TaxTMI 
TaxTMI 
2019 (2) TMI 1762
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....ead "Particulars of Financial Debt" the total amount of debt granted is Rs.5,00,00,000/- and the total amount claimed to be in default is stated to be Rs.10,81,50,936/- (inclusive of principal amount and interest @ 12% quarterly rests) as on 31.12.2017. The date of default as per Form I is mentioned to be 01.07.2011. A) Brief History of the case: 3. The Financial Creditor, on 14.10.2009, has granted a loan of Rs.5,00,00,000/- @ 12% interest to the Corporate Debtor which is duly disbursed as per the Statement of Account of the Financial Creditor issued by Bank of India annexed in the Petition. The interest was to be paid on a monthly basis but as there was no express agreement to this loan arrangement, the Corporate Debtor used to pay interest in a consolidated manner. Against this loan, a pledge of 12,44,000 shares of the Corporate Debtor has been made. 4. The Corporate Debtor paid the interest amount only till July, 2011. Thereafter, there were negotiations going on between the Financial Creditor and the Corporate Debtor. In June, 2013 the Corporate Debtor issued Cheque No. 849610 of Rs.5,00,00,000/- dated 13.06.2013, which was dishonoured on 15.06.2013 with the remark "Fund....
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....tor is not making the payment and all the procedural formalities have been complied with, this Petition/Application may be Admitted for the initiation of the CIRP. C) Submissions by the Corporate Debtor : 11. The Corporate Debtor has filed an affidavit in reply and an additional affidavit in reply to this petition. The contention of the corporate Debtor is that the cheque of Rs.5,00,00,000/- supra, was issued to the Corporate Debtor as a security for the debt. Hence, the encashment of the above said cheque by the Financial Creditor without the authority of the Corporate debtor was wrong and invalid in law. Further, the Corporate Debtor submits that the loan was sanctioned on a pledge of 12,44,000 shares. The Financial Creditor, instead of invoking the pledge or selling/disposing the pledged shares, has initiated multiple legal proceedings against the Corporate Debtor, which is wrong on the part of the Financial Creditor. The Corporate Debtor submits that no dues would have been payable by the Corporate debtor if the Financial creditor had sold the pledged shares and recovered its dues. 12. In the additional affidavit in reply, the Corporate Debtor has raised the issue that th....
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....a number of judgements to substantiate this contention. In National Securities Clearing Corporation Ltd. V. Prime Broking Company (India) Ltd. [2016 SCC Online Bom 4501],Order dated 28.06.2016, it was held that: "Even otherwise, I find that the law as far as Section 176 of the Contract act, 1872 is concerned, is quite well settled. The law, as I understand it, is that a pledger cannot compel a pledgee to exercise the power of sale as a means of discharge or to satisfy the debt. The Pledgor's rights are only (i) in case the pledgee exercised the power of sale, to insist that it should be honestly and properly done and the sale proceeds applied to the debt; (ii) in case the pledgee did not exercise the power of sale, then the pledgor can redeem the pledge on payment of the debt or such part of it that has remained unpaid; and (iii) in case the sale was improperly exercised, to get damages caused thereby." Similar view was given by the Hon'ble Madras High Court in the matters of S.L. Ramaswamy Chetty V. M.S.A.P.L. Palaniappa Chettiar, [AIR 1930 Mad 364] and Rani Leasing & Finance Limited V. Sanjay Khemani [2015 SCC Online Cal 450]. 16. The Financial creditor has further s....
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.... of "Bankers' Books", statement of account being a record used in the ordinary business of the Bank, it will fall within the definition of Bankers' Book. In Entry No. 7, what is asked to attach is the copy of the Bankers' Book, it has not been asked to file a certified copy as certified under Bankers Book Evidence Act' unquote. Therefore, it can't be said that unless a certified copy is filed, it should not be looked into. 19. Furthermore, the contention of the Corporate Debtor, that the Cheque No. 849610 of Rs.5,00,00,000/- dated 13.06.2013 was issued as a security to the Financial Creditor, is also rejected because I am of the conscientious view that for once even if it is believed that it was a security given for the debt, then also, the Corporate Debtor is acknowledging its liability and giving the right to the Financial Creditor to encash the cheque in case of default. 20. As far as invocation of pledge is concerned, throwing light on Section 176 of the Indian Contract act, 1872 would be helpful. Section 176 of the Contract act, 1872 says that: "176. Pawnee's right where pawnor makes default: If the pawnor makes default in payment of t....
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....opped to prove the non-existence of debt by raising any kind of 'dispute' or defence as the same is all cliché' for deciding the fate of present proceedings. The Petitioner's claim of existence of debt and default has been corroborated with ample evidence and is enough to hold a view in its favour. 23. On going through the facts and submissions of the petitioner and upon considering the same, it is concluded that the Financial Creditor has established that the loan was duly sanctioned and duly disbursed to the Corporate Debtor but there has been default in payment of Debt on the part of the Corporate Debtor. 24. Considering the above facts, I come to conclusion the nature of Debt is a "Financial Debt" as defined under section 5 (8) of the Code. It has also been established that admittedly there is a "Default" as defined under section 3 (12) of the Code on the part of the Debtor. 25. As a consequence, keeping the admitted facts in mind, it is found that the Petitioner has not received the outstanding Debt from the Respondent and that the formalities as prescribed under the Code have been completed by the Petitioner, I am of the conscientious view tha....