2021 (1) TMI 1238 - Tri - Insolvency and Bankruptcy

Application Denied: Lack of Evidence & Status as Creditor

Surinder Kumar Singal Versus Aarkay Innovations Limited

The Tribunal rejected the application due to insufficient evidence of a financial contract and the failure to establish the petitioner's status as a ... Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial creditors - existence of debt and dispute or not - HELD THAT:- The petitioner has failed to establish that the Unsecured Loan he has granted falls within the scope of “Financial Debt” in the absence of any Loan Agreement/board Resolution setting out the terms & conditions of the agreement. Also, we shall not go into the question of whether any amount is due from the Corporate Debtor to the Petitioner or not here and shall only limit us to the issue that whether the petitioner has fulfilled the characteristics of a “Financial Creditor” as defined under Section 7 of the Code or not. Due to the insufficient evidence/documents provided by the petitioner in the present case, this application is hereby rejected. Issues Involved:1. Jurisdiction of the Tribunal.2. Existence of Financial Debt.3. Default in Payment.4. Financial Contract.5. Petitioner's Status as Financial Creditor.Detailed Analysis:1. Jurisdiction of the Tribunal:The Tribunal established jurisdiction based on the incorporation details and registered address of the Corporate Debtor, Aarkay Innovations Limited, which is within the Chandigarh Bench's purview.2. Existence of Financial Debt:The petitioner, Surinder Kumar Singal, claimed to have provided unsecured loans totaling Rs. 1.95 crores to the Corporate Debtor. The loans were advanced in two parts: Rs. 20 lacs and Rs. 1.75 crores. The petitioner provided evidence of these loans through balance sheets, statements of interest, and Form 26AS, which showed TDS deductions on interest paid by the Corporate Debtor.3. Default in Payment:The petitioner asserted that the Corporate Debtor defaulted on interest payments post-30.09.2018. A demand notice was issued on 21.01.2019, with the last repayment date set as 10.02.2019. Despite receiving the notice, the Corporate Debtor failed to repay, leading to the petition.4. Financial Contract:The Corporate Debtor argued that there was no formal financial contract or board resolution documenting the terms of the loan, including interest rates and repayment schedules. The Tribunal noted the absence of such a contract, which is crucial for establishing the 'time value of money' and thus a financial debt under the Insolvency and Bankruptcy Code (IBC).5. Petitioner's Status as Financial Creditor:The Tribunal examined whether the petitioner qualified as a financial creditor under Section 7 of the IBC. The Corporate Debtor contended that the petitioner's contribution was part of a promoter's obligation and not a financial debt. The Tribunal referenced precedents from the National Company Law Appellate Tribunal (NCLAT) and concluded that without a financial contract, the petitioner's claim did not meet the criteria for a financial debt.Conclusion:The Tribunal rejected the application due to insufficient evidence of a financial contract and the failure to establish the petitioner's status as a financial creditor under the IBC. The judgment emphasized the necessity of formal documentation to substantiate claims of financial debt in insolvency proceedings.