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TMI Blog2019 (8) TMI 1714X X X X Extracts X X X X X X X X Extracts X X X X ..... erstanding ("MoU") on 14th December 2016 whereby (Fifty Crores only) were given by the Financial Creditor to Corporate Debtor as short term loan for one year carrying an interest at the rate of 12.50% per annum, payable on quarterly rest. It was also stipulated that the principal amount along with interest was payable on 14th December 2017. It is because of default by Corporate Debtor in repayment of said loan along with interest that present petition has been filed. The amount due and payable has been stated at as on 27.02.2017. 3. The Ld. Senior Counsel for the Financial Creditor narrated the basic fact and contended that the Financial Creditor was a NBFC having requisite licence / authorisation to carry on the business as a NBFC. The Ld. Senior Counsel pointed out that there was no dispute as regards the amount disbursed / genuineness of MOU dated 14.12.2016. The Ld. Senior Counsel further submitted that the short-term loan was repayable on 14.12.2017, but the Operational Creditor failed to repay principal sum along with interest and thus, committed breach of MoU. The Financial Creditor, on such breach, issued loan recovery notice on 28.02.2018 to pay the impugned sum and inter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... C Cal 416; ii). state of Kerala & ors. vs. McDowell & co. Ltd. - 1994 supp (2) SCC 605; iii). Lexicon Finance Ltd. vs. Park Securities Ltd. - AIR 2004 Bom 115; iv). SMS Tea Estates Pvt. Ltd. vs. Chandmari Tea co. Pvt. Ltd. - (2011) 14 SCC 66; v) Garware Wall Ropes Ltd. vs. Coastal Marine Constructions & Engineering Ltd. - 2019 SCC Online SC 515; vi) Darothi Mukherjee vs. Ajoy Kumar Ghosh & Ors. -Manupatra MANU/WB/1307/2016 in F.A.M.T. No. 955 of 2016 and C.A.N. Nos. 9211 and 10875 of 2016, Order dated 15.11.2016. 5. The Ld. Senior Counsel, thereafter, drew our attention to the structure of the Corporate Debtor and financial status to show that the Corporate Debtor was a core investment company within the meaning of the provisions of Section 45JA and 45M of the Reserve Bank of India Act, 1934 read with Section 45-l(c) of the said Act. The Ld. Senior Counsel also submitted that Corporate Debtor had become a Non-Banking Financial Company as on 31st December 2018 and most certainly as on 31.03.2019. Hence, it was not a corporate person within the meaning of Section 3(7) of IBC 2016. He also drew our attention to provisions of Section 3 (16) and 3 (17) of IBC 2016. He emphati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d in business of development, implementation, operation and maintenance of road / highway projects in India and was operating through SPCS / SPVS by investing in equity and debt instruments of its SPVs, hence, such business model could not convert the Corporate Debtor into a NBFC. He further drew our attention to the application filed by the Corporate Debtor with RBI for grant of registration to commence on the business of a core investment company and submitted that such application had been pending with the RBI and in the said application the company had itself mentioned that they were desirous of commencing / carrying on the business of a non-deposit taking systematically important core investment company and, therefore, based upon their own admission, the company could not be considered a financial service provider within the meaning of provisions of Section 3(17) of IBC 2016. 8. The Ld. Senior Counsel for the Financial Creditor further contended that in case of M/S. HDFC vs. RHC Holding Pvt. Ltd. in No.26 of 2019, order dated 10th July, 2019, the Hon'ble National Company Law Appellate Tribunal held that financial service provider did not come within the meaning of Corpora ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... early stage, the signs of insolvency and take corrective measures to secure the interest of various stakeholders. As per provisions of Section 7(1), Insolvency Resolution Process can be initiated against a Corporate Debtor when a default has occurred and the Financial Creditor files evidence of default along with the application. As per section 3(12) of I&B Code, 'default' means non-payment of a debt which has become due and payable and is not paid by the Corporate Debtor. 'Debt' as per clause 3(11) means a liability or obligation in respect of a claim which is due from any person and includes a financial debt and operational debt. This takes us to look at the meaning of 'claim' which is defined in section 3(6) of the I&B Code, 2016 and reads as under:- "3(6) "claim" means - (a) a right to payment, whether or not such right is reduced to judgment, fixed, disputed, undisputed, legal, equitable, secured, or unsecured; (b) right to remedy for breach of contract under any law for the time being in force, if such breach gives rise to a right to payment, whether or not such right is reduced to judgment, fixed, matured, unmatured, disputed, undisputed, secu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntracts in civil laws such as legal incapacity of the person executing a contract or insufficiency of stamp duty paid on the instrument or lack of valid licence, registration, authorisation or Board resolution or other technical breach/defects etc. which would not absolve the corporate debtor under IBC,2016 from facing CIR Process. It is further noteworthy that enforceability subject to limitations of Public Policy and agreement being void ab initio has not been made a pre-condition in IBC, 2016 as Financial Creditor as per section 5(7) means only person to whom a financial debt is owed. Financial debt as per section 5(8) means a debt along with interest, if any, which is disbursed against time value of money and includes different kinds of transactions and whenever such transactions take place that by-itself is suffice to create an event or conduct which may give birth to claim subsequently. Further, we are of the considered view that obligation to pay loan is not created by the instrument, but it arises from promise to repay such loan which law always implies when money is borrowed. Having said so, the legal infirmities regarding initiation of CIR Process under IBC could be: (i) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Total amount of claim (including an interest as at the insolvency commencement date) 5. Details of documents b reference to which the debt can be substantiated 6. Details of how and when debt incurred 7. Details of any mutual credit, mutual debts, or other mutual dealings between the co orate debtor and the creditor which ma be set-off against the claim 8. Details of any security held, the value of the security, and the date it was given 9. Details of the bank account to which the amount of the claim or any part thereof can be transferred pursuant to a resolution plan 10. List of documents attached to this claim in order to prove the existence and non- payment of claim due to the financial creditor (Signature of financial creditor or person authorised to act on his behalf) [Please enclose the authority if this is being submitted on behalf of the financial creditor] Name in BLOCK LETTERS Position with or in relation to creditor Address of person singing *PAN number, passport, AADHAAR Card or the identity card issued by the Election Commission of India. DECLARATION I, [Name of claimant], currently residin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t to payment may be an equitable claim. The term 'equitable' has not been defined under IBC, 2016, hence we have to look the meaning of the term in the common parlance or, as has been noticed judicially or, as defined in the dictionary. In general parlance, the term "equitable" means, something that is fair and reasonable to all parties in a particular situation. In judicial sense, it can be explained as a remedy or solution that is ethically or legally just and reasonable under the circumstances, though, it may or may not be wholly satisfactory to any or all parties involved. The dictionary meaning of the term 'equitable' is just that confirmable to the principles of natural justice and right. Just, fair and right, in consideration of the facts and circumstances of the individual case. Existing in equity; available or sustainable only in equity; or upon the rules and principles of equity. (ix) Another judicial principle based upon equity is principle of equitable estoppel. In its broadest sense, equitable estoppel is a means of preventing a party from asserting a legal claim or defence that is contrary or inconsistent with his or her prior action of conduct. Our t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... person assailing it, not by the person asking relief basing on the agreement. The only ground that has to be proved by the party asserting it is execution of the agreement, if execution is admitted, then what all assailing party to do is to prove to the satisfaction of the court that though execution of instrument is admitted, it is hit by one or other ground mentioned above. The basic reason perhaps for not providing trial in IBC proceedings is, credit availed by the debtor and guarantees given by guarantors reflect in various records of the respective company, banks and ROC, therefore the defence that is being witnessed day in and day out is non-filing of certificate, some fraction of deference in computation of claim amount etc. If we see any case de-hors all these frivolous technical flaws, it will be evident that debt is availed and defaulted. So if anybody going beyond this fact, it is nothing but breach of trust, which is the basic element present in an agreement entered between the parties. We don't say that parties should not raise the defences available to them; we only say how we have to deal with administration of justice when substratum is admitted by the assailing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erson which provides financial services in terms of authorization issued or registration granted by Financial Creditor Regulator. In the present case, Corporate Debtor has merely applied for a licence / registration with RBI but no such authorization / registration exists on the date of accepting of short term loan or on the date of filing of petition under section 7 of IBC 2016 by Financial Creditor or even as on date; hence, this plea of the Corporate Debtor is also devoid of merits and, thus, rejected. (xvi) We also do not find any merit that person authorized to file this petition was not having requisite authority as the Board resolution authorizing the person mentions that such person can file a petition before NCLT, being an adjudicating authority, for matters arising under IBC 2016. 12. In the CA (1B) No. 1060/KB/2019 filed by the Corporate Debtor, the contentions raised by the Corporate Debtor have been mentioned which have already been dealt by us herein before, hence, this CA needs no separate findings. 13. In view of the above facts and legal position and considering the fact that the petition filed by the Financial Creditor is complete in all respects and meets the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t where at any time during the corporate insolvency resolution process period, if the Adjudicating Authority approves the resolution plan under sub-section (I) of Section 31 or passes an order for liquidation of corporate debtor under Section 33, the moratorium shall cease to have effect from the date of such approval or liquidation order, as the case may be. ix) Necessary public announcement as per Section 15 of the IBC, 2016 may be made. x) MR. SOUMENDRA PODDAR, IRP Registration No. IBBl/lPA-001/lP-P00446/2017-18/ 10789, E-mail: [email protected] residing at 1/427, Gariahat Road, Kolkata-700 068, is appointed as Interim Resolution professional for ascertaining the particulars of creditors and convening a Committee of Creditors for evolving a resolution plan. xi) The Financial Creditor to pay sum of Rs. (Rupees Five Lakh Only) to IRP as advance fees as per Regulation 33(3) of IBBI (Insolvency Resolution Process for Corporate Persons) Regulation 2016 which shall be adjusted from final bill. xii) The Resolution Professional shall conduct CIRP in time bound manner as per Regulation 40A of IBBI (Insolvency Resolution Process for Corporate Persons) Regulation, 2016. xi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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