TaxTMI 
TaxTMI 
2019 (3) TMI 192
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.... 2. Heard the Learned Counsels for the Financial Creditors and the Corporate Debtor, and perused the pleadings including the documents placed on file. 3. The Financial Creditor(s) have claimed principal amount of Rs. 19,00,00,000/-(Rs. 16,00,00,000/- plus Rs. 3,00,00,000/-) interest @ 15% p.a., totaling Rs. 20,21,10,959/- as outstanding against the Corporate Debtor, which the Corporate Debtor has failed to pay. 4. The case of the Financial Creditors is that an agreement dated 07.02.2016 was entered into between the 2nd Applicant/Financial Creditor viz., Mr. K. Kumaran, Mr. P. V. Sanmugam, Mr. Gigi George and other group of companies for division of assets and liabilities and their shareholdings in the group of Companies. As per clause 2.1 of the said agreement, the 2nd Applicant/Financial Creditor was to exit the Corporate Debtor by transferring his shares to G. Georg and P.V. Sanmugam and it was also agreed that the property owned by the 1st Applicant/Financial Creditor that was given as collateral security (by way of mortgage) to ICICI Bank against the credit facilities sanctioned in favour of the Corporate Debtor would be released by P. V. Sanmugam on or before 30.06.2016 ....
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....orefully described in Schedule-7. (iv) PVS and GG shall cause KAIAL to provide the original title documents of 285 Acres of KAIAL's property, out of the 335 Acres morefully described in Schedule-8, and shall create a mortgage by deposit of title deeds in favour of KK, to be kept in escrow, for the benefit of KK with M/s. Guru & Ram. M/s. Guru & Ram shall hold the above documents in escrow for the benefit of KK. In the event, Karasangal Property is not released on or before 30.06.2016 or such other extended period mutually agreed in writing between the parties, M/s. Guru & Ram shall deliver all the documents held in escrow as mentioned above to KK. KK shall be entitled to resume ownership of the shares of KDL and KAIAL covered by the Original Share Certificates, kept in escrow with M/s. Guru & Ram and shall also have the right to point 1 (one) nominee as director on the Board of KDL and KAIAL. KK shall be entitled to exercise the rights of a Mortgagee as regards 14 Acres of Paddapai Land and 285 acres of KAIAL land. KK shall be permitted to sell 14 acres of Padappai Property and/or 285 acres of KAIAL's property and use the proceeds to pay ICICI Loan in orde....
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....laced at page 121 of the typed set filed with the Application which clearly shows the transactions with regard to the payments of Rs. 3 Crores more which was paid to ICICI Bank through Indian Bank [total payments have become 19 crores] and the same is being mentioned under Para 10 at page B7 of the Application. 8. The Counsel for the Corporate Debtor has submitted that the 1st Applicant/Financial Creditor is a shareholder and the 2nd Applicant/Financial Creditor is a Director/Promoter of the Corporate Debtor till today. The Counsel for the Corporate Debtor has referred to the judgments dated 09.02.2018 and 19.12.2018 passed by Hon'ble NCLAT in Neeraj Bhatia v. Davinder Ahluwalia and in Company Appeal (AT) (Insolvency) No. 164 of 2018, dated 19-12-2018 titled Lalit Mishra v. Sharon Bio Medicine Ltd and submitted that the issue involved in the matters is as to whether the shareholder and Director/Promoter can be treated as Financial Creditor as per Sections 5(7) r/w 5(8) of the I&B Code, 2016. The answer given by the Hon'ble Appellate Tribunal is in negative. However, as seen the facts and circumstances of the present case and the facts and circumstances of the cases title....
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....ject of the statute to suggest to the contrary. The golden rule is that the words of a statute must prima facie be given their ordinary meaning. It is yet another rule of construction that when the words of the statute are clear, plain and unambiguous, then the Courts are bound to give effect to that meaning, irrespective of the consequences. It is said that the words themselves best declare the intention of the law given. The Courts have adhered to the principle that efforts should be made to give meaning to each and every word used by the legislature and it is not a sound principle of construction to brush aside words in a statute as being inapposite surpluses, if they can have a proper application in circumstances conceivable within the contemplation of the statute." 9. The intention of the legislature does not appear to have excluded the Shareholders and Directors/Promoters from the purview of definition of the 'Financial Creditor' or 'Financial Debt', who might have given loan to the Corporate Debtor or repaid the loan on behalf of the Corporate Debtor. It is not out of placed to mention that this Authority vide its Order dated 09.07.2018 passed in CP18/2018....
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....shall on receipt of such notice take note of the same and the company shall intimate the Registrar in such manner, within such time and in such form as may be prescribed. It has further been submitted by the Learned Sr. Counsel for the Financial Creditors that as per the proviso to Section 168 of the Companies Act, 2013, the copy of the resignation has also been sent in Form-11 to the Registrar of Companies. Therefore, it is clearly established that the 2nd Applicant/Financial Creditor is not the Director of the Corporate Debtor as of now. 12. In order to rebut the contentions of the Learned Counsel for the Corporate Debtor that the 1st Applicant/Financial Creditor is not signatory to the Agreement dated 07.02.2016, the Learned Sr. Counsel for the Financial Creditors has referred to Clause 8 of the said Agreement, which clearly provides that KK's wife ("Mrs. KK") had executed a Power of Attorney in favour of PVS in respect of her immovable property admeasuring 11 Acres situated at Karasangal, morefully described in Schedule-6, and PVS had provided the Karasangal Property to ICICI Bank as collateral security (by way of mortgage) for the credit facilities being enjoyed by KDL ....
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....#39;ble NCLAT in Company Appeal (AT) (Insolvency) No. 61 of 2018 titled Andhra Bank v. F.M. Hammerle Textile Ltd., wherein under Paras 13, 14 and 15, it has been observed that the Corporate Debtor has counter indemnity obligation in respect of guarantee given by it to the Andhra Bank and it was held that the Andhra Bank comes within the definition of 'Financial Creditor' as defined under Sections 5 (7) r/w 5 (8) of the I&B Code, 2016. 17. The Learned Sr. Counsel for the Financial Creditors has referred to Section 5 (8) (h) of the I&B Code, 2016 which provides as under: - 8. "Financial Debt" means a debt along with interest, if any, which is disbursed against the consideration for time value of money and includes - (a) .................... (b) .................... (c) .................... (d) .................... (e) .................... (f) .................... (g).................... (h) any counter-indemnity obligation in respect of a guarantee, indemnity, bond, documentary letter of credit or any other instrument issued by a bank or financial institution; (i) ........................
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....ondent Corporate Debtor's management immediately. He is also directed to cause public announcement as prescribed under Section 15 of I&B Code, 2016, within three days from the date the copy of this order is received, and call for submissions of claim in the manner as prescribed. 21. The moratorium is hereby declared which shall have effect from the date of this Order till the completion of Corporate Insolvency Resolution Process, for the purposes referred to in Section 14 of the I&B Code, 2016. It is hereby ordered to prohibit all of the following, namely: (a) The institution of suits or continuation of pending suits or proceedings against the corporate debtor including execution of any judgment, decree or order in any court of law, tribunal, arbitration panel or other authority; (b) Transferring, encumbering, alienating or disposing of by the corporate debtor any of its assets or any legal right or beneficial interest therein; (c) Any action to foreclose, recover or enforce any security interest created by the corporate debtor in respect of its property including any action under the Securitisation and Reconstruction of Financial Assets and Enforcement ....