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TMI Blog2022 (9) TMI 172X X X X Extracts X X X X X X X X Extracts X X X X ..... e which was filed by both the Appellants herein. The Appellants demanding Corporate Debt against the Respondent/Corporate Debtor had filed an application under Section 7 of IB Code which was registered as CP (IB)No.964/KB/2020. On the date of filing of the application under Section 7 of the IB Code it was admitted position that the Corporate Debtor/Burnpur Cement Limited's Management had already changed in a Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (hereinafter referred to as 'SARFEASI Proceeding'). With effect from 1.10.2019 the Management of the Company was taken over by UV Asset Reconstruction Company Ltd. The said knowledge of the appellants is reflected from the reply given by Corporate Debtor which is at page 64 Volume 1 of the Memo of Appeal. Both the appellants had claimed for alleged corporate debt after almost four years lapse of a so called claim 2. The facts gathered from the Memo of Appeal and record depicts that on 14.04.2014 Prarthana Sales Pvt Ltd, Appellant No.1 and Narsingh Mercantile Pvt Ltd, Appellant No.2 had provided Burnpur Cement Ltd, sole respondent Inter Corporate Deposits in the following terms: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... legal steps regarding the same. To reply letters sent on behalf of the corporate debtor, reminder was also sent by the appellants and without waiting for receipt of special audit report, it appears that the appellants filed joint application under Section 7(1) of the IB Code before the NCLT on 10th August, 2020. Before the NCLT, the appellants asserted that total amount claimed Rs.2,97,82,697/- was inclusive of Rs.2,10,00,000/- Principal amount (Rs. 55 lakh- Prarthana Sales Pvt Ltd, Rs. 50 lakhs-Active Commercial Pvt Ltd and Rs.1.5 crore Nikita Vyapar Ltd and Rs.87,82,687/- being interest charged @ 10% per annum till 31.07.2020. As per the Memo of Appeal on 18.01.2021 the Respondent/corporate Debtor filed an affidavit in reply which was replied by filing of rejoinder on 15.02.2021. Further on 09.05.2021 the Respondent/corporate debtor filed a supplementary affidavit. After hearing the parties and examining the issue as to whether there was an existence of default or not the Learned NCLT finally dismissed the application filed by the appellants by its impugned order dated 13.06.2022 which has been assailed in the present appeal. 6. Learned counsel for the appellants assailing the i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d 15.12.2014 are in verbatim same except change of names of the second party in the agreement and their address. Similarly agreement dated 14.04.2014 is also same. However, this agreement does not contain the facts mentioned in para 5 of aforesaid two agreements. In paragraph 5 of agreement dated 13.10.2014 and 15.12.2014 same fact has been mentioned which is reproduced hereinbelow:- "The Lender company has filed an application for amalgamation of its company named 'Active Commercial Pvt Ltd' into Narsingh Mercantile Pvt Ltd. The re-payment of loan shall be made: a) If the demand is raised by the Lender prior to the order of amalgamation of the company-the repayment of loan shall be made to respective companies from which the loan has been disbursed to the borrower. b) If the demand is raised by the Lender after the order of amalgamation is passed the payment shall be made to the amalgamated companies bank account i.e. in the bank account of Narsingh Mercantile Pvt Ltd. Except contents of only paragraph 5 of aforesaid two agreements is missing otherwise entire contents of two agreements are mentioned in agreement dated 14.04.2014. Further we feel appropriate at this juncture ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... have read all the terms and conditions of this given agreement. (b) They unconditionally agree to abide by the terms and conditions contained in this agreement. (c) The information and financial details submitted by the Borrower to the Lender are true, correct and best of his knowledge. 8. In case of death of the Lender/Borrower, the Loan amount shall be receivable/payable by his legal heir as per the terms and conditions as given in this Loan Agreement. 9. If any provision of this agreement is illegal, invalid or unenforceable for any reason, it will be severed from the remaining provisions which will remain unaffected. IN WITNESS WHEREOF the parties hereto have hereunder set and subscribed their signatures with their respective hands, on the 14th day of April, 2014 year first hereinabove witness, both at Kolkata. 1 Signed by the Borrower Sd/- for Burnpur Cement Ltd 2. Signed by the Lender For Prarthana Sales Pvt Ltd Sd/- for Prarthana Sales Private Limited" "This Loan Agreement is executed on date 15th December, 2014 between BURNPUR CEMENT LIMITED, a Public Limited company incorporated in India under the Companies Act, 1956 bearing CIN:L27104WB1986PLC0408 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... allowed 10 days time from the date of receipt the demand letter from the Lender to repay the loan amount along with interest. 7. The mode of transfer of the Loan amount and shall be made either in NEFT/Net Banking/banking channels or any other mode as mutually agreed between the Lender and Borrower. 8. Both parties represent covenants and warrant to each other that; (a) They have read all the terms and conditions of this given agreement. (b) They unconditionally agree to abide by the terms and conditions contained in this agreement. (c) The information and financial details submitted by the Borrower to the Lender are true, correct and best of his knowledge. 9. In case of death of the Lender/Borrower, the Loan amount shall be receivable/payable by his legal heir as per the terms and conditions as given in this Loan Agreement. 10. If any provision of this agreement is illegal, invalid or unenforceable for any reason, it will be severed from the remaining provisions which will remain unaffected. IN WITNESS WHEREOF the parties hereto have hereunder set and subscribed their signatures with their respective hands, on the 15th day of December, 2014 year first hereinabove ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r by UV Asset Reconstruction Co Ltd under a SARFEASI Proceeding. From the said conduct of the Appellants many things can be inferred, particularly serious doubt regarding the so called lending by the appellants to the corporate debtor can be raised. Besides aforesaid facts which creates serious doubts in respect of the claim raised by the appellants, in the minds of this Tribunal, on going through the impugned order the Court is of the considered opinion that the Learned NCLT has examined several aspects and has reasonably observed that in exercise of summary jurisdiction under the Code it is difficult to conclude that a bona fide financial debt exists. 11. For initiating Corporate Insolvency Resolution Process (CIRP) under Section 7 (4) of the IB Code a duty is cast on the Adjudicating Authority to ascertain the existence of default from the records. Meaning thereby that if there is any difficulty in coming to the conclusion regarding the existence of default the Adjudicating Authority has got no option but to reject the petition filed under Section 7(1) of the IB Code. On examination of the impugned order it is clear that through Learned Adjudicating Authority has taken note of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r which led to seizure of material which showed the assessee i.e., Corporate Debtor had inter alia received an unsecured loan of Rs 2,70,00,000from Prarthna. The assessment order further records that the assessee was asked to produce all details of the loan taken from Prarthana however, the assessee had failed to provide any information. The income tax department on its own investigation unearthed that the directors of Prarthana were Mr. Anand Prakash Kejriwal and Ms Jyoti Kejriwal. Mr. Anand Prakash Kejriwal and Ms. Jyoti Kejriwal were also the directors of Narsingh, Active and Nikita. After noting the above details, the assessment order in para 6.3 (b) notes as under:- It will be appropriate to take notice of the commonly known notorious facts about the modus operandi of converting the unaccounted funds by different companies by taking unsecured loan from willing dubious entities. These entities are mere paper/shell companies having no real business activity and incorporated for the purpose of providing unsecured loan to different beneficiary companies in the form of share capital, unsecured loan, etc in lieu of commission. Further an analysis of bank statement of such companie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o the avoidance of the payment of taxes. The modus operandi adopted by the assesse has been found to be a method of evading taxes being non-genuine transactions without being verifiable. 7.c These are, by nature 'make believe transactions which do not deserve to be accepted as genuine. The truth or genuineness of such transactions must prevail over the smoke screen, created by way pre- meditated series of steps taken by the assessee, with a view to imparting a colour of genuineness and character of commercial nature, to such unsecured loan transactions. 7.d The unsecured loan was taken by the assessee from companies who did not have own fund, any business and physical asset. If we look behind these transactions then it is clear that the sole purpose for which the transactions were done was to generate capital in the business and in that event the assessee has to be made liable to pay taxes which it would have paid but for the arrangement of these transactions. 7.g The assessee has not deliberately produced the lenders who gave unsecured loans to the assessee to stop the further investigation which may result in examination of the bank accounts and book of accounts of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... registered office of both financial creditors is also the same. (vi) No explanation has come forward from the Financial Creditors about the disbursements made by Prarthana on 16.04.2014 and 17.10.2014 which were immediately paid back by Corporate Debtor in a day or two. This factum of receipt and immediate payback has been taken notice by income tax department as "commonly known modus operandi of converting the unaccounted funds by different companies by taking unsecured loan from willing dubious entities". (vii) Another unexplained fact is that even though as per the Financial Creditors' own case, the Corporate Debtor had stopped paying interest from 2015-16 and 2016-17, there is not a single correspondence on record from Financial Creditors alleging default, seeking repayment of their monies back or even checking on status of their outstanding amounts. In other words, even though the default had taken place as far back as 2016-2017, no steps appear to have been taken by Financial Creditors who suddenly took action to seek repayment in the year 2020. This unexplained slumber by the Financial Creditors for over four years does not inspire confidence and is inconsistent with th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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