2017 (12) TMI 1798 - Tri - Insolvency and Bankruptcy

Petition Dismissed Due to Lack of Evidence

Smt. Srikanta Sarda Versus M/s. Tansway Marketing Pvt. Ltd.

Smt. Srikanta Sarda Versus M/s. Tansway Marketing Pvt. Ltd. - TMI Issues Involved:1. Whether the respondent company was in existence as on the date of filing this petition and whether this petition is maintainable as its name was struck off from the Company Master Data as allegedRs.2. Whether Exhibit-B is a promissory note as alleged and if so, whether the debt claimed by the petitioner is a financial debt under section 5(8) of IBCRs.3. Whether the petitioner succeeded in establishing the existence of default as per Sec. 7 (4) (2) of IBCRs.4. Reliefs and costs.Detailed Analysis:Issue 1: Existence and MaintainabilityThe respondent argued that the petition was not maintainable as the respondent company was not in existence on the date of filing the petition, supported by Exhibit-R, a Company Master Data dated 10th November 2017. However, Exhibit-A, another Company Master Data dated 16th June 2017, showed the company as active. Furthermore, a resolution dated 20th October 2017 authorized the respondent's counsel to appear before the Tribunal, indicating the company was active on that date. The petition was filed on 1st August 2017, before the resolution date, proving the company was active at the time of filing. Therefore, the contention that the company was not active on the date of filing is without merit, and the petition is maintainable.Issue 2: Nature of Exhibit-B and Financial DebtExhibit-B, alleged to be a promissory note, was not produced in its original form, only a copy was provided. The document, printed on the respondent company's letterhead and signed by its director, lacked an adhesive stamp and did not meet the requirements of a promissory note under Sec. 2(22) of the Indian Stamp Act, 1899. Additionally, there was inconsistency in the petitioner's identification, raising doubts about the document's genuineness. As per the Indian Stamp Act, a promissory note must be stamped if the consideration exceeds Rs. 5000, which Exhibit-B was not. Therefore, Exhibit-B cannot be relied upon as a promissory note or receipt.For a debt to be considered a financial debt under Sec. 5(8) of IBC, it must involve consideration for the time value of money, typically evidenced by interest. Exhibit-B did not stipulate any terms of repayment or interest, failing to meet the criteria for a financial debt. The petitioner did not provide any evidence proving the respondent's liability to repay with interest. Hence, the claim of a financial debt by the petitioner is without merit.Issue 3: Existence of DefaultThe petitioner alleged default based on demand notices (Exhibits C and D) sent to the respondent, which did not elicit any reply. However, the absence of a reply does not constitute proof of default. The petitioner did not produce any record of default, information utility, or bank statements to substantiate the claim. Issuance of a demand notice is not a prerequisite under Sec. 7(1) of IBC, unlike Sec. 9. Therefore, the petitioner failed to prove the existence of default as required under Sec. 7(4)(2) of IBC.Reliefs and CostsGiven the findings on the above issues, the petition does not meet the requirements for initiating the corporate insolvency resolution process. The petitioner failed to establish the existence of a financial debt and default. Consequently, the petition is dismissed, and no relief or costs are awarded.ConclusionThe petition was dismissed as the petitioner failed to prove the existence of a financial debt and default. The respondent company was active at the time of filing the petition, making the petition maintainable, but the lack of sufficient evidence regarding the financial debt and default led to its dismissal.