TaxTMI 
TaxTMI 
2018 (12) TMI 965
X X X X Extracts X X X X
X X X X Extracts X X X X
....tly furnished Form No. 1 under Rule 4 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016 (hereinafter as Rules) in the capacity of "Financial Creditor" on 10.11.2017 by invoking the provisions of Section 7 of the Insolvency and Bankruptcy Code (hereinafter as Code). 2. Further under the head "Particulars of Corporate Debtor" the description of the debtor is stated as 'M/s. Maharashtra Aluminium & Alloys Private Limited' (hereinafter as Debtor) having Registered office at, 17 / C, Marine Chambers, 1st Marine Street, Shop No. 9, Marine Lines, Mumbai, Maharashtra - 400020. 3. In the requisite Form, under the head "Particulars of Financial Debt" the total amount of Debt in default is stated as Rs. 61,06,586/- which includes the Principal amount of Rs. 33,00,000/- plus Interest @ 18 % p.a. amounting to Rs. 28,06,586/- as on 01.04.2017. The date of default is stated as 01.04.2017. The bifurcation of the claimed amount is as follows : Financial Creditor Outstanding Amount Amount (Principal)/Claimed 1st Financial Creditor Rs. 12,00,000/- 2nd Financial Creditor Rs. 10,00,000/- 3rd Financial Creditor Rs. 11,00,000/- Total ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... Rs. 4,00,000/- 11.03.2014 000013170226 3. Rs. 4,00,000/- 14.03.2014 00013250692 Total Rs. 12,00,000/- The Ledger Account of the Debtor in books of the Financial Creditors evidences the above mentioned transaction. The copies of Ledger Accounts are annexed with the Petition. 5.2. It is further stated that the 2nd Financial Creditor has disbursed the amount in following manner : Sr. No. Amount Disbursed Date Cheque No./Ref. No. 1. Rs. 5,00,000/- 24.03.2014 000013428621 2. Rs. 4,00,000/- 24.03.2014 000013441576 3. Rs. 1,00,000/- 19.05.2014 000014628807 Total Rs. 10,00,000/- The Ledger Account of the Debtor in books of the Financial Creditors evidences the above mentioned transaction. The copies of Ledger Accounts are annexed with the Petition. 5.3. It is further submitted that the 3rd Financial Creditor has disbursed the amount in following manner : Sr. No. Amount Disbursed Date Cheque No./Ref. No. 1. Rs. 10,00,000/- 14.02.2012 000040 2. Rs. 5,00,000/- 10.03.2012 000042 3. Rs. 8,00,000/- 24.12.2013 0000115565....
X X X X Extracts X X X X
X X X X Extracts X X X X
....efore the CIRP may be commenced over the Debtor. 6. Submissions by the Corporate Debtor : 6.1. The Learned Advocate for the Corporate Debtor firstly has raised the issue of the maintainability of this Application under provisions of the Code. 6.2. The Learned Advocate has submitted that claim of the Financial Creditors have advanced the amount to the Debtor as an investment in the Debtor Company. There was no written agreement / contract which was entered between the parties. 6.3. It is further submitted that the terms for payment of interest were never agreed upon between the parties. It is also stated that the Parties had agreed upon sharing of benefits / profits to the Debtor Company and therefore there is variable amounts were paid to the Financial Creditors. 6.4. It is also submitted that the Directors of the Financial Creditors, by fraud and with use of fabricated documents, have transferred Shares of various other companies controlled by the Directors of the Debtor. And when this fact had brought to the notice of the Directors of the Debtor, the Directors have filed the Civil Suit bearing no. 227/2017 before the Hon'ble Bombay High Court, alleging the said fra....
X X X X Extracts X X X X
X X X X Extracts X X X X
....f Rs. 14,000/-, Rs. 10,500/- and Rs. 10,500/- respectively for 1st, 2nd and 3rd Financial Creditor. This TDS was deducted by the Debtor U/s. 194A of the Income Tax Act, 1961 and the same has been deposited also with the Income Tax Department. It is noticed that the S. 194A stands for the Tax on Interest other than the Interest on Securities. Since, the TDS is deducted U/s. 194A it cannot be towards the distribution of profits and therfore a conclusion can be drawn that the Debtor has paid the amount to the 1st to 3rd Financial Creditors towards the Interest Amount of Loan. 7.5. In light of above observation to answer the above framed first question it can be stated that 'the amount advanced by the Financial Creditors is an amount advanced as Loan'. Moreover the Debtor has not made out a case of disbursement of any 'Dividend' or 'Profit' so as to demonstrate the impugned transaction at all related to an Investment. 7.6. To answer the second question it is necessary to examine the position of the Civil Suit filed before the Hon'ble Bombay High Court. From the submissions by both sides it is noticed that the said Civil Suit is not yet decided by the Hon'ble Bombay High Court and....
X X X X Extracts X X X X
X X X X Extracts X X X X
....rther before going further, it is necessary to place a reliance on the provisions of the S. 7 of the Code. The relevant provisions are reproduced as below : "S. 7 (5) : Where the Adjudicating Authority is satisfied that- (a) a default has occurred and the application under sub-section (2) is complete, and there is no disciplinary proceedings pending against the proposed resolution professional, it may, by order, admit such application; or (b) default has not occurred or the application under sub-section (2) is incomplete or any disciplinary proceeding is pending against the proposed resolution professional, it may, by order, reject such application: Provided that the Adjudicating Authority shall, before rejecting the application under clause (b) of sub-section (5), give a notice to the applicant to rectify the defect in his application within seven days of receipt of such notice from the Adjudicating Authority." 7.14. The above provision makes it clear that the Adjudicating Authority can dismiss a S. 7 Petition when either the Debt is not due and payable or the default in repayment is not arrived. The factual matrix of this case reveals that, ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ial Debt. 7.18. As far as the question of the 'default' is concerned, it has already been established supra. Hence, to conclude the discussion it can be stated that the Petition under Adjudication deserves Admission. 7.19. The facts of the case have already established that the amount claimed is 'Financial Debt' as defined U/s. 5 (8) of the Code and there is a Default in the re-payment of the Debt as defined U/s. 3 (12) of the Code. 7.20. As a consequence, keeping admitted facts in mind that the Financial Creditor had not received the outstanding Debt from the Corporate Debtor and that the formalities as prescribed under the Code have been completed by the Financial Creditor the Bench is of the conscientious view that this Petition deserves 'Admission'. 7.21. The Financial Creditors have proposed the name of Insolvency Professional. The Bench has perused the record the proposed IRP and noticed that, against him no disciplinary proceedings are pending. Consequently, the IRP proposed by the Financial Creditor, Mr. Saket Shantilal Jain, O/at. Office No. 70, 2nd Floor, Empire Building, Above Macdonald, 134, D N Road, Mumbai, Maharashtra - 400001, E-mail : cajainsaket@gmail.....