TMI Blog2023 (6) TMI 153X X X X Extracts X X X X X X X X Extracts X X X X ..... he Books of Account, the loan received by the Corporate Debtor at that point of time was Rs.11,03,82,823/-. The limit of Cash Credit Facility was decided as Rs. 14 Crores without following the regulations. The Investigation Report establishes that the disposing of the said loan itself is a violation of Karnataka Souharda Sahakari Act, 1997 and the byelaws of the 1st Respondent s Society. The Special Officer had categorically stated that the reversal of interest waiver, which the Appellant is relying upon to establish their case that the Quantum of Debt is incorrect, is practically inaccurate. Moreover, once the threshold on debt is crossed, the Adjudicating Authority has to admit or reject the Application based on the Provisions of the Code. Time Limitation - HELD THAT:- It was decided that once the threshold is crossed, it is not for the Adjudicating Authority to decide the exact Quantum of Debt , but what has to be examined is whether there is a Debt and Default . The grounds raised by the Company Secretary appearing on behalf of the Appellant that the Company was not in Default , is not supported by any documentary evidence. The Balance Sheet for the year en ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... GMENT [ Per : Shreesha Merla, Member ( Technical ) ] 1. This Appeal is filed by the Appellant who is the Promoter/ Shareholder of the Corporate Debtor under Section 61 of the Insolvency and Bankruptcy Code, 2016 (hereinafter referred to as the Code ), against the Impugned Order dated 06/04/2021, passed by the National Company Law Tribunal, Bengaluru Bench, Bengaluru in C.P.(IB) No. 196/BB/2020, by which Order, the Adjudicating Authority has admitted the Section 7 Application preferred by the 1st Respondent / Financial Creditor / Shree Aashraya Souhard Credit Society Limited. 2. The facts in brief as arrayed in the Company Petition are that the Petitioner / First Respondent is a Co-operative Society registered under the Karnataka Co-operative Societies Act, 1959 and subsequently got registered under Karnataka Souharda Sahakari Act, 1977 and changed its name to Shree Aashraya Souhard Credit Society Limited . The Corporate Debtor is a Company which is engaged in the business of Real Estate and Construction, having few Common Directors with the Petitioner s Society based on which the Petitioner (hereinafter referred to as the Financial Creditor ) had provided Secur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... It is submitted that there is no default on behalf of the Corporate Debtor and the amounts claimed by the Financial Creditor before the Deputy Registrar of Co-operative Societies is disputed on several grounds. The Financial Creditor has failed to give credit against the FDRs and wrongfully debited the accounts of the Corporate Debtor in its books. The statement of accounts of the Corporate Debtor does not speak about the reversal of interest waiver of 2012 and also about debiting interest thereon. It is submitted that the Adjudicating Authority has not adjudicated the amount in default nor has taken note of the fact that the Statutory Authority under the KSS Act is the Competent Authority to determine if any amount is payable. A perusal of Section 44 and Section 42 of the KSS Act show that there is a bar on Jurisdiction of Courts and that the disputes may be decided by the Registrar of Co-operative Societies or referred to an Arbitrator. Whether a particular issue constitutes a dispute under the Act, cannot be called in question in any Court. It is strenuously argued by the Learned Company Secretary that unless the amount in default is determined by the Court o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is contended that there are 6002 deposit holders in the Society, if the request placed by the deposit holders is considered, it prejudices the interest of 5,978 deposit holders who are waiting to receive their deposit money. Further such an adjustment is not permitted under Law, in view of the fact that the 1st Respondent is in Liquidation and therefore the refusal of non-adjustment of FDR, being used as a defense to claim that there is no default, is erroneous. The Demand Notice was issued on 01/03/2018 calling upon the Corporate Debtor to pay the amount, but there was no response. The Application is not barred by Limitation as till December 2017, Respondent No. 1 and 2 were under common control and management. As such, the Notices and Reply Notice exchanged between common Management during year 2016-17 is not of much consequence. The last Payment was made on 04/12/2017 by transferring Rs. 8,32,413/-, to the loan amount of the Corporate Debtor and the acts of the Corporate Debtor by selectively disclaiming the transfer of Mr. Roshan Raikar s payment to manage the Limitation, is totally uncalled for. It is apparent that there is natural fraud in the Society and the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Order dated 28/02/2023, the Interim Resolution Professional ( IRP ) was left with no option but to file an Application for Liquidation vide IA No. 257/2023. It is submitted that subsequent to the approval of such settlement proposal unanimously, on 25/03/2023, the Appellant preferred an IA No. 233 of 2023 and the Adjudicating Authority adjourned the matter, on account of the pendency of the instant Appeal. Assessment : 6. The brief point that falls for consideration in this Appeal is whether the Adjudicating Authority was justified in admitting the Section 7 Application, filed by the Financial Creditor / Shree Aashraya Souhard Credit Society Limited. It is not in dispute that the 1st Respondent s Society was formed by the same set of Directors, who are in control of the Corporate Debtor. It is seen from the Investigation Report that the Society was used as a channel to pool in funds from large number of small investors to fund the financial requirement of the Corporate Debtor. The Corporate Debtor is in the business of Real Estate and Construction and has secured the funds from the general Public through the 1st Respondent / Financial Creditor. The Balance She ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the contention of the Appellant qua the quantum of payment of debt is considered, we are of the earnest view that the same does not fall for consideration before the Adjudicating Authority at the stage of admission of the Application under Section 7 of the Code. The only requirement is that the minimum outstanding debt should be more than the threshold amount provided for under the Code. The actual amount of Claim is to be ascertained by the Resolution Professional after collating the Claims and their verification which comes at a later stage . [Emphasis Supplied] 10. It was decided that once the threshold is crossed, it is not for the Adjudicating Authority to decide the exact Quantum of Debt , but what has to be examined is whether there is a Debt and Default . The grounds raised by the Company Secretary appearing on behalf of the Appellant that the Company was not in Default , is not supported by any documentary evidence. The Balance Sheet for the year ending 31/03/2018 clearly includes the amount due and payable. The total Debt as on 31/03/2020 stood at Rs. 12,09,45,192/- which includes the rebate amount drawn by the Corporate Debtor and the Corporate Deb ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rincipal and Rs. 1,67,86,388 towards interest. Therefore, the case of the Appellant that the Corporate Debtor was not in default , the debt amount was not crystallized , and that the Deputy Registrar of Co-operative Societies should first decide the disputed amount, fails, keeping in view the aforenoted reasons. 14. It is pertinent to mention that the Adjudicating Authority has rejected the Resolution plan, though approved by the CoC, on the ground that it does not satisfy the provisions of Section 29A(G) read with Section 240 A of the Code. This Tribunal in Company Appeal (AT) (CH) (Ins) No. 110 of 2023 dealing with the Impugned Order dated 28/02/2023 in IA No. 192 of 2022 has upheld the Order of the Adjudicating Authority in rejecting the Resolution Plan filed by the Appellant and the Suspended Directors. It passes beyond one s comprehension as to how the Appellant who is assailing the Section 7 Admission Order under the IBC Code has emboldened himself to present the Resolution Plan. 15. For all the aforenoted reasons this Comp Appeal (AT) (CH) (Ins) No. 51 of 2021 is dismissed as devoid of merits . No Order as to Costs. - - TaxTMI - TMITax - Insolvency & Bankru ..... X X X X Extracts X X X X X X X X Extracts X X X X
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