TaxTMI 
TaxTMI 
2019 (8) TMI 1381
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....tal Rs. 80,00,000/-, 8,00,000 Equity Shares of Rs. 10/- each and paid-up share Capital Rs. 75,00,000/- (7,50,000 Equity Shares of Rs. 10/- each) having its registered office at A/04/A, Nusa Dua R.Narayanapura Road, Whitefield, Bangalore - 560 066. b) The total amount of debt is Rs. 5,02,23,791/- (Rupees Five Crore Two Lakhs Twenty Three Thousand Seven Hundred and Ninety only) which involves two components. One such component is a sum of Rs. 4,05,45,011/- (Rupees Four Crores Five Lakhs Forty Five Thousand and Eleven Only) which sum includes the principal amount of Rs. 2,33,78,962/-(Rupees Two Crores Thirty Three Lakhs seventy Eight Thousand Nine Hundred and Sixty Two only) as well as interest of a sum of Rs. 1,71,66,049/-(Rupees One crore Seventy One Lakhs Sixty Six Thousand and Forty Nine only) as on 31.03.2017 and another component is a sum of Rs. 31,80,112/-(Rupees Thirty One Lakhs Eighty Thousand One Hundred and Twelve Only) which sum includes the principal amount of the sum of CHF 50,000/- (Swiss Franc Fifty Thousand Only) as well as interest of a sum of Rs. 4,55,112 (Rupees four Lakhs fifty Five Thousand One Hundred and Twelve only) as on 31.03.2017. c) A sum....
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....wing manner: 1. By 31/8 - - Rs. 25,00 lakhs 2. By 30/9 - - Rs. 50.00 lakhs 3. By 31/10 - Rs. 50.00 lakhs 4. By 30/11 - Rs. 50.00 lakhs 5. By 31/12 - Balance due of Interest + Principal" (b) "Similarly Managing Director of the Respondent Company at Annexure-AB-47 dated 4th January, 2014 has given account of schedule of some payments which is mentioned therein as given below: 1. January 2014 - Nil 2. End February 2014 - Rs. 15.00 lakhs 3. End March 2014 - Rs. 30.00 lakhs (That will mean that we would have paid Rs. 40,00 lakhs by the 31st March, 2014) 4. End April 2014 - Rs. 10.00 lakhs 5. From End May to end November 2014 we will divide the balance against principal and pay it. 6. Interest will be paid in two instalments on end December and end January 2015" 5. The Director and Chief Operating Officer of the Respondent Company have also sent an e-mail dated 22.07.2013 giving the details of amount received, interest accrued at Annexure AB-12. 6. However, the respondent has denied that this is not a financial debt as the loan agreement executed therein is not sufficiently s....
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....lf in Annexures - U and V, though mentioned under a completely untenable and inconsistent ground of a purported 'interest' being attributable to it. 10. The Respondent has also stated that the Petitioner once again paid an amount of CHF 50,000 to the Respondent for booking an apartment in another project of the Respondent company. Later when the Petitioner learnt that the Respondent project is taking much time to develop, he decided to get back his money. 11. It is further submitted by Respondent that the Respondent is ready to repay the balance amounts namely Rs. 63,80,000/- (Rupees Sixty three lakhs Eight Thousand) and the amount of CHF 50,000 which amounts to Rs. 26,60,600/- (Rupees Twenty Six Lakhs Sixty Thousand Six Hundred). These amounts would not constitute a debt due to the Petitioner under its capacity as a 'financial creditor'. Therefore, the instant petition is not maintainable alleged the Respondents. 12. The Respondent has vehemently opposed the contentions of the Petitioner that the Petitioner is a financial creditor in respect of I&B Code, 2016 by stating there can be no financial debt due from the Respondent in existence since it would be in violation of t....
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....f India. (xi) Individuals of Bangladesh nationality can open an NRO account provided they hold a valid visa and valid residential permit issued by Foreigner Registration Office (FRO)/Foreigner Regional Registration Office (FRRO) concerned." (b) The NRO account maintained by the Petitioner permits only obtaining of loans, or standing as security for a third party loan. Therefore, no lending of money by the Petitioner is permissible under law. (c) The term Section 2(e) of the Foreign Exchange Management Act (FEMA), 1999 defines a Capital Account Transaction as under: "2(e) "Capital account transaction" means a transaction which alters the assets or liabilities, including contingent liabilities, outside India of persons resident in India or assets or liabilities in India of persons resident outside India, and includes transactions referred to in sub-section (3) of section 6."" (d) Pursuant to Section 6(3) of the FEMA 1999, the RBI has formulated the Foreign Exchange Management (Permissible Capital Accounts Transactions) Regulations, 2000. In terms of Regulation 3(2) any person may sell or draw foreign exchange to or from an authorised perso....
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....dated July 01, 2013, whereas the books of accounts of the Respondent do not reflect the existence of any loan taken or debts due with the financial statements of the Respondent. (j) The following observation of the Delhi High Court in Virender Singh v. Laxmi Narain 2007 CriLJ 2262 can be relied on to assert the fact that the illegality of a transaction cannot post facto enable a 'purported' aggrieved party to assert its right, unless exceptional circumstances for the same exist; "11. The principle that the Courts will refuse to enforce an illegal agreement at the instance of a person who is himself a party to an illegality or fraud is expressed in the maxim in pari delicto protior est condition defendantis. But as stated in Anson's principles of the English Law of Contracts, 22nd Edn., P.343: there are exceptional cases in which a man will be relieved of the consequences of an illegal contract into which he has entered-cases to which the maxim does not apply. They fall into three Classes (a) where the illegal purpose has not yet been substantially carried into effect before it is sought to recover money paid or goods delivered in furtherance of it; (b) where the p....
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.... advanced. 17. It is not in dispute the Respondents have made payments from 27.11.2013 to September, 2016 only towards interest due and the Principal amount Rs. 2,33,78,962/- and Rs,l,71,66,049/- towards balance interest amount is pending for payment. 18. The Respondent Company is liable to pay to the Petitioner a sum of Rs. 5,02,23,791/- which includes Principal Amount, balance Interest on remaining amount due, TDS stated to have been deducted by the Respondent, (not remitted to IT Department) and interest @ 30% thereon and Penalty levied for not paying IT in time. 19. It is amply clear that the Respondent was unable to pay even the admitted liabilities and has become insolvent. E-mails dated 31.01.2013, 30.12.2013. 01.10.2015 and 24.11.2015 sent by Mr.Koshy Varghese, the Managing Director to the Petitioner clearly indicate the admission of liability. 20. A legal notice dated 16.05.2017 had been sent to the Corporate Debtor to pay the dues within a period of 21 days has been received by the Corporate Debtor on 19.05.2017 has also been enclosed along with the Petition. 21. In response to the legal notice dated 16.05.2017 a belated reply has been sent by the Counsel f....
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....rovided under Section 2 (e) of the FEMA, 1999 approval of RBI does not require and the rules framed therein shall not be attracted. As the money disbursed by the Petitioner is utilized by the Respondent in contravention of exchange laws, it is the Respondent who is wholly liable to concerned authorities for their violative actions. As the Petitioner is unaware as to when and how his funds are being utilised by the Respondents, no liability can be cast upon the Petitioner. 27. Petitioner also submits that further recording of the debt in earlier accounts of the Company under the term "advance from customer" and subsequently removed from the same accounts, the Respondent is only guilty of manipulation of their own accounts. Having accepted the sum as advance and accounted for the same and investment in real estate business is a direct conflict with investment, onus rest on Respondent's shoulder and the Petitioner is in no way be fastened with any liability. The Respondent being a borrowing Company and its borrower and its Promoter were completely responsible and the burden falls on the Respondent to ensure that the laws of the land were adequately complied with. 28. Petitioner ....
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....lottee under a real estate project shall be deemed to be an amount having the commercial effect of a borrowing; and (ii) the expressions, "allottee" and "real estate project" shall have the meanings respectively assigned to them in clauses (d) and (zn) of section 2 of the Real Estate (Regulation and Development) Act, 2016 (16 of 2016) (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 obligation in respect of a guarantee, indemnity, bond, documentary letter of credit or any other instrument issued by a bank or financial institution; (i) the amount of any liability in respect of any of the guarantee or indemnity for any of the items referred to in sub-clause (a) to (h) of this clause" 32. The Petitioner has also cited case law which reads as follows: Hon'ble Supreme Court in Chilakuri Gangulappa v. Revenue Divisional Officer, Madanapalle [2001] 4 SCC 197 held as under: "13. In the present case, an a....
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....te authority under the Stamp Act. 34. Considering the various submissions made by the Petitioner and the Respondent, it is crystal clear that the amount in question has been advanced by the Petitioner, and utilized by the Respondent, based on the loan agreement and in the Real Estate Project or purchase of Flat and hence, it cannot be disputed that he is not a Financial Creditor as also by going through the audited balance sheet as on 31.03.2016 duly submitted by the Advocate for the Petitioner in respect of the Respondent Company the health of the Company does not seems to be very good as Reserve and surplus is only Rs. 34,53,140/- (Rupees Thirty Four Lakhs Fifty Three thousand One Hundred Forty Only) with the Company. The Respondent Company started since 2002 and it is carrying lot of current and non-current liability and is blocked in current assets i.e. inventories, Trade Receivables. All these circumstances suggest, that it is fit case to be admitted, under Section 7 of Insolvency & Bankruptcy Code for Corporate Insolvency Resolution Process to be initiated. 35. On perusal of the Application, we found that the instant Application is filed strictly in accordance with law,....