TMI Blog2022 (6) TMI 1324X X X X Extracts X X X X X X X X Extracts X X X X ..... ctness of assertion of the applicant to establish the alleged loan amount as financial debt - the evidence as produced by the applicant are not satisfactory to prove the nature of claim as financial debt and cannot be safely relied on. Since the present application has been filed under Section 7 of the IBC, therefore, it can be said that the applicant claimed that a decree is a financial debt irrespective of its genesis i.e., the substratum on which the decree is adjudicated and became due but when we shall read the definition of claim, debt, financial debt and financial creditor then we find that the decree is not included as an financial Debt unless the claim on which decree is adjudicated is a financial debt, of course definition of Creditor include decree holder but definition of financial debt does not include any decree holder without ascertaining the true nature of the claim basis on which decree is adjudicated. This Authority is not a forum for recovery of amount and we are clearly of the view that the applicant is utilizing the process of IBC to facilitate recovery whereas the primary focus of IBC is to ensure revival and continuation of the corporate debtor, and to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was also dishonored upon presentation. c) Consequently, applicant preferred a summary suit being Civil Suit (Original Side) 66 of 2016 under Order XXXVII of the Code of Civil Procedure 1908 before the Hon'ble High Court of Delhi at New Delhi on the 01.02.2016 for recovery of Rs. 4,38,00,617/- along with admitted interest @ 24% from 01.02.2016 onwards. Another compromise deed dated 23.12.2016 was executed between the parties wherein the corporate debtor undertook to pay Rs. 2,38,61,907/- by way of two postdated cheques which were also dishonored upon presentation. However, the corporate debtor made payment of piecemeal amount Rs. 25,00,000/- on 06.01.2018 out of the total outstanding amount of Rs. 4,38,00,617/- and interest which is outstanding. d) CS(OS) 66 of 2016 preferred by the applicant is decreed in his favor vide judgement dated 11.01.2018 for a sum of Rs. 4,38,00,617/- along with interest @ 24% per annum from 01.02.2016 along with pendente lite and future interest till date of actual payment of the full amount after deducting the payment of Rs. 25,00,000 paid by the corporate debtor on 06.01.2018. Exemplary Cost of INR 5,00,000/- was imposed in the said o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r motive has filed the section 7 petition on 13.12.2021.. 5. The applicant submitted a rejoinder wherein averments made by the corporate debtor in the reply were denied and it was stated that- a. The present application falls within the jurisdiction of this Hon'ble Tribunal and the same is evident from contents of the petition. b. Corporate debtor has fraudulently shown the applicant as a shareholder and FIR No. 1049/2021 before P.S. Beta 2 Greater Noida has been filed in relation to the aforesaid. c. Corporate debtor has never disputed the due amount and hence the present case is fit for initiation of CIRP. The claim of applicant has fructified unto the final decree dated 11.01.2018 and a fresh right has accrued to the Financial Creditor to recover the amount of the Final Decree. Reliance was placed by the applicant on the judgment passed by the Hon'ble Supreme Court in the case of Dena Bank (Now Bank of Baroda) Vs. C. Shivakumar Reddy, Civil Appeal No. 1650 of 2020 dated 04.08.2021 wherein it was held that- 143... Moreover, a judgment and/or decree for money in favour of the Financial Creditor, passed by the DRT, or any other Tribunal o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ancial 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. (Emphasis Supplied) 9. With reference to the Applicant's reliance on the judgment passed by the Hon'ble Supreme Court in the case of Dena Bank (Now Bank of Baroda) Vs. C. Shivakumar Reddy, Civil Appeal No. 1650 of 2020 dated 04.08.2021, we are of the view that the in Dena Bank case (supra), the facts of the case was that- i. the financial creditor had relied on the recovery certi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the applicant vide loan agreements dated 24.02.2010 and 31.03.2010 involves time value of money or have commercial effect of borrowing to bring the alleged loan advances within the ambit of definition of Financial Debt therefore, doesn't qualify to be a financial debt as per the definition of financial debt in Section 5(8) of the IBC. The applicant failed to provide the financial statements, original loan agreements or any other document evidencing the disbursement of debt. The only document on which the appellant relies his case is the copy of the order dated 11.01.2018 in CS(OS) 66 of 2016. 14. We are of the view that as per sub-section (7) of Section 5 of the Code, only such creditor could be the 'financial creditor' of the corporate debtor to whom a 'financial debt' is owed by the corporate debtor; and, as per sub-section (8) of Section 5 of the Code, the key requirement of a financial debt is 'disbursal against the consideration for the time value of money', which includes the events or modes of disbursement as enumerated in sub-clauses (a) to (i) of Section 5(8) of the code. In the case before us, the appellant has not disbursed any debt aga ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... definition does not shows that the 'Decree Holder' means a 'Financial Creditor' or an 'Operational Creditor'. The words financial creditor is defined under section 5(7) of IBC Code and the same is quoted below: Financial Creditor 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; Operational Creditor means a person to whom an operational debt is owed and includes any person to whom such debt has been legally assigned or transferred. Section 5(8) of IBC, 2016 Financial Debt means a debt alongwith interest, if any, which is disbursed against the consideration for the time value of money and includes- (a) money borrowed against the payment of interest (b) any amount raised by acceptance under any acceptance credit facility or its de-materialised equivalent; (c) any amount raised pursuance 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 cap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... decree holders as a separate class, recognized by the virtue of the decree held by them. Further, this view of the Honourable High Court was further upheld by the Honourable Supreme Court while dismissing the Special Leave to Appeal (C) No. 6104/2022 by order dated 11.04.2022. 22. And when we shall consider the case in hand in the light of aforesaid decision then we are of the considered view that a decree-holder does not come within the definition of Operational Creditor, therefore, the present application is not maintainable 23. We have clearly noted that this Authority is not a forum for recovery of amount and we are clearly of the view that the applicant is utilizing the process of IBC to facilitate recovery whereas the primary focus of IBC is to ensure revival and continuation of the corporate debtor, and to protect it from corporate death. 24. Needless to say, that an application under Section 7 of the Code is maintainable if the financial debt is proved to be due and there is default. In the light of detailed qualitative and quantitative discussions and also this Tribunal keeping in mind the entire conspectus of the attendant facts and circumstances of the instant c ..... X X X X Extracts X X X X X X X X Extracts X X X X
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