TMI Blog2021 (7) TMI 512X X X X Extracts X X X X X X X X Extracts X X X X ..... ment of existence of a debt being owed is not forsaken. In order to differentiate between the nature and purpose of mortgage‟ and guarantee‟ with respect to a loan, the Hon ble Apex Court proceeds to clarify in Anuj Jain by holding that a mortgagee as a creditor shall be a secured creditor‟ but not a financial creditor‟ - The Appellant‟s reliance on Anuj Jain in support of his claim is, therefore, found to be out-of-context from the facts of the instant case. We may look at the ASCOT REALTY PRIVATE LIMITED VERSUS AJAY KUMAR AGARWAL, ORIENTAL BANK OF COMMERCE -SUBSTITUTED BY PUNJAB NATIONAL BANK, INDIA BULLS HOUSING RESPONDENT FINANCE LIMITED, FULLERTON INDIA CREDIT COMPANY LIMITED, SWARNA TECHNOLOGY PRIVATE LIMITED, ESKAY ENCLAVE PRIVATE LIMITED, YUTHIKA TRADING COMPANY PRIVATE LIMITED, PANDEY CHEMICAL PRIVATE LIMITED, ACTUAL DRESSES, GM DRESSES, KRYSTAL DRESSES, QUEEN DRESSES, RDH TECHNOLOGIES PRIVATE LIMITED [ 2020 (10) TMI 962 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , NEW DELHI] where it was held that The matter cannot, of course, be settled merely by treating the ipsissima verba of Wiles, J., as though they were part of an Act of Par ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 4.9 2019. The Appellant has claimed that in the first meeting of the COC, the Resolution Professional determined the voting percentage of each member of the COC as follows: 9M Corporation (Appellant) 6.11% STCI Finance Limited (Respondent No. 2) 75.90% Phosphate India Private Limited (Respondent No.3) 17.99% The Appellant has further stated that the claim filed by STCI Finance Limited was based on debtor-creditor relationship, which is the result of guarantee given by the Corporate Debtor BPPL for a loan of ₹ 24 crores sanctioned by STCI Finance Ltd. to Bohra Industries Limited (hereinafter referred to as BIL ), which is a group concern of the Corporate Debtor BPPL. 3. It is claimed by the Appellant that BPPL has furnished a collateral security to Respondent No. 2 STCI Finance Limited and thus STCI Finance Ltd. is not a financial creditor as defined in Section 5(7) and Section 5(8) of the IBC since the fundamental requirement of a financial debt is disbursal against the consideration for the time value of money . 4. Finally, the Appellant has claimed that the Adjudicating Authority has not considered this important distinction between debt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d Counsel for Appellant has also cited the judgment of this tribunal in Amrit Kumar Agarwal versus Tempo Alliances Private Limited, Company Appeal AT (Insolvency) No. 1005 of 2020 to emphasize that mere obligation to pay dues does not bring liability within the ambit of section 5(8) of the IBC to make such debt a financial debt. She has urged that in the present matter there may be remedies available for the secured creditor for recovery of his loan amount but this remedy is not through triggering CIRP. 9. The Ld. Counsel for Appellant has claimed that Respondent No.1, the Resolution Professional, has not constituted the Committee of Creditors in accordance with the provision of Section 21 of IBC since STCI Finance Ltd. is not a financial creditor whereas it has been considered as one. 10. The Learned Counsel for Appellant has said that in Anuj Jain (supra), in Para 54, the issue of guarantee obligation falling within the ambit of financial debt under Section 5(8) of the IBC has been considered wherein the Hon ble Apex Court dealt extensively with the judgment of SBI vs Kusum Ballabhdas Thakkar (1991 SCC online GUJ 14) and considered the provisions of Sections 126, 127 and 12 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l for Respondent No.1 BPPL (Corporate Debtor), through the Resolution Professional, has argued that the definition of financial debt is an inclusive definition and it includes those amounts too, for which guarantee or indemnity has been given for the amount of any liability under section 5 (8)(i) of the IBC. He has further added that in the instant case, both conditions of the definition of financial debt are present, i.e. there is disbursement of debt to BIL and the Corporate Debtor BPPL has given a corporate guarantee to STCI Finance Limited to the effect that in case of non-payment of debt by BIL, the amount can be recovered from the Corporate Debtor. 14. In his arguments, the Learned Counsel for Respondent No.3 has stated that his client has a 17.99% voting right in the Committee of Creditors. He has emphasized that while he is supporting the case of the Appellant, his arguments are different from the arguments put forth by the Learned Counsel of the Appellant. He has urged that a financial creditor is a creditor who is supposed to be involved with the business of the Corporate Debtor in the sense that the monies advanced/loaned by him go into the growth, rejuvenation an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Security and Guarantees offered on behalf of the Borrower is at Schedule I on pp. 235-236of Appeal Paperbook, Vol. II. We reproduce the sections relating to Security‟ and Guarantees‟ from Loan Summary Schedule (Schedule I) attached at pp. 235-236 on Appeal Paperbook, Vol. II for appreciation of the properties/assets offered therein:- Security a. Residential plot situated in Plot No.3-A and 53-B, Ambamata Scheme, Ayurvedic College Chouraha to Mahakaleshwar Road, Udaipur, Rajasthan Admeasuring 15120 sq.ft. belonging to Mr. Hemant Bohra Mrs. Beena Bohra. b. Office No. 301, Anand Plaza, Block (A), Third Floor, University Road, Udaipur, Rajasthan admeasuring 564.25 sq.ft. belonging to M/s. Bohra Pratisthan Pvt. Ltd. c. Office No. 314-315, Anand Plaza, Block (A), Third Floor, University Road, Udaipur, Rajasthan admeasuring 456.82sq.ft. belonging to M/s. Bohra Pratisthan Pvt. Ltd. d. Office No. 336, Anand Plaza, Block (B), Third Floor, University Road, Udaipur, Rajasthan admeasuring 4054.77sq.ft. belonging to M/s. Bohra Pratisthan Pvt. Ltd. e. Industrial property situate in Plot No. 4897 to 4903 Jhamar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d includes (a) money borrowed against the payment of interest; (b) any amount raised by acceptance under any acceptance credit facility nor its de-materialized equivalent; (c) any amount raised pursuant to any note purchase facility or the issue of bonds, notes, debentures, loan stock or any similar instrument; (d) the amount of any liability in respect of any lease or hire purchase contract which is deemed as a finance or capital lease under the Indian Accounting Standards or such other accounting standards as may be prescribed; (e) receivables sold or discounted other than any receivables sold on non-recourse basis; (f) any amount raised under any other transaction, including any forward sale or purchase agreement, having the commercial effect of a borrowing; [Explanation: For the purposes of this sub-clause:- (i) any amount raised from an allottee under a real estate project shall be deemed to be an amount having the commercial effect of a borrowing; and (ii) the expressions, allottee and real estate project shall have the meanings respectively assigned to them in clauses (d) and (zn) of section 2 of the Real Estate (Regu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment of existence of a debt being owed is not forsaken. 23. Later, in the same judgment Anuj Jain (supra), in Para 50.1 a distinction is made very categorically and logically between a creditor who is having security interest over the assets of the Corporate Debtor as against a financial creditor who has stake in the Corporate Debtor's growth, and why inclusion of creditors who only hold security interest over the assets of the corporate debtor as financial creditor would be detrimental to the financial health of the corporate debtor. This paragraph 50.1 is extracted below- 50.1 Keeping the objectives of the Code in view, the position and role of a person having only security interest over the assets of the corporate debtor could easily be contrasted with the role of a financial creditor because the former shall have only the interest of realizing the value of its security (there being no other stakes involved and least any stake in the corporate debtor‟s growth or equitable liquidation) while the latter would, apart from looking at safeguards of its own interests, would also and simultaneously be interested in rejuvenation, revival and growth of the corporate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . We refer to observations made by Hon ble Supreme Court in this very judgment of Anuj Jain (supra) in Para 44.1.5 which reads as follows:- 44.1.5. For taking into comprehension the ratio of Pioneer Urban (supra) and for its application to the question at hand, appropriate it would be to recount the basic principles expounded and explained by a three-judge bench in the case of Haryana Financial Corporation and Anr. V. Jagdamba Oil Mills and Anr. MANU/SC/0056/2002 : (2002) 3 SCC 496 that the observations of the Court in a judgment are always required tio be read in the context in which they appear. This Court has said, - 19. Courts should not place reliance on decisions without discussing as to how the factual situation fits in with the fact situation of the decision on which reliance is placed. Observations of courts are not to be read as Euclid‟s Theorems nor as provisions of the statute. These observations must be read in the context in which they appear. Judgments of courts are not to be construed as statutes. To interpret words, phrases and provisions of a statute, it may become necessary for judges to embark upon lengthy discussions but the discussion is mea ..... X X X X Extracts X X X X X X X X Extracts X X X X
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