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TMI Blog2025 (5) TMI 580X X X X Extracts X X X X X X X X Extracts X X X X ..... been filed challenging order dated 27.05.2022 passed by the Adjudicating Authority (National Company Law Tribunal), New Delhi, Bench - IV by which order Section 7 application filed by M/s Arun Enterprises - Respondent No.1 herein has been admitted. Aggrieved by which order this appeal has been filed by a Suspended Director of the Corporate Debtor. 2. Brief facts of the case necessary to be noticed for deciding this appeal are: (i) The Corporate Debtor owned a property C-3, Site - C, Surajpur Industrial Area, Greater Noida, Uttar Pradesh. An agreement to sell dated 08.02.2016 was entered between Mr. JPS Chadha and Mr. Arun Dhir of M/s Arun Enterprises for sale of above land for consideration of Rs.3,65,00,000/-. (ii) The Vendor has received an amount of Rs.51,00,000/- from the Vendee, which is noticed in the Agreement to Sell prior to applying for transfer of said property and thereafter the Vendee shall have the right to get the transfer deed of the property executed. Subsequently, another payment was made of Rs.50,00,000/-. (iii) An agreement for cancellation of Sale Agreement dated 25.03.2017 signed by JPS Chadha and Arun Dhir, where JPS Chadha agreed to return payment alo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ween the parties qua returning of the amount. On the basis of record available, it is established that only part payment has been made and still a sum of Rs. 1,31,00000 is due against the corporate debtor. The said fact also stands substantiate from the balance sheet of corporate debtor, wherein the said amount has been disclosed as unsecured loan. 20. In view of the above said discussion, this Tribunal is of affirm view that a Respondent/Corporate Debtor failed to return the amount of Rs. 1,31,00,000/- to the operational creditor and there was no genuine pre-existing dispute between the parties." (viii) Aggrieved by order admitting Section 7 application, this appeal has been filed. 3. When the appeal came for hearing on 15.07.2022, Appellant submitted that the Appellant is ready to deposit amount of Rs.1,31,00,000/-. This Tribunal by order dated 15.07.2022 subject to deposit of Rs.1,31,00,000/- by Demand Draft passed an interim order that no steps shall be taken by the IRP, however, IRP shall ensure that the Corporate Debtor remains a going concern. Order dated 15.07.2022 is as follows: "ORDER (Through Virtual Mode) 15.07.2022: Learned Counsel for the Appellant submits t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erty situate at C-3, Site - C, Surajpur Industrial Area, Greater Noida, Uttar Pradesh. Amount was transferred in the bank account of the Corporate Debtor on 05.02.2016. The Corporate Debtor through its Director JPS Chadha entered into agreement to sell dated 08.02.2016. The Respondent further transferred Rs.50 Lakhs on 11.02.2016 and further Rs.23 Lakhs by wife of one of the partners was transferred in the bank account of the Corporate Debtor. The Corporate Debtor failed to transfer said property in the name of the Respondent, hence, cancellation of sale agreement dated 25.03.2017 was entered which contain a clause that Corporate Debtor agreed to return the money advanced with 2% p.m. interest. JPS Chadha agreed and admitted that he failed to pay instalment due on 20.04.2017, 15.05.2017. Only instalment of an amount totaling to Rs.20 Lakhs on 21.10.2017 and 31.08.2017 were received by the Respondent and post-dated cheques handed over to the Respondent were returned. It is submitted that amount is reflected in the balance sheet of the Corporate Debtor as loan as has been noticed by the Adjudicating Authority. The Corporate Debtor having admitted the amount as loan, financial debt wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... endee. Vendor shall provide all the required set of papers with details of property under consideration as a working unit as required for transfer of property 6. That the Vendee shall have the rights to get the Transfer Deed of the same property executed in his/her favour or in favour of his/her nominee(s) tor which the Vendor has got no objection. 7. That the vendor shall be responsible for all outstanding dues and demands in respect of the said property up to the date of final transfer deed and that all future dues thereafter shall be paid by the Vendee. 8. That the vendor shall hand over the vacant possession of the said property to the vendee at the time of execution of final Transfer Deed. 9. That in case of breach of any clause by the VENDOR aforesaid or tail to get the plot transferred in the name of Buyer/Vendee on his nominee, the VENDEE shall have the right to get the Transfer Deed/ Sale Deed registered through Court of Law after depositing the balance amount of this Agreement to sell. 10. That if the vendor does not execute the Transfer Deed within the given time then he/she has to return the advance money to the Vendee along with interest @2% per month." 9. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... elf pleads that amounts were transferred to the Corporate Debtor against transfer of land and building situate at Surajpur Industrial Area. First two paragraphs of brief synopsis are as follows: "The Petitioner had transferred various amounts in the account of corporate debtor against which corporate debtor had to transfer its land & building situated at SurajPur, Greater Noida, owned by the Corporate Debtor. The corporate debtor also agreed that the amount transferred by the Petitioner would be returned along with an interest of 2% per month if the land was not transferred in the name of Petitioner." 12. In the Section 7 application, the Respondent No.1 has annexed Sale Agreement dated 08.02.2016, Cancellation of Sale Agreement dated 25.03.2017, Extract of the minutes of meeting dated 16.11.2016 and other documents which clearly indicate that the genesis of transaction is the Sale Agreement dated 08.02.2016, as noted above. 13. For a transaction to be treated as financial debt within the meaning of Section 5 Sub-section (8) of I&B Code, the law is well settled. The Hon'ble Supreme Court in "Anuj Jain IRP for Jaypee Infratech Ltd. vs. Axis Bank Limited, (2020) 8 SCC 401" whil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thus transaction for sale and purchase of plot of Corporate Debtor and the amount transferred to the Corporate Debtor was towards part payment of consideration and the mere fact that agreement between the parties contain a stipulation for 2% p.m. interest cannot make the transaction to be a financial debt. 15. Learned counsel for the Appellant has relied on judgment of this Tribunal in "Sandeep Mittal vs. M/s ASREC (India) Ltd. & Ors., Company Appeal (AT) (Ins.) No.37 of 2024" where this Tribunal had occasion to consider nature of transaction where amount was due towards a sale consideration. In the above case, this Tribunal has considered Section 5(8). In the above case also this Tribunal held that application filed under Section 7 by the Financial Creditor was not maintainable since there was not financial debt as there was no disbursement for time value of money. In the above case also the agreement was agreement for sale of assets. In Paras 11, 12, 13 and 14 this Tribunal laid down following: "11. The question as noticed above, which need to be answered, is the nature of transaction, which culminated into Agreement dated 27.11.1990. Whether the Agreement dated 27.11.1990 is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... It is well settled position of law that 'financial debt' means a debt disbursed against consideration for time value and money and includes the transactions as enumerated in sub-clause (8) of Section 5. The 'financial debt', came for consideration before the Hon'ble Supreme Court in large number of cases. We may first notice judgment of the Hon'ble Supreme Court in Pioneer Urban and Infrastructure Ltd. vs. Union of India and ors. -2019) 8 SCC 416. The Hon'ble Supreme Court in the above judgment held that definition of 'financial debt' goes on to state that a "debt" must be "disbursed" against the consideration of time value of money. It was further held that the expression "disbursed" refers to money, which has been paid against the consideration for the "time value of money". In paragraphs 70 and 71 of the judgment, the Hon'ble Supreme Court laid down following: "70. The definition of "financial debt" in Section 5(8) then goes on to state that a "debt" must be "disbursed" against the consideration for time value of money. "Disbursement" is defined in Black's Law Dictionary (10th Edn.) to mean: "1. The act of paying out money, commonly from a fund or in settlement of a deb ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Subject to what is held above, we summarize our legal conclusions: a. There cannot be a debt within the meaning of subsection (11) of section 5 of the IB Code unless there is a claim within the meaning of sub-section (6) of section 5 of thereof; b. The test to determine whether a debt is a financial debt within the meaning of sub-section (8) of section 5 is the existence of a debt along with interest, if any, which is disbursed against the consideration for the time value of money. The cases covered by categories (a) to (i) of sub-section (8) must satisfy the said test laid down by the earlier part of sub-section (8) of section 5; c. While deciding the issue of whether a debt is a financial debt or an operational debt arising out of a transaction covered by an agreement or arrangement in writing, it is necessary to ascertain what is the real nature of the transaction reflected in the writing; and d. Where one party owes a debt to another and when the creditor is claiming under a written agreement/arrangement providing for rendering 'service', the debt is an operational debt only if the claim subject matter of the debt has some connection or correlation with the 'service' su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... judicating Authority committed error in admitting Section 7 application filed by Respondent No.1. 20. We have noticed above that the Appellant offered to deposit Rs.1,50,00,000/- when the appeal was heard and by our order dated 15.07.2022 while granting interim relief, we have permitted deposit of Rs.1,50,00,000/- by the Appellant by way of Demand Draft. In the Rejoinder Affidavit which has been filed by the Appellant, there is a specific averment that Rs.1.5 Crore which has been deposited with this Tribunal has been issued from the personal account of Mr. JPS Chadha. In Para 3 of the Rejoinder Affidavit following is pleaded: "3. That instead of raising its legitimate demand from the suspended director of the Corporate Debtor, the Respondent has unnecessarily dragged the corporate debtor into dispute. It is now pertinent to note herein that the demand drafts amounting to Rs. 1.5 crore which has been deposited with this Hon'ble Tribunal have also been issued from the personal account of Mr. Jatinder Pal Singh Chadha." 21. From the facts on the record it is clear that it is JPS Chadha who entered into agreement dated 08.02.2016 as well as Cancellation Agreement dated 25.03.20 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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