TMI Blog2022 (9) TMI 1125X X X X Extracts X X X X X X X X Extracts X X X X ..... icant financial creditor is entitled to move the application against the corporate debtor in view of admitted outstanding financial debt and default of the same by the corporate debtor. In terms of Section 7 (5) (a) of the Code, the instant petition stands admitted - Petition admitted - moratorium declared. - Company Petition No. (IB)-406/ND/2021 - - - Dated:- 5-9-2022 - Dharminder Singh , Member ( J ) And K. K. Singh , Member ( T ) ORDER Per Sh Dharminder Singh , Hon ble Member ( Judicial ) The instant petition is filed by Mr. Pramod Kumar ('Applicant') under Section 7 of the Insolvency and Bankruptcy Code, 2016 (for brevity 'the Code') read with rule 4 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016 (for brevity 'the Rules') with a prayer to trigger Corporate Insolvency Resolution Process in respect of respondent M/s. Newcon Engineers Private Limited ('Corporate Debtor') for default in repayment of financial debt of Rs. 1,65,53,664/- (Rupees One Crores Sixty Five Lakhs Fifty Three Thousand Six Hundred Sixty Four Only). 2. The Respondent Company M/s. Newcon Engineers Private Limited ('c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the respective dates. The applicant adds that on depositing the same to the bank, the cheques were dishonored for the reasons of funds insufficient' in the corporate debtor's bank account. e) The applicant in Part-IV of the Form had claimed the financial debt of Rs. 1,65,53,664/- in default and date of default as 03.12.2019 i.e., when the corporate debtor failed to pay the entire amount even after termination of the agreement dated 06.05.2018. f) The applicant has placed the following document on record to prove its claim: i. Copy of the loan agreement dated 06.05.2018 between the applicant and the corporate debtor. ii. Copy of the board resolution dated 14.05.2018 of the corporate debtor, authorizing corporate debtor to borrow loan from the applicant. iii. Copy of demand notice sent to the corporate debtor dated 17.02.2021. iv. Copy of the Bank Account Statements from 06.05.2018 to January 2020 reflecting the payments by corporate debtor to applicant. v. Computation chart total principal and interest amount due to the financial creditor. 4. The defence placed by the corporate debtor in the reply and submissions made and argued by th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... debtor had placed reliance on citation of Hon'ble NCLAT judgement dated in 20.09.2019 in Palogix Infrastructure Private Limited vs. ICICI Bank Limited. 5. The applicant filed rejoinder to the reply submitted by the corporate debtor. The submissions of the applicant in the rejoinder are summarized here under:- a) The applicant submits that the applicant has provided a Loan of Rs. 80,00,000/- to the Corporate debtor through a loan agreement dated 06.05.2018 for a specific purpose i.e. to utilize kerbing weight, PQC, and DLC work, Stone pitching, toe wall, Drain chute at the KME Expressway project and the same is evident from the Board resolution dated 14.05.2018 issued by the Corporate Debtor. The applicant adds that the loan agreement was executed between the parties in New Delhi on 06.05.2018. b) The applicant submits that applicant is not governed by Uttar Pradesh Money Lending Act, 1976 and that Clause 3(2) of The Uttar Pradesh Regulation of Money Lending Act, 1976 ( Act ) defines the term Business of money lending and section 3(6) defines the term money lender. The applicant further submits that the applicant does not come under the definition of money lender ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... We have heard Ld. Counsel for both the parties and perused the averments made in the petition, reply, rejoinder and written submissions filed by the parties. The relevant documents annexed with the respective submissions have been examined meticulously. 7. Before considering the issues involved and going into the merits of the case, the corporate debtor had raised the question on the maintainability of the instant petition on the technical ground as to the authorisation of signatory of the petition and date of default mentioned in the petition. 8. The Hon'ble Supreme Court of India in Dena Bank vs C. Shivakumar Reddy Anr [Civil Appeal No. 1650 of 220 dated August 04, 2021] held that:- 144. There is no bar in law to the amendment of pleadings in an application under Section 7 of the IBC, or to the filing of additional documents, apart from those initially filed along with application under Section 7 of the IBC in Form-1. In the absence of any express provision which either prohibits or sets a time limit for filing of additional documents, it cannot be said that the Adjudicating Authority committed any illegality or error in permitting the Appellant Bank to file addit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... law that the IB Code shall override all other laws as provided under Section 238 of the IB Code needs no elaboration. In that view, notwithstanding the fact that the alleged corporate debtor filed an application under Section 8 of the 1996 Act, the independent consideration of the same dehors the application filed under Section 7 of IB Code and materials produced therewith will not arise. The adjudicating authority is duty bound to advert to the material available before him as made available along with the application under Section 7 of IB Code by the financial creditor to indicate default along with the version of the corporate debtor. This is for the reason that, keeping in perspective the scope of the proceedings under the IB Code and there being a timeline for the consideration to be made by the adjudicating authority, the process cannot be defeated by a corporate debtor by raising moonshine defence only to delay the process. In that view, even if an application under Section 8 of the 1996 Act is filed, the adjudicating authority has a duty to advert to contentions put forth on the application filed under Section 7 of IB Code, examine the material placed before it by the finan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . (3% p.m.) levied on the outstanding principal amount has been in default by the corporate debtor. Therefore, we are satisfied that the amount of financial debt in default is above the pecuniary threshold limit of Rs. 1 crore as envisaged under Section 4 of the code and hence the instant petition is maintainable. 14. As regard to the corporate debtor's contention regarding debt being not 'Financial Debt' and applicant not being 'Financial Creditor' as defined under Section 5(8) and Section 5(7) of the Code, 2016 respectively, the question whether the alleged transaction can be treated as financial debt or not can be analyzed from on the nature and purpose of the loan agreement dated 06.05.2018 and the supporting documents annexed therewith. 15. Further Section 5(7) and Section 5(8) of the Code, 2016 define Financial Creditor and Financial Debt, which are as under: Section 5(7) Financial Creditor means any person to whom a financial debt is owed and includes a person to whom such debt has been legally assigned are transferred to. Section 5(8) Financial Debt means a debt along with interest, if any, which is disbursed against the consideration ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... @ 3% per month. The interest charged at 3% per month on the amount disbursed, is the product of the instant transaction, which undoubtedly constitutes the time value of money and have commercial effect of borrowing and therefore the alleged transaction is fully covered by the definition of Financial Debt as provided under Section 5(8) of the Code, 2016 and the applicant being Financial Creditor as provided under Section 5(7) of the Code, 2016. 19. The Hon'ble Supreme Court in the matter of Innoventive Industries Ltd. vs. ICICI Bank Anr (2018) 1 SCC 407, held as follows:- 29. The scheme of Section 7 stands in contrast with the scheme under Section 8 where an operational creditor is, on the occurrence of a default, to first deliver a demand notice of the unpaid debt to the operational debtor in the manner provided in Section 8(1) of the Code. Under Section 8(2), the corporate debtor can, within a period of 10 days of receipt of the demand notice or copy of the invoice mentioned in sub-section (1), bring to the notice of the operational creditor the existence of a dispute or the record of the pendency of a suit or arbitration proceedings, which is pre-existing - i.e. be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /s. Newcon Engineers Private Limited shall be initiated. 21. The applicant in Part III of its petition proposed the name of Mr. Sanyam Goel proposed Interim Resolution Professional, having Registration Number IBBI/IPA-002/IP-N00138/2017-2018/10397. Mr. Sanyam Goel, having registration number IBBI/IPA-002/IP-N00138/2017-2018/10397 and email - id goelsanyam@gmail.com is appointed as an Interim Resolution Professional for corporate debtor. The consent of the proposed interim resolution profession in Form-2 is taken on record. 22. We also declare moratorium in terms of Section 14 of the Code. The necessary consequences of imposing the moratorium flows from the provisions of Section 14 (1) (a), (b), (c) (d) of the Code. Thus, the following prohibitions are imposed: (a) The institution of suits or continuation of pending suits or proceedings against the corporate debtor including execution of any judgment, decree or order in any court of law, tribunal, arbitration panel or other authority; (b) Transferring, encumbering, alienating or disposing of by the corporate debtor any of its assets or any legal right or beneficial interest therein; (c) Any action to foreclose ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ount however is subject to adjustment towards Resolution Process cost as per applicable rules 26. The Interim Resolution Professional shall perform all his functions contemplated, inter-alia, by Sections 15, 17, 18, 19, 20 21 of the Code and transact proceedings with utmost dedication, honesty and strictly in accordance with the provisions of the Code, Rules and Regulations. It is further made clear that all the personnel connected with the Corporate Debtor, its promoters or any other person associated with the Management of the Corporate Debtor are under legal obligation under Section 19 of the Code to extend every assistance and cooperation to the Interim Resolution Professional as may be required by him in managing the day to day affairs of the 'Corporate Debtor'. In case there is any violation committed by the ex-management or any tainted/illegal transaction by ex-directors or anyone else, the Interim Resolution Professional would be at liberty to make appropriate application to this Tribunal with a prayer for passing an appropriate orders. The Interim Resolution Professional shall be under duty to protect and preserve the value of the property of the 'Corporat ..... X X X X Extracts X X X X X X X X Extracts X X X X
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