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TMI Blog2022 (9) TMI 1125X X X X Extracts X X X X X X X X Extracts X X X X ..... ion of Corporate Insolvency Resolution Process has been prayed for was incorporated on 08.08.2012 having its registered office situated at F-99, Ground Floor Okhla Industrial Estate, Phase-Ill, New Delhi-110020. Since the registered office of the respondent corporate debtor is in New Delhi, this Tribunal having territorial jurisdiction over the NCT of Delhi is the Adjudicating Authority in relation to the prayer for initiation of Corporate Insolvency Resolution Process in respect of respondent corporate debtor under sub-section (1) of Section 60 of the Code. 3. The averments made by the applicant in its petition and argued by the Ld. Counsel for the applicant are summarized hereunder: a) The applicant submits that the applicant is a business man running business under the name of M/s. PZF international Noida, which is a partnership firm the applicant is a partner. The applicant adds that M/s. PZF International (Noida) is carrying on the business of manufacturing candies and pan chutney. b) The applicant submits that the applicant by loan agreement dated 06.05.2018 had provided loan of Rs. 80,00,000/- to the corporate debtor for a period of 12 months. The applicant further subm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt petition is not maintainable in the eyes of law as the applicant is a resident of Noida, Uttar Pradesh as is evident i) from the copy of loan agreement dated 06.05.2018, ii) Affidavit supporting application dated 29.07.2021 and iii) from the Part I of the application in the prescribed Form 1, therefore the provisions of the Uttar Pradesh Regulation of Money Laundering Act, 1976 are applicable to the applicant. b) The corporate debtor further submits that as per Section 7 of the Uttar Pradesh Regulation of Money Lending Act, 1976, a lender is required to be registered under this act for the purpose of money lending. The corporate debtor adds that as per Section 10(1) of the Uttar Pradesh Regulation of Money Laundering Act, 1976, no person can carry on the business of money lending, unless he holds a valid certificate of registration. c) The corporate debtor submits that the applicant has failed to determine a proper date of default and has wrongfully mentioned the range of period of default. The corporate debtor adds that the applicant cannot be considered as financial creditor nor the debt can be categorized as financial debt in terms of the definitions of the Code, 2016. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent for registration of the financial creditor as per the Uttar Pradesh Money Lending Act, 1976. To support the contention, the applicant had placed reliance on citations Gauri Shankar and Ors. Vs Kailash Rai [ 1987 SCC online All 755 ] judgement Of Hon'ble Allahabad High Court and Mandubhai Vitthoba Pawar Vs. State of Maharashtra [Crl. W.P. No. 627 of 2015] the Hon'ble Bombay High Court c) The applicant further submits that it is trite in law that as per Section 238 of the Code, 2016, the provisions of the Code have superseding effect on any other laws prevailing. d) The applicant submits that the instant petition is maintainable and above the threshold of Section 4 of the Code, 2016 as the total amount of debt claiming to be outstanding including interest as on April 2021 was Rs. 1,65,53,664/-. The applicant further submits that financial debt would mean and include any loan disbursed against the time value of money along with the interest as per Section 5(8) of the Code, 2016 and therefore, the amount of Rs. 1,65,53,664/- which was due to be paid to the applicant as per the terms and conditions of the Loan Agreement dated 06.05.2018 is inclusive of interest and is th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ority might, at its discretion, decline the request of an applicant to file additional pleadings and/or documents, and proceed to pass a final order. In our considered view, the decision of the Adjudicating Authority to entertain and/or to allow the request of the Appellant Bank for the filing of additional documents with supporting pleadings, and to consider such documents and pleadings did not call for interference in appeal. 9. We find that the applicant in compliance of order dated 17.05.2022 of this Tribunal had cured the defects regarding the signing and authorization of the petition. The applicant had submitted the amended petition under Section 7 of the Code, 2016 duly executed and signed by Mr. Pritam Kumar with authorization letter in the name of Mr. Pritam Kumar. Therefore, we find no force in the corporate debtor's contention as to the maintainability of the present petition on the technical ground. 10. As regard to the corporate debtor's contention of the applicability of the Uttar Pradesh Regulation of Money Lending Act, 1976 to the applicant, we are of the considered view that it is a settled proposition of law that Section 238 of the Code, 2016 provides th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ne as to whether there is substance in the defence and to arrive at the conclusion whether there is default. If the irresistible conclusion by the adjudicating authority is that there is default and the debt is payable, the bogey of arbitration to delay the process would not arise despite the position that the agreement between the parties indisputably contains an arbitration clause." (emphasis added) 12. Therefore, the Insolvency and Bankruptcy Code, 2016 is a special law having an overriding effect on any other law as mandated under Section 238 of the Code. Accordingly, this Adjudicating Authority is not willing to go into the question of determining the applicability of the Uttar Pradesh Regulation of Money Lending Act, 1976 to the applicant. The statutory right of the applicant satisfying the requirements of Section 7 of the Code, 2016 i.e., existence of the debt and default cannot be defeated or taken away on the ground of the applicability the Uttar Pradesh Regulation of Money Lending Act, 1976 to the applicant. Further, the corporate debtor at the time entering into loan agreement dated 06.05.2018 was very well aware of the arrangement and jurisdiction of the applicant, h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng in Jaypee Infratech case, where the Supreme Court held that there needs to be a disbursal against consideration for time value of money even in respect of transactions covered in clauses (a) to (i) of section 5(8): "46. Applying the aforementioned, fundamental principles to the definition occurring in Section 5(8) of the Code, we have not an iota of doubt that for a debt to become 'financial debt" for the purpose of Part II of the Code, the basic elements are that it ought to be a disbursal against the consideration for time value of money. [...] The requirement of existence of a debt, which is disbursed against the consideration for the time value of money, in our view, remains an essential part even in respect of any of the transactions/dealings stated in clauses (a) to (i) of Section 5(8), even if it is not necessarily stated therein. [...] In other words, any of the transactions stated in the said clauses (a) to (i) of Section 5(8) would be falling within the ambit of "financial debt" only if it carries the essential elements stated in the principal clause or at least has the features which could be traced to such essential elements in the principal clause." (Emphasi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... seen, in the case of a corporate debtor who commits a default of a financial debt, the adjudicating authority has merely to see the records of the information utility or other evidence produced by the financial creditor to satisfy itself that a default has occurred. It is of no matter that the debt is disputed so long as the debt is "due" i.e. payable unless interdicted by some law or has not yet become due in the sense that it is payable at some future date. It is only when this is proved to the satisfaction of the adjudicating authority that the adjudicating authority may reject an application and not otherwise." "30. On the other hand, as we have seen, in the case of a corporate debtor who commits a default of a financial debt, the adjudicating authority has merely to see the records of the information utility or other evidence produced by the financial creditor to satisfy itself that a default has occurred. It is of no matter that the debt is disputed so long as the debt is "due" i.e. payable unless interdicted by some law or has not yet become due in the sense that it is payable at some future date. It is only when this is proved to the satisfaction of the adjudicating author ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 02; (d) The recovery of any property by an owner or lessor, where such property is occupied by or in the possession of the corporate debtor." (e) The IB Code 2016 also prohibits Suspension or termination of any license, permit, registration, quota, concession, clearances or a similar grant or right given by the Central Government, Slate Government, local authority, sectoral regulator or any other authority constituted under any other law for the time being in force, on the grounds of insolvency, subject to the condition that there is no default in payment of current dues arising for the use or continuation of the license, permit, registration, quota, concessions, clearances or a similar grant or right during the moratorium period." 23. It is made clear that the provisions of moratorium shall not apply to transactions which might be notified by the Central Government or the supply of the essential goods or services to the Corporate Debtor as may be specified, are not to be terminated or suspended or interrupted during the moratorium period. In addition, as per the Insolvency and Bankruptcy Code (Amendment) Act, 2018 which has come into force w.e.f. 06.06.2018, the provisions of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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