AI Drafter 
TaxTMI 
TaxTMI 
2018 (8) TMI 1786
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....Debtor previously holding 50% of the Share Capital and presently the same has been reduced to 25%. Since the Corporate Debtor was in requirement of funds the Petitioner granted unsecured loan repayable on demand, from time to time to the Corporate Debtor in good faith. As on 31.03.2008 a sum of Rs. 3,23,46,475/- was advanced by the Petitioner as unsecured loan. The Corporate Debtor from the years 2008 to 2010 repaid the major portion of the loan and as on this date the loan outstanding is Rs. 1,45,36,475/- and the same was reflected in the Financial statements of the Corporate Debtor. The Corporate Debtor issued balance confirmation on 01.04.2016 which confirms the balance of Rs. 1,45,36,475/-. 3. The Petitioner further submits that since no balance confirmation was received for the year 2016-2017, the Petitioner approached the statutory auditor of the Corporate Debtor and the statutory auditor by email dated 05.10.2017 confirmed the balance of Rs. 1,45,36,475/- which is shown as balance due to the Petitioner. Since the Corporate Debtor did not repay the loan, the Petitioner on 22.01.2018 sent a lawyer's notice calling upon the Corporate Debtor to repay the loan amount of Rs....
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....etween the Applicant and the Corporate Debtor. It is the case of the Respondent that none of the loans under the quasi-partnership arrangement between the Corporate Debtor and the Applicant had any term for repayment or interest. The various facts mentioned in the reply would become relevant in the event the amount defaulted by the corporate Debtor has not been admitted. Once the amount is admitted and is reflected in the accounts and confirmed by the Corporate Debtor, the facts as mentioned in the reply would completely become irrelevant and go behind the curtain and cannot or does not influence the outcome of this Application. Apart from that the main argument put forth on behalf of the Corporate Debtor is that there is no Financial Debt and the Applicant is not a Financial Creditor and in support of the same it is stated that: (a) The Application must be filed by a Financial Creditor and (b) There must be a default in paying the Financial Debt. The important point to be noted that the Exhibit-D dated 01.04.2016 wherein the Corporate Debtor had clearly confirmed that an amount of Rs. 1,45,36,475/- is the closing balance of the account which is the outstanding in....
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....o equity has been implied by the opening words of Section 5(8) of the IBC (iii) Vishwa Nath Singh v. Visa Drugs & Pharmaceuticals (P.) Ltd [2018] 145 SCL 304, in para 15, it was held that "In the present case, the respondent has failed to show that the amount of loan treated to have been given to the Corporate Debtor were disbursed against the consideration for the time value of money. In the absence of any such evidence on record to suggest that the amount was disbursed against the consideration for the time value of money and was borrowed by the Corporate Debtor against the payment of interest, we hold that the respondent - M/s. Visa Drugs and Pharmaceuticals do not come within the meaning of 'financial creditor'. 7. Heard both sides. Section 3(10) defines 'Creditor' means any person to whom a Debt is owed and includes a Financial Creditor, an operational creditor, a secured creditor, an unsecured creditor and a decree-holder; Section 3(11) defines 'Debt' means a liability or obligation in respect of a claim which is due from any person and includes a Financial Debt and Operational Debt; Section 5(7) defines 'Financial Creditor'....
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.... to be adjudicated on the issue whether the same are paid towards investment in shares or as loan. But here in the present case, the debt is admitted and is reflected in the books of account of the Corporate Debtor as loan which clearly clinches the case on hand. (iv) Other decisions as quoted by the Corporate Debtor also are completely irrelevant for the just adjudication of this case. 8. Therefore, we hold from the above discussions which clearly shows that there is debt and default on side of the Corporate Debtor. 9. The Petitioner has mentioned Mr. Pranav Damania, Reg. No. IBBI/IPA-001/IP-P00079/2017-18/10164, having address at 407, Sanjar Enclave, Opp PVR/Milap Cinemas, Kandivali (W), Mumbai -400 067 as an Interim Resolution Professional. 10. This Bench having been satisfied with the Petition filed by the Operational Creditor which is in compliance of provisions of sections 8 & 9 of the Insolvency and Bankruptcy Code admits this Application declaring Moratorium with the directions as mentioned below: (i) That this Bench hereby prohibits the institution of suits or continuation of pending suits or proceedings against the Corporate Debtor including exe....