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TMI Blog2022 (12) TMI 373X X X X Extracts X X X X X X X X Extracts X X X X ..... 3. The Learned Counsel appearing for the Appellant narrated the facts which led to the filing of the Application before the Adjudicating Authority under Section 7 of the I&B Code, 2016. 4. It is submitted that the Appellant is a Sole Proprietorship Company of Sh. Ravinder Singh, who is an Ex-Director of the Corporate Debtor i.e. Kalinga Sponge Iron Limited. The proprietor was inducted as Director of the Corporate Debtor in the year 2003 and continued up till 28.07.2017. During the said period the Appellant Company has advanced unsecured loans to the Corporate Debtor with consent of other Directors and the said advance amount was used by the Corporate Debtor in its usual course of business for commercial purpose. The amounts were repaid from time to time as and when demanded subject to availability of funds. The loans facilitated by the Appellant were repayable on demand by the Corporate Debtor. 5. It is submitted that the Balance Sheet for the Financial Year 2015-16 of the Corporate Debtor reflects the amount of Rs.6,73,86,240/- as outstanding and payable to the Appellant as on 31.03.2016. The said amount has been carried forward to the Financial Year 2016-17, however, due to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... It is submitted that; (1) M/s Hansraj Dhankar, (2) Ravinder Singh (Proprietor) of Ravindra Construction, (3) Shish Pal Solanki, and (4) Amit Kumar Agarwal were the promoters of the Corporate Debtor and held shares of the Company within themselves. The Corporate Debtor was considered as a partnership concern between the four persons. The Corporate Debtor enjoyed credit limits from SBI and Corporation Bank and the Directors had furnished personal guarantees for the limits sanctioned to the Corporate Debtor. While so, the account of the Corporate Debtor with the banks was classified as NPA on 13.02.2013 and the default amount stood at Rs.8,55,05,409/- for which both the Corporate Debtor as well as the Directors / Personal Guarantors were liable. Notice under Section 13(2) of the SARFAESI Act, 2002 was issued on 14.03.2013, and the property was put for sale on multiple times by the Bank. The said auction did not fetch any buyers and last auction of the properties was published on 13.06.2017 for an amount of Rs.21.58 crores. The default amount as on the date of notice stood at Rs.35.88 crores. The Directors / Personal Guarantors were also liable to make good the balance amount in case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... i.e. after release of personal guarantees. 16. It is submitted that the audited balanced sheet of the Appellant as on 31.03.2018, the dues payable stood at Rs.31,57,596/- after adjustment in terms of MoU. However, the Appellant was paid an amount of Rs.32 lacs and an excess of amount of Rs.42,404/- was paid which is receivable. The Appellant failed to disclose the MoU and other documents before the Adjudicating Authority which would establish that the alleged amount has been paid / adjusted in lines with the Agreement / MoU. 17. The Learned Counsel further submitted that the Appellant has chosen to ignore the letter dated 12.04.2018 addressed to the Appellant and the Proprietor confirming settlement of account. The ledger balance relied upon by the Appellant does not show the alleged dues claimed by it. Further, the Balance Sheet of the Respondent for the year ending 31st March 2018 clearly show the unsecured loan of the Appellant stood as Rs.31,57,596/- and the same was squared off by payment of Rs.32 lacs to the Appellant, which cannot be disputed by the appellant after having received the money and being discharged of his personal guarantees from State Bank of India and Corpo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... session of the company, plant, building was handed over to the present Directors. All the four Directors of the Corporate Debtor by Letter dated 28.07.2017 resigned from the Board of Directors of the Corporate Debtor. Thereafter, by Declaration dated 13.04.2018, the applicant along with other three erstwhile Directors has categorically stated that no claims from Mr. Prem Chand Agarwal and his family's members in relation to any matters to Kalinga Sponge Iron Ltd. and that they shall not make any dispute with them in relation to any matter henceforth. Hence, there is a categorical admission that no amount is due and payable. By Letter dated 12.04.2018, the Corporate Debtor has issued a Letter to the applicant, wherein it is stated that based on the Memorandum of Understanding (MOU) dated 22.06.2017 that a sum of Rs.32 Lakh is due and payable by the Corporate Debtor to the applicant towards full and final settlement of all dues. This Letter has been acknowledged by the applicant. However, in course of the earlier, the Counsel for the applicant stated that he denies the authenticity of this Letter. Hence, this cannot be relied upon. In the Balance-Sheet audited for the year 2017-18, i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6. The application was filed on 24.08.2018 15. The applicant has failed to prove that he is entitled to interest on the alleged loan and that it was agreed that corporate debtor shall pay 24% interest P A. No document is filed to support that the alleged amount due is financial loan. Further the date of default is crucial point. The applicant failed to satisfy this tribunal regarding the exact date of default. Hence, the applicant has failed to prove existence of financial loan, interest due, and default. 16. In view of the above discussions, documents on record and after hearing the learned senior Counsel/Counsel at length we are of firm opinion that this petition ought to be dismissed." 22. The Adjudicating Authority categorically held that by letter dated 12.04.2018, the Corporate Debtor has issued a letter to the Appellant, wherein it is stated that based on the Memorandum of Understanding dated 26.02.2017, a sum of Rs.32 lacs is due and payable by the Corporate Debtor to the Appellant towards full and final settlement of all dues. The Adjudicating Authority also observed that the said letter has been acknowledged by the Appellant. However, the Counsel for the Appellan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hares, clearances of book balances, change of signatories, cases and dues, plant operation and dispute resolution etc. Both the parties have affixed their signatures on the MoU and there is no dispute with regard to the terms and conditions of the MoU. From the MoU, it is apparent that under Clause (3) which refers to consideration of the amount fixed as Rs.26 crores for transfer of ownership. It is mentioned that the amount required for OTS is Rs.21 crore and the balance amount of Rs.5 crore to be paid to the outgoing parties in the ratio of 35:30:20:15. As per the MoU, the proprietor of the Appellant stands at Sl. No. 2 in the preamble of MoU and he holds 30% shares in the company and accordingly it was agreed to pay 30% of the balance payment as stated above. 26. The Learned Counsel for the Appellant contend that the Corporate Debtor defaulted in payment of the amount and relied upon the Balance Sheet for the year 2015-16 of the Corporate Debtor. The photo copy of the Balance Sheet annexed at page 144 of Vol. I, it is seen under the category of long-term borrowings the name of the Appellant reflects and the amount shown as Rs. 6,61,16,240/- (subject to corrections since the pho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m of purchase of their shareholdings and balance towards other liabilities whatsoever and howsoever. We also ensure to cordially settle with the banks under One time Settlement Scheme. Yours faithfully, For Kalinga Sponge Iron Ltd. Sd/- Director For Kalinga Sponge Iron Ltd. Sd/- Director" 31. As per the above letter, the outgoing parties confirmed the terms of MoU dated 22.06.2017 and also confirmed the consideration as final settled amounts towards their shareholding and other liabilities. 32. However, the Appellant contend that it issued a demand letter dated 25.06.2018 and 18.07.2018 addressed to the present Directors claiming balance of amount Rs.4,62,92,880/-. In the very same letter, the Proprietor of the Appellant admitted the receipt of amount Rs.32 lacs on 16.04.2018. In response to the letter dated 25.06.2018, the Corporate Debtor vide its reply dated 14.07.2018 addressed to the Proprietor of the Appellant stating that the balance amount claimed by it do not contain any account ledger substantiating the balance outstanding and requested to provide the year wise ledger of last 5 years of both the accounts i.e. the Appellant and the Proprietor (Mr. Ravinder ..... X X X X Extracts X X X X X X X X Extracts X X X X
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