TMI Blog2021 (1) TMI 1191X X X X Extracts X X X X X X X X Extracts X X X X ..... pparent from page no 218 and 220 of the application (Exhibit-H). The enforceability of a MoU depends upon the principle governing legislation, I.e. the Contract Act. The Petitioner, admittedly has shown the date of default as the date of filing of the commercial suit number 782 of 2017 filed somewhere in July 2017 as reflected from Form I, part IV at page no 6 of the Application. It is to be mentioned herein that, the word Creditor , Debt , and default are used at many places in Insolvency Code and hence are very important. Default means non-payment of debt when whole or any part of instalment of the amount of debt has become due and payable and is not paid by the debtor or the Corporate Debtor, as the case may be, Section 3(12) of the IB Code. Therefore, the date of filing of the commercial suit i.e. dated 12.07.2017, cannot be, in any manner be called as date of default, as per IB Code. Thus, due to want of date of default , the petition is bad in eye of law and not maintainable. On going through the records and documents produced by both the sides it is amply clear that, the arrangement between the parties are in the nature of business sharing and there is no 'f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d to the applicant, annexed to the application at page No. 226 (Ex. I) reveals that, consequent upon the alleged Memorandum of Understanding (MoU) (page 218-225 - Ex. H) dated Nil was entered into between the applicant and respondent, the applicant had disbursed total sum of ₹ 10.00 crores to the respondent, during the period between 03.06.2011 and 16.07.2011, as reflected in the letter dated 22.07.2011 (page 226 - Ex. I) on the following terms and conditions: - the respondent will develop the property at S.V. Road, Vile Parle (West), Mumbai; the applicant shall assist the respondent for marketing/financial requirement of the project; the respondent is expected to get a clarification from local City Civil Court for the case filed by minority shareholders that by the preceding month the respondent can develop the property itself. in addition of ₹ 10.00 crores already paid by the applicant, a further payment of ₹ 15.00 crores shall be made within seven days from the date of such clarification (as per clause 3 above), after a certified copy of the order is given to the applicant; to enable the respondent to further progress in the project, a sum of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0.2011 (page 228-229 Ex. J) that... in consideration of the petitioner providing marketing services and marketing of the project as well as financing-of costs to be incurred for development of the said property as mentioned above together with interest, petitioner shall pay 50% of the sale realisation to the respondent in full and final settlement pro rata basis of the finance provided by the applicant together with interest and for marketing services and marketing advice (sic). That, this will be in full and final settlement of the finance provided, interest and marketing services and marketing advice. That, the said letter further stipulates that the amount receivable by the respondent after deducting the payment already received from the applicant, the amount available to the respondent will be less than ₹ 1000.00 (Rupees thousand crores only) and in case, for any reason, if the amount receivable to the respondent is less than ₹ 1000.00 crores, in that event to cover the short fall, the amount payable to the applicant towards financing and services will be reduced by the amount of the shortage. That, in case the respondent terminates/defers this marketing arrang ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from disposing of, transferring, alienating, encumbering or parting with possession or creating any third party rights in the suit lands and a direction to the corporate debtor herein to furnish security in a sum of money; that, the terms on which the petitioner provided finance for the development of the said project and marketing and other assistance were broadly discussed between the officers of the petitioner and the corporate debtor; that, the petitioner had agreed and confirmed that a sum of ₹ 1000.00 crores would be provided to the corporate debtor and the same would be released in the manner as and when required by the corporate debtor; that, it was further settled that an amount of ₹ 300.00 crores would be provided immediately by the petitioner to the corporate debtor so as to settle the dues of various creditors. That, the said condition was also highlighted in the letter issued by the corporate debtor on 02.04.2011 in response to the letter of Intent received from the petitioner; That, various negotiations took place between the corporate debtor and the petitioner and a rough draft of the MoU dated nil (page 218-225 Ex. H) was prepared for discuss ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... limitation; that, affidavit verifying the petition is not in accordance with the NCLT Rules, 2016; that, no default under I B Code, 2016; that, the petitioner is not a financial creditor under the Insolvency and Bankruptcy Code, 2016; that, the debt claimed is not a financial debt; that, the petitioner has produced order passed by the Hon ble High Court of Bombay, however, intentionally not produced the Commercial Suit as well as the Counter Claim filed by the corporate debtor. Findings 10. Heard both sides at length as also perused the documents annexed with application and the reply filed by the respondent. 11. It is the duty of the Adjudicating Authority to decide in conformity with the pleadings and the proofs i.e. to say jus decere , and non jus dare to administer the justice and not to make the law. 12. It is pertinent to mention that the entire claim is based on a MoU dated nil (Ex. H page 218-225). Itisa universally settled law that decisions are taken by the Adjudicating Authority on the basis of documents produced by both the sides. The so called MoU dated nil does not contain vital information like date of execution of the document, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the conditions of Contract as per the Contract Act, same cannot be enforced. However, even in the above situation, person has the right to approach to the Court on the basis of: Principles of promising estoppel and Equity (Motilal Padampat Sugar Mills Co Ltd. v/s State of Uttar Pradesh [1979 SC 621]) However, the MoU dated nil Exhibit H, so relied upon by the petitioner, lacks the basic ingredients/conditions as said above and laid down under Contract Act, as such not enforceable in the eyes of law. Further, the petitioner claiming himself to be a financial Creditor and also relied upon the Letter of Intent dated 03.06.2011, Annexure F. Usually the letter of intent outlines the chief terms of a prospective deal. A Letter of Intent is a document outlining the intentions of two or more parties to do business together; it is often non-binding unless the language in the documents specifies that the companies are legally bound to the terms. While going through the Letter of Intent dated 03.06.2011, ANNEXURE F page 215, no where it is worded / speaks about disbursement of loan or the date of disbursement. For the sake of convenience, the contents of letter of inte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r , means any person to whom a financial debt is owed and includes a person to whom such debt has been legally assigned or transferred to; and it may further be money that is borrowed or raised in any of the manners prescribed In Section 5(8) or otherwise, as Section 5(8) is an inclusive definition. Further, being a Financial Creditor, has to prove that there is default on the basis of solid documents, or information in an Information Utility , that is easily verifiable. 21. However, the Petitioner, admittedly has shown the date of default as the date of filing of the commercial suit number 782 of 2017 filed somewhere in July 2017 as reflected from Form I, part IV at page no 6 of the Application. It is to be mentioned herein that, the word Creditor , Debt , and default are used at many places in Insolvency Code and hence are very important. Default means non-payment of debt when whole or any part of instalment of the amount of debt has become due and payable and is not paid by the debtor or the Corporate Debtor, as the case may be, Section 3(12) of the IB Code. Therefore, the date of filing of the commercial suit i.e. dated 12.07.2017, cannot be, in any manner be called ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cant, it can be easily inferred that, applicant has admitted that the amount has been paid to the Corporate Debtor as advance for marketing/ financial requirements of the project so undertaken by the Corporate Debtor. Apart from other terms as reflected in letter dated 22.07.2011 (Exhibit I page no 226), it is to be remembered that the advance amount paid cannot be considered as 'Financial debt' or 'Operational debt'. On going through the records and documents produced by both the sides it is amply clear that, the arrangement between the parties are in the nature of business sharing and there is no 'financial debt'. 26. On perusal of the record it is found that, Commercial Suit No. 782 of 2017, filed somewhere in July, 2017, is pending for adjudication before Hon'ble High Court of Mumbai. It is also a matter of record and admitted fact that, a counter claim is filed by the respondent in Commercial Suit No. 782 in the Hon'ble High Court of Bombay on 18.05.2018 which prima facie shows that there is a pre-existing dispute between the parties. It is also a matter of record that the petitioner has sought injunction in the Commercial Suit restraining th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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