLAT in Company Appeal (AT) (Insolvency) No. 452 of 2020. 9. We have heard the submissions made by both the parties during the course of various stages of 17 hearings and we have examined the written submissions. We have also examined the High Seas Sale agreement which is the source document produced before us from which the claim by the Applicant as a Financial Creditor is said to emanate. The Applicant also has produced the Loan Agreement and Loan Renewal Agreement in order to substantiate their claim. 10. The Applicant has also submitted that since the debt fallen due has not been paid by the Corporate Debtor they have approached a sole Arbitrator and the Arbitration Award was passed by the sole Arbitrator on 18.03.2015 and the order was received by the parties on 31.0 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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