TaxTMI 
TaxTMI 
2017 (9) TMI 1130
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.... ordered moratorium with further order to appoint an Insolvency Resolution Professional and passed consequential directions. 2. Learned Counsel for the Appellant-Corporate Debtor assailed the impugned order mainly on the following grounds:- (i) The application filed by Respondent under Section 7 is defective and not complete as it was not accompanying the documents, as mandated by sub-section (3) of Section 7 of the 'I & B Code'. (ii) The application under section 7 is time barred, as the debt claimed related to the years 2011, 2012 and 2013. (iii) That the 'default of debt' as claimed by Respondent has not been admitted by the Corporate Debtor and (iv) That the Respondent is not a 'Financial Creditor', but an Investor. 3. Learned counsel for the appellant submitted that an application by a 'Financial Creditor' under Section 7 can only be filed when it is furnished with the documents provided under sub-section (3) of Section 7 and none other, namely (a) a record of the default as recorded with the information utility (b) Such other record or evidence of default as may be specified. 4. The expression "such other record of evidence of defaul....
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....d under sub-section (8) of Section 5. The debenture certificates were purchased by Respondent only by way of an investment, and do not come within the meaning of 'financial debt'. 10. Learned Counsel for the appellant also placed reliance on definition of "debt" as defined under sub-section (11) of Section 3 of the 'I & B Code'. It was further contended that there is pendency of proceedings between the parties as the 'Financial Creditor' has already invoked arbitration against the 'Corporate Debtor' for the same cause of action which is an admitted fact. 11. In reply Learned Counsel appearing on behalf of the respondent submitted that in absence of the Regulations framed by the Board, the statutes (I & B Code) cannot be made ineffective, having come into force since 15th December 2016. Reliance was also placed on Insolvency and Bankruptcy (Adjudicating Authority Rules, 2016) (hereinafter referred to as Adjudicatory Rules) framed by the Central Government, under section 239 of the I & B Code'. 12. Learned Counsel for the respondent submitted that the Balance Sheet of 'Corporate Debtor' was noticed by Learned Adjudicating Authority, befo....
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....editor either by itself or jointly with other financial creditors may file an application for initiating corporate insolvency resolution process against a corporate debtor before the Adjudicating Authority when a default has occurred. Explanation. -For the purposes of this sub-section, a default includes a default in respect of a financial debt owed not only to the applicant financial creditor but to any other financial creditor of the corporate debtor. (2) The financial creditor shall make an application under sub-section (1) in such form and manner and accompanied with such fee as may be prescribed. (3) The financial creditor shall, along with the application furnish- (a) record of the default recorded with the information utility or such other record or evidence of default as may be specified; (b) the name of the resolution professional proposed to act as an interim resolution professional; and (c) any other information as may be specified by the Board. (4) The Adjudicating Authority shall, within fourteen days of the receipt of the application under sub-section (2), ascertain the existence of a default from the records of an information utility or on the basis of ....
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.... thereto. Part V of Form-1 deals with particulars of 'Financial Debt' (documents, record and evidence of default), as quoted below: - "PART V PARTICULARS OF FINANCIAL DEBT [ DOCUMENTS, RECORDS AND EVIDENCE OF DEFAULT] 1. PARTICULARS OF SECURITY HELD, IF ANY, THE DATE OF ITS CREATION, ITS ESTIMATED VALUE AS PER THE CREDITOR. ATTACH A COPY OF A CERTIFICATE OF REGISTRATION OF CHARGE ISSUED BY THE REGISTRAR OF COMPANIES (IF THE CORPORATE DEBTOR IS A COMPANY) 2. PARTICULARS OF AN ORDER OF A COURT, TRIBUNAL OR ARBITRAL PANEL ADJUDICATING ON THE DEFAULT, IF ANY (ATTACH A COPY OF THE ORDER) 3. RECORD OF DEFAULT WITH THE INFORMATION UTILITY, IF ANY (ATTACH A COPY OF SUCH RECORD) 4. DETAILS OF SUCCESSION CERTIFICATE, OR PROBATE OF A WILL, OR LETTER OF ADMINISTRATION, OR COURT DECREE (AS MAY BE APPLICABLE), UNDER THE INDIAN SUCCESSION ACT, 1925 (10 OF 1925) (ATTACH A COPY) 5. THE LATEST AND COMPLETE COPY OF THE FINANCIAL CONTRACT REFLECTING ALL AMENDMENTS AND WAIVERS TO DATE (ATTACH A COPY) 6. A RECORD OF DEFAULT AS AVAILABLE WITH ANY CREDIT INFORMATION COMPANY (ATTACH A COPY) 7. COPIES OF ENTIRES IN A BANKERS BOOK IN ACCORDANCE WITH THE BANKERS BOOKS EVIDENCE ACT, 189....
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....ue to the financial creditor may be proved on the basis of - (a) the records available with an information utility, if any; or (b) other relevant documents, including - (i) a financial contract supported by financial statements as evidence of the debt; (ii) a record evidencing that the amounts committed by the financial creditor to the corporate debtor under a facility has been drawn by the corporate debtor; (iii) financial statements showing that the debt has not been repaid; or (iv) an order of a court or tribunal that has adjudicated upon the non-payment of a debt, if any." 23. 'Form - C attached to the Regulation relates to proof of claim of 'Financial Creditor' whereunder at Serial No. 10, the 'Financial Creditor' is supposed to refer the list of documents in proof of claim in order to prove the existence and non-payment of claim dues to the 'Operational Creditor'. Therefore, the stand of the appellant that the Board has not framed any Regulations, relating to clause (a) of sub-section (3) of Section 7, cannot be accepted. 24. The next ground taken on behalf of the appellant is that the claim of the respondent is barred by limitation,....
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.... means a debt alongwith interest, if any, which is disbursed against the consideration for the time value of money and includes- (a) money borrowed against the payment of interest; (b) any amount raised by acceptance under any acceptance credit facility or its de-materialised equivalent; (c) any amount raised pursuant to any note purchase facility or the issue of bonds, notes, debentures, loan stock or any similar instrument; (d) the amount of any liability in respect of any lease or hire purchase contract which is deemed as a finance or capital lease under the Indian Accounting Standards or such other accounting standards as may be prescribed; (e) receivables sold or discounted other than any receivables sold on non-recourse basis; (f) any amount raised under any other transaction, including any forward sale or purchase agreement, having the commercial effect of a borrowing; (g) any derivative transaction entered into in connection with protection against or benefit from fluctuation in any rate or price and for calculating the value of any derivative transaction, only the market value of such transaction shall be taken into account; (h) any counter-indemnity obliga....