Applicant's claim rejected by NCLT Chennai, shareholder status upheld. RP acted within duties. Emphasis on financial statements.

The National Company Law Tribunal (NCLT), Chennai, dismissed the Applicant's claim to be admitted as a Financial Creditor, determining that the Applicant was a shareholder based on documentary evidence. The Tribunal found no valid transfer of shares to the Appellant and concluded that the Resolution Professional (RP) acted within their duties. The Tribunal emphasized the importance of financial statements filed with the RoC and dismissed the appeal, upholding the Adjudicating Authority's decision without costs.

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Issues Involved:
1. Whether the claim of the Applicant is required to be admitted in the capacity as a Financial Creditor.
2. Whether the shares were duly transferred to the Appellant.
3. Whether the Resolution Professional (RP) acted beyond his duties.
4. Whether the documentary evidence supports the Appellant's claim.

Summary:

Issue 1: Financial Creditor Status
The National Company Law Tribunal (NCLT), Chennai, dismissed the Application of M/s SMS Foundation and Investment LLP, observing that the Applicant's claim should not be admitted as a Financial Creditor. The Loan Agreement dated 27.12.2019 converted Rs.16.00 Crores into a loan with 15% interest. Despite disbursing Rs. 12,94,04,499/- to the Corporate Debtor, the Applicant's partners were listed as shareholders in the Corporate Debtor's books. The Applicant did not take steps under Section 59 of the Companies Act, 2013, for rectification. The ledger showed a balance payable as 'NIL' as of 31.03.2020, leading to the conclusion that the Applicant was a shareholder.

Issue 2: Transfer of Shares
The Appellant argued that shares were never duly transferred under the law, citing the absence of signed Share Transfer Deeds, unpaid Stamp Duty, and no Transfer entry on the Share Certificate. The Tribunal noted that the original Share Certificates were in the Appellant's possession, with endorsements dated 17/12/2019. MGT-7 confirmed the transfer of 18,60,000 shares to the Appellant's partners. The Tribunal found no evidence of a Board Meeting revoking the MoU dated 02/08/2019, and the amounts infused were considered an investment to be converted into equity.

Issue 3: Role of Resolution Professional (RP)
The Appellant claimed that the RP acted 'ultra vires' by adjudicating claims, but the Tribunal held that the RP had rightly rejected the claim based on documentary evidence. The RP's duty to verify claims under Regulation 13 of the CIRP Regulations 2016 does not constitute an adjudicatory function.

Issue 4: Documentary Evidence
The Tribunal emphasized the greater evidentiary value of Financial Statements filed with the RoC over internal documents like ledger statements. The Loan Agreement dated 27/12/2019 did not mention the MoU dated 02/08/2019. The Tribunal found no evidence in the Auditor's Report or Books of Accounts reflecting the claim amount as an outstanding loan. The Appellant's failure to take steps under Section 59 of the Act, despite knowing about the share transfer, weakened their position.

Conclusion:
The Tribunal dismissed the appeal, affirming that the documentary evidence established the Appellant's status as a shareholder and not a Financial Creditor. The order of the Adjudicating Authority was upheld, and the appeal was dismissed with no costs. Connected pending Interlocutory Applications were closed.

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