TaxTMI 
TaxTMI 
2018 (8) TMI 591
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....ed to as CD). 3. The applicants herein, they being M/s. Shreyans Realtors Pvt. Ltd. hereinafter referred to as "FC1" and M/s. Otis Developers (hereinafter referred to as "FC2"), have preferred this application seeking initiation of Corporate Insolvency Resolution Process (in short "CIRP") against M/s. Saroj Realtors and Developers Pvt. Ltd., hereinafter referred to as the "CD" alleging default in repayment of debt, which the FCs had reportedly provided to the CD in 2013. 4. The FC1 is a Private Limited Company incorporated on 28th October, 2004 and was given identification number which is U70101 AS2004PTC007563. The registered office of the FC1 is situated at 4th floor, Avantika Nilay, Ulubari Bazar Road, Near DTO Office, Guwahati, Kamrup, Assam. The FC2 was incorporated on 1st April, 2008 as a Partnership Firm and its registered office is situated at 4th floor, Avantika Nilay, Ulubari Bazar Road, Near DTO Office, Guwahati, Kamrup, Assam and was given identification number which is RF/KAM(M)/173/Y/192 of 2017-18. 5. The corporate debtor ("CD") is a Limited Company which was incorporated on 12-04-2006 and was given identification number which is 270101AS2006PTC008107. Accor....
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....FC2 was also not repaid in accordance with the arrangements, made in resolution dated 27-05-2013. Rather, CD adopted a Board resolution on 29-03-2014 to deny and dispute its securing such loans from the FCs and also refused to repay the loan in accordance with the repayment schedules, incorporated in the resolutions, aforementioned. Therefore, the defaults in repayment of those loans occurred on 01-04-2014. 10. Since the CD had taken loans from the FC1 on 16-05-2013 and from FC2 on 27-05-2013 on certain terms and conditions and since the CD refused to repay such loans as per arrangement made earlier as is evident from the resolution adopted by CD on 29-03-2014, therefore, there were clear defaults in repayment of the loans aforesaid on 1st April, 2014. The financial statements, pertaining to the FCs, annexed with the application as Annexure -l(i) to Annexure-l(xii) --- argues the FCS--- fortify more and more the claim of FCs qua payment of loans to the CD as well as the defaults that occurred in repayment of said loans. 11. In their application, the FCs had named one Mr. Amit Pareek, CS as being Insolvency Resolution Professional (in short "IRP") against whom no proceeding wh....
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....es hereto------leave alone----such jural relationship ever being broken by the CD herein. Being so, this proceeding is required to be dismissed on this score also. 16. To support such a contention, it has been stated that in 2013, the CD had been experiencing some acute financial difficulties. Therefore, the company through its director Mr. Abhishek Choudhary approached the FCs seeking financial assistance to tide over such financial troubles and as agreed to by the parties thereto, they entered into two Memoranda of Understandings, (MOUs). One of such MOU was entered into on 24th day of May 2013 and same was in between Mr. Abhishek Choudhary on one side and Smt Shital Jain and Sri Jitendra Kumar Jain, her brother-in-law, on the other side. 17. The MOU which was entered into between the parties aforesaid on 24-05-2013 would be referred to as MOUl.The relevant part of MOU1 is reproduced below: "SRI Avishek Choudhury son of Late K. Mondol resident of Arati Plaza, 3D, Chandmari, Guwahati -781003, Herein after referred to is the First Party (which expression shall mean and include their heirs, executors administrators, legal representatives and assigns) of the ONE PART. ....
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....of Flat sold in Borbari Project up to 31/03/2013 is 28 (as per Annexure-C) and that if any unaccounted liability from sale of Flats to customers off the record arises the same shall be borne by Shri Avishek Choudhury and that Shri Jitendra Kumar Jain and Smti Shital Jain shall in no way be responsible for the same. 5/12. That both the parties have agreed that 5% of the profit before arriving at the Net Profits of the Borbari Project of the Company shall be invested outside the business of the Company which will be meant for Social purposes and obligation relating to Education and Healthcare as part of Corporate Social Responsibility of the Company. 6/13. That the company shall pay 350 lakhs to Shri Banajit Talukdar, outgoing director of the company as Rs. 30 lacs before his resignation, Rs. 300 lacs in 18 equal monthly instalments and balance Rs. 20 lacs on completion of 20 months. 6/14. After allocation of above 5% of Profit of Borbari Project and 2 Flats as above, balance Net profit will be shared between the First Party and the Second Party in the equal ratio. 7/19. That though the Second Party is primarily concerned for the Borbari Project of....
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....tors, administrators and assigns) of the FIRST PART. 2.a. SRI BANAJIT TALUKDAR, S/O Sri Jatinda Nath Haloi, aged about 33 years, resident of House No.19, Bishnudeb Goswami Path, Bharalumukh, Guwahati- 781 009 in the district of Kamrup (M), Assam, b. MRS. BOBBY PINKY DHEKIAL, D/O Sri Tarun Kumar Dhekial, aged about 35 years, resident of House No.19, Bishnudeb Goswami Path, Bharalumukh, Guwahati 781 009 in the district of Kamrup (M), Assam and c. MR. TARUN KUMAR DHEKIAL, S/O Late Karuna Kanta Dhekial aged about 62 years, resident of Gyan Kanika Apartments, Flat No.3C, Basisthapur, 3rd Bye Lane, Beltola, Guwahati-28 (Assam) (which expression shall unless repugnant to the context or meaning thereof, shall mean and include their heirs, successors, executors, administrators and assigns) of the SECOND PART. AND 3.a. SMT. SHITAL JAIN, W/O Sri Rajesh Jain, resident of 3rd Floor, Avantika Nilay, Ulubari Bazar Road, Ulubari, Guwahati - 781 007, in the district of Kamrup (M), Assam ad b. SRI JITENDRA KUMAR JAIN, S/O Sri Bimal Kumar Jain, in the district of Kamrup (M), Assam both being incoming Director/ Investor of M/s. Saroj Realtors and Developers Pvt. Ltd. (which expres....
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....arty in consideration of their resignation from directorship and transfer of shares to the First and Third Party held by the Second Party in SRDL in terms of this MOU. 3/16 That the immovable property owned by MRS. MEENA KUMARI DAS as has been mortgaged in favour of Assam Gramin Vikash Bank as a Collateral Security for the loan taken by SRDL for its Six Mile project shall have to be released without any encumbrances in favour of Mrs. Meena Kumari Das, The Company shall take all necessary steps towards release of the mortgage ad finalize the same within a period of one year from the date of execution of this MOU. 4/19 That on payment of the aforesaid sum of Rs. 30 lacs and on execution of the aforesaid Agreements to Sale of Flats, the Second Party shall have to simultaneously resign from their respective Directorship as the case may be and relinquish their respective shareholdings in the company as the case may be in the manner as provided in this MOU. However, the 3rd Party shall join SRDL as director before the resignation of Second Party and Form 32 of Third Party be submitted immediately before the Registrar of Companies. The Third Party hereby confirms their i....
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.... Since under the MOU1 and MOU2, Smt Shital Jain and Sri Jitendra Kumar Jain --and -not any other person --were to provide funds to the CD under certain terms and conditions incorporated therein and since neither under the MOU 1 nor MOU2, there was any provision for payment of interest on the money so credited to the CD, CD retained such money in interest free unsecured account which was to be repaid as per convenience of the CD. 25. In that connection, CD adopted a Board resolution on 29-03-2013. For ready reference, said Board resolution is also reproduced below: - CERTIFIED EXTRACT COPY OF THE MINUTES OF THE BOARD MEETING HELD AT THE REGISTERED OFFICE OF THE COMPANY AT 2ND FLOOR, HOUSE N0.115, SARAT PLAZA, RAJGARH ROAD, GUWAHATI 781 007 (ASSAM) ON 29(tm) MARCH, 2014 AT 11.05 AMD (Cotd.) Sri Avishek Choudhury has informed the Board that some collections are into the Companies Bank Account directly from some parties related to Sri Jitendra Kumar Jain and has been kept under Interest Free Loan A/C beause as per the MOU dated 4th June, 2013, the funds were supposed to come from Sri Jitendra Kumar Jain and Mrs. Shital Jain only and not from any other party. He als....
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....takably discloses that there was no jural relationship between the first part ( which is CD herein) and third part therein and since the parties in the present proceeding are, in fact, the first part and third part in MoU-2, there cannot be any escape from the conclusion that no financial debt as contemplated in Section 5(8) of the Code of 2016 had ever been due from the CD to the FCs. Being so, the present proceeding is required to be rejected on this count alone. 29. But then, the resolution dated 16-05-2013 and resolution dated 27-05-2013 came under sharp criticism from the side of the CD for some other grounds as well. First, it was contended that the contract which was projected through the resolution dated 16-05-2013 was between the CD and FC1 whereas the contract which was projected through the resolution dated 27-05-2013 was between the CD and FC2. Since the CD is admittedly a lifeless juristic person, it can act only through a body of human beings which is commonly called as the Board of Directors. 30. Since the company is a juristic person, law allows a company to sue for wrong done to it. Similarly a company can also be sued for the wrong which are committed by the....
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.... in Chapter II of the Indian Contract Act, 1878, Sections 10,13 and 14 of the Contract Act in particular stand fulfilled. Such conditions are: "10. What agreements are contracts All agreements are contracts if they are made by the free consent of parties competent to contract, for a lawful consideration and with a lawful object, and are not hereby expressly declared to be void. Nothing herein contained shall affect any law in force in India, and not hereby expressly repealed, by which any contract is required to be made in writing or in the presence of witnesses, or any law relating to the registration of documents. "13. "Consent" defined -Two or more person said to consent when they agree upon the same thing in the same sense "14. "Free consent" defined - Consent is said to be free when it is not caused by - (1) coercion, as defined in section 15, or (2) undue influence, as defined in section 16, or (3) fraud, as defined in section 17, or (4) misrepresentation, as defined in section 18, or (5) mistake, subject to the provisions of sections 20, 21 and 22. Consent is said to be so caus....
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....ly shatters the very basis of the Annexure -B and Annexure-B-1 at least insofar as acceptance of loans aforesaid with terms and conditions, specified therein, are concerned. A bare perusal of the same would make it clear. 39. Though Annexures B and B-1 had nearly shaked the very edifice of the contracts under consideration which , in turn, put a reasonably huge amount of money belonging to the FCs at great risk, the FCs never initiated any proceeding against the CD seeking recovery of the money, stated in Annexure-B and B-1, together with interest accrued thereon. Such conduct on the part of the FCs, being found highly contradictory to normal behaviour, would make the authenticity of the contracts in Annexure-B and B-1 more and more doubtful. On all those scores, the CD urges this Authority to reject the present application. 40. Responding to allegations aforesaid, the FCs strenuously denied the allegation that the FCs herein are, in fact, second party in MoU-1 and third party in MoU-2. Rather they are independent entities who granted loans to the CD, on being properly approached by it. Therefore, the legality or otherwise of the claims made in the present application are to ....
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....a perusal of record , I have found that it is not in dispute that the CD is a private limited company and as such, it is an unanimated juristic person which has always been held to a distinct entity different from the persons/entities which come together to form such legal entity. Being a juristic person, it can do all the acts that a natural person can do -but then- it can do all such acts only through a body of human beings which is commonly called as the Board of Directors. Further, being a juristic person, it also needs to act in. accordance with the charters which bring the company into being as well as the prescriptions of law and Rules framed thereunder. 46. Since the company is a juristic person and since it can work only through a body of human beings, called as Board of Directors, all the acts done in the name of the company must be backed by decisions, taken by it in accordance with the prescriptions in MoA and AoA, Law, Rules, framed under the Law. Such acts are generally done by the Board in its meeting convened and conducted in accordance with the prescription in Section 173/174 of the Companies Act of 2013. However, it is sometimes possible to give post facto appr....
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.... conditions on being duly authorized by a Board of Directors of the CD, this authority has no other option but to uphold the plea of the CD that it had never authorized Sri Choudhary to approach the FCs for securing loans from the FCs. Such revelations, in turn, serve to show that the CD cannot be forced to repay the aforesaid loans. 52. Even if one assumes for the sake of argument for a moment that Sri Choudhary had duly represented the CD in the contracts which were allegedly entered into between the FCs and CD on 16-05-2013 and 27-05-2013, such purported contracts are required to be rejected for yet another reason as well. The laws laid down in Section 10 to Section 15 of the Contract Act proclaim that an agreement cannot get graduated to a valid contract unless certain conditions stated therein stand fulfilled. Such conditions are already alluded to herein before. 53. When one reads the aforesaid provisions of law in between the lines, he would find that the word "thing", so used in section 13 of the Contract Act must obviously be taken as widely as possible, though it seems most appropriate where the contract has to be with corporal property. The word, "same thing "must ....
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....4 in juxtaposing with other materials available on record. A careful perusal of said resolution brings to the fore several startling revelations. Such resolution demonstrates that someone related to the second party in MoU 1(who was also the third party in MoU-2) had credited some amount to the account of CD, perhaps without its knowledge and therefore, CD chose to keep such money in its account as unsecured non-interest bearing loan. 58. The CD kept such money in its account as unsecured non-interest bearing for reasons more than one. But basic of those reasons being -(i) such loans were credited to account of the CD by the parties who are related to Sri Jitendra Kumar Jain and/or Mrs. Shital Jain who the CD had no apparent connection with and (ii) such loans were credited to the account of CD by the parties aforesaid without the asking of the CD. Such revelations which emerge from the Resolution dated 29-03-2012 make a further dent to the claim of FCs that the CD obtained loans from them on the dates aforementioned on the terms and conditions specified in Annexure B and B-1. 59. However, the resolution dated 29-03-2014 reveals more and more skeletons in the cupboard support....
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....ring this Authority to initiate CIRP against the CD. I have considered such submission in the light of discussion, made hereinbefore and have already found that all the basic documents , tendered from the side of FCs, fail to establish that the CD had actually accepted the aforesaid loans, agreeing to the terms and conditions, specified in Annexure-B and B-1. 64. Being so, when the primary evidence, pressed into service from the side of the FCs ,failed to show that the CD had actually received the amounts, so stated in the Annexure B and B-1, and that too, only under the terms and conditions, the bank statements, which are evidently in the nature of corroborative evidence only, could not do the role of resurrecting the case of the FCs. In such a situation, I have no difficulty, whatsoever in rejecting the argument, from the side of FC which structured taking bank statements as its fulcrum. 65. Consequently, the claims of FCs that the FC1 had granted the CD a loan to the tune of Rs. 31,66,000/-on the basis of resolution dated 16-05-2013 and the FC-2 had also granted it a loan to the tune of Rs. 72,32,000/- on the basis of resolution, dated 27-05-2013 on the terms and condition....