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2020 (2) TMI 392
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....th September 2018, Exhibit-Q hereto, and thereupon induct the Applicant in the Committee of Creditors with voting share proportionate to its amount of claim; (b) That this Hon'ble Tribunal ascertain the constitution of the purported Committee of Creditors and thereafter disqualify/remove such members from the purported Committee of Creditors with voting share proportionate to its amount of claim ; (c) That pending hearing and final disposal of this Application, this Hon'ble Tribunal be pleased to stay the insolvency resolution proceedings in relation to the Corporate Debtor." 2. DECISIONS IN THE PAST :- Before we proceed to discuss on merits this Application, it is necessary to place on record the past history of this case happened on the occasion when the Petition filed by the Financial Creditor The Invex Private Limited (hereinafter in short Invex) submitted under section 7 of the I&B Code pending for Admission to take decision for commencement of Corporate Insolvency Resolution Process against the Corporate Debtor Dome Bell Electronics India Private Limited (hereinafter in short Dome Bell). As per the sequence, before the start of the hearing on S....
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....t giving any information of the proceedings sub-judice before Court Room No. 1. 6. On hearing all the parties present this Bench hereby places on record an observation that the litigants are expected to be just, fair and truthful while representing a case by placing on record the complete information specially if any case is sub-judice before any Court of law. The Petitioner as well as the Respondent being duly represented by the Learned Counsels have concealed those facts which is unexpected from the responsible counsel. 7. Be that as it is, all the parties are in agreement that the Corporate debtor be restrained from dealing with any of its assets so that the rights and interest of the Financial Creditors be protected. Under exceptional circumstances narrated supra, this Bench hereby directs the Corporate Debtor M/s. Dome-Bell Electronics India Private Limited not to deal in any manner by transferring or alienating any of its assets as appearing in the Books of Accounts till further orders. 8. Matter be listed for hearing on 11.07.2018." 2.1 Thereafter main Petition (CP-IB-2051/NCLT/MB/2018), moved by 'Invex' in the capacity of 'Financial....
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....ebenture trust deed]. Pursuant to the said debenture trust deed the Hindustan Oil issued nonconvertible debentures having face value of Rs. 10 lakhs each at par aggregating to Rs. 1626 crores by the debenture trustee in favour of the applicant Nityank. The applicant Nityank has become the beneficial owner of the said debentures within the meaning of Debenture Trust Deed. It was agreed that the Hindustan Oil will be liable to pay default interest at the rate of 18% which have not been paid on the respective dates. In order to secure the payment obligation, the M/s. Dome-Bell i.e. the Corporate Debtor executed a corporate guarantee deed dated 30 December 2016 in favour of the Applicant M/s. Nityank. As a result, the M/s. Dome-Bell had guaranteed the payment obligation of the M/s. Hindustan Oil in relation to the debentures. Additionally, the payment obligation was partly secured by a share pledge agreement also dated 30 December 2016, entered into between the debenture trustee and certain shareholders of Videocon D2H Ltd, including the Dome-Bell in the said share pledge agreement. Under the said share pledge agreement M/s. Dome-Bell had pledged 44,38,400 equity shares of Videocon D2H....
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....mpugned transaction was entered fraudulently to defeat the Applicant's (Nityank) claim. In a reminder notice the Applicant (Nityank) had called upon the Dome-Bell to pay outstanding amount of Rs. 2035,83,00,000/-. 4.2 The allegation is that although the Company was fully conscious of its obligation towards the Applicant (Nityank) under the said Corporate Guarantee it had fraudulently entered into the impugned transaction. According to the Applicant, it was a sham transaction for the purpose of delaying Applicant's claim against the M/s. Dome-Bell under the said Corporate Guarantee. An apprehension has been expressed that Dome-Bell may create a Third Party right. The submission is that the Dome-Bell be restrained from creating any Third Party right in respect of its Assets. The Applicant has learnt that the Dome-Bell had made claim before the Dish TV for allotment of Equity Shares in exchange for identified Shareholding. The apprehension is that on receipt of the shares, the Dome-Bell may alienate shares or deal with those shares to defeat the recovery. In the light of the aforementioned background, this Application has been moved so that the Applicant be made an In....
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....ht forward and bona fide. As far as the present case is concerned, the nature of the Financial Debt, on the face of it, is simple casting no doubt being a single debit entry in the Bank Account of the Financial Creditor through which an amount of Rs. 8,58,00,000/- was transferred on 16.03.2011 through RTG in the account of Corporate Debtor (Dome-Bell). In respect of this transaction the Intervener is totally silent without casting any doubt. Rest of the transactions which are reported are complex dovetailed transactions, but merely because of their complexity do not put this transaction within the ambits of a "Fraudulent transaction". It is worth to make an observation that the Applicant was legally required to establish a direct nexus of his debt with the debt of the present Petitioner. No such nexus is established to conclusively prove that the Debtor Company Dome-Bell has any connection with regard to this very Debt with the Debt of Nityank. For granting intervention this should be a fundamental legal requirement. In the absence of direct connection or nexus of Nityank with the Debt in question in this Petition it is absolutely unfair to allow as an Intervenor. There could be bu....
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....ts as well as on Law. In case of M/s. Jeevan Credit & Leasing v. M/s. King Airways Limited (CA No. IB 13/PB/2017) Order dated 08.03.2017, a finding on fact was that the defects in filing displayed glaring inconsistencies which had gone to the root of the Application's 'Maintainability'. According to the finding, it was puzzling as to how the Applicant and Respondent could be categorized as "Corporate Persons". A finding was given that the Applicant had also failed to furnish necessary Board Resolution affirming grant of Loan. The acknowledgements have raised questions about the bona fide of the parties and according to the Hon'ble Principal Bench, the transaction was stage managed with an ulterior motive. Since the present Petition has contained all such relevant information and transaction is duly corroborated by several evidences and confirmations, therefore, the case law as relied upon on all fours is not applicable. Likewise, the decision of Hon'ble NCLAT in the case of SREI Infrastructure Finance Ltd. v. Right Tower Pvt. Ltd. & Anr. (Company Appeal (AT) Insolvency) No. 38 of 2018) Order dated 20.02.2018 is on the issue of Privity of Contract on the part of ....
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.... Since the Corporate Debtor is undergoing CIRP, this Petition is not maintainable against the same Corporate Debtor. However, Petitioner may file his claim before the Resolution Professional. It is further clarified that if his claim is not admitted, he can challenge the same before this Adjudicating Authority. The second petition against the same Corporate Debtor, after admission of the first petition is not maintainable." 2.3 The purpose of reproduction of the Orders passed in the past is that the alleged claim of this Applicant M/s. Nityank was duly considered and stood rejected as far as the Insolvency Proceedings are concerned. It is strange that the Applicant is moving again this Application at the stage when the Insolvency Proceedings have reached upto the stage of considering approval of a 'Resolution Plan'. Although this Applicant is indulged in repetitive litigation, nonetheless, this Bench can not do much but to express displeasure by cautioning the Applicant to avoid multiplicity of legal proceedings by filing Applications after Applications. 3. MERITS/FACTS OF THE CASE :- On merits the date wise summary as produced in the list of events can ....
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....or inter alia dismissing the captioned Company Petition. 21.08.2018 - This Hon'ble Tribunal was pleased to reject the Applicants Miscellaneous Application No. 695 of 2018 and admitted the captioned Company Petition. 29.08.2018 - Being aggrieved by the Admission Order, the Applicant has filed an Appeal against the Admission Order before the Hon'ble National Company Law Appellate Tribunal, being Company Appeal (Insolvency) No. 499 of 2018. The Hon'ble Appellate Tribunal heard the matter on 29th August 2018, and reserved it for orders after giving liberty to the parties to file their written submissions. 7th September 2018 - In accordance with the Public Announcement, and without prejudice to the Applicant's rights and contentions in respect of its challenge to the admission of the captioned Company Petition and the consequent appointment of the Respondent as the IRP, the Applicant submitted to the Respondent its claim and proof of claim, in Form C, by way of the Applicant's email dated 7th September 2018 addressed to the Respondent. Despite submission of the Applicant's claim against the Corporate Debtor, the Corporate Debto....
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....t has recorded a prima facie finding that the transaction entered into inter alia between the Applicant and the Corporate Debtor is not in the nature of debt. The Applicant had even preferred appeal bearing No. FOA(OS) (COMM) 185 of 2018 before Hon'ble Division Bench of Delhi High Court against the said finding of Hon'ble Single Judge of Delhi HC, the same was not entered and disposed of by order dated August 21, 2018. 7. The Applicant has suppressed this material fact in the present Application filed before this Hon'ble Tribunal. It is submitted that on this ground alone the present Application needs to be dismissed in limine. A copy of the said order dated August 2, 2018, passed by the Hon'ble Delhi High Court is annexed hereto and marked as Exhibit-"DD". Further, the Respondent craves leave to refer to and rely upon the said order dated August 21,2018 passed in appeal No. FAO(OS) (COMM) 185 of 2018 when produced." 5.1 The Respondent RP has vehemently pleaded that numerous frivolous attempts have been made but the Applicant was always unsuccessful before several Judicial Authorities including the Hon'ble High Court. According to the Learned Counsel....
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.... merely a contract of Pledge. 5.3 Besides above reasons, Learned RP has also drawn our attention through a Reply in writing that Nityank itself had filed a Misc. Application before NCLT (MA-377/2018) in Company Petition No. 1238 of 2018 wherein it is alleged that the transaction of Claim-B was a fraudulent transaction and therefore, prayed for cancellation of the same. Therefore, now said Claim-B cannot be demanded as a genuine transaction that too, a financial debt. According to Learned RP it is a very complex situation and not a case of clear financial debt, therefore, rightly rejected. In the Reply the details of the transaction were narrated as it has already been narrated by Nityank Applicant. 5.4 The Learned RP has also drawn our attention on an Order of Respected NCLAT New Delhi titled as Nityank Infrapower & Multiventures (P.) Ltd. v. Invex (P.) Ltd. [2019] 101 taxmann.com 267 (NCL - AT), wherein the entire transaction was discussed in detail and thereafter it was concluded that the Appellant (Nityank) had failed to suggest that the Application under Section 7 filed by Invex was with malicious intent. The Appeal of Nityank was dismissed, for ready reference relevant p....
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....re trust deed). Pursuant to the said 'Debenture Trust Deed', the 'Hindustan Oil' issued nonconvertible debentures having face value of Rs. 10 Lakhs each at par aggregating to Rs. 1626 Crores by the debenture trustee in favour of the Applicant- 'Nityank Infrapower & Multiventures Pvt. Ltd. The Applicant- 'Nityank Infrapower & Multiventures Pvt Ltd.' has become the beneficial owner of the said debentures within the meaning of 'Debenture Trust Deed'. It was agreed that the 'Hindustan Oil' will be liable to pay default interest at the rate of 18% which have not been paid on the respective dates. In order to secure the payment obligation, 'M/s. Dome-Bell Electronics India Private Limited'- ('Corporate Debtor') executed a corporate guarantee deed dated 30th December 2016 in favour of the Applicant- 'Nityank Infrapower & Multiventures Pvt. Ltd.' As a result, 'M/s. Dome-Bell Electronics India Private Limited'- ('Corporate Debtor') had guaranteed the payment obligation of 'M/s. Hindustan oil' in relation to the debentures. Additionally, the payment obligation was partly secured by a share pledge agre....
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....e said default and in view of the indebtedness of M/s. Dome-Bell Electronics India Pvt. Ltd. ' (Corporate Debtor'), the Applicant - 'Nityank Infrapower & Multiventures Pvt. Ltd.' was constrained to file a Company Petition. In this Application further information is given that the 'M/s. Dome-Bell Electronics India Pvt. Ltd. ' (Corporate Debtor') was the owner of 4,08,90,000 shares of 'Videocon D2H'. Pursuant to an oral agreement, it was agreed that the 'M/s. Dome-Bell Electronics India Pvt. Ltd. ' (Corporate Debtor') shall issue additional security to the Applicant of those identified shareholding. It was found by the Applicant that 'M/s. Dome-Bell Electronics India Pvt. Ltd. ' (Corporate Debtor') had pledged some of those shares to a third party after the default committed of non-payment. Through a correspondence it was found that the 'M/s. Dome-Bell Electronics India Pvt. Ltd. ' (Corporate Debtor') had pledged 3,40,00,000 equity shares out of the identified shareholding. According to the Applicant, the impugned transaction was entered fraudulently to defeat the Applicant's - 'Nityank Infrapower & Multi....
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....of the petition under Section 7 was not served on it, but such submission cannot be accepted. The Adjudicating Authority has rightly rejected the plea as the law is settled law is that only after being admitted as a party to the litigation an Intervener can get entitlement for demand of a copy of a pleading. It is also a settled law that the 'Corporate Insolvency Resolution Process' is not a litigation as held in "Binani Industries Limited v. Bank of Baroda & Anr.- Company Appeal (AT) (Insolvency) No. 82 of 2018 etc." 9. Therefore, supply of copy of pleading to an intervenor does not arise. This apart, in fact no affidavit or pleading is filed before the Adjudicating Authority but the requisite form such as, (Form-1) is filed for application under Section 7 or (Form-5) for filing application under Section 9. In the said format the applicants only provide the details as required as per the format which includes the name of the 'Corporate Debtor', 'Creditors', amount of 'debt' and debt of 'default' etc. along with relevant enclosures thereto. 10. For a petition under Section 65 of the 'I &B Code' or for alleged allegat....
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....Holder for which the Corporate Debtor had stood surety therefore the claim is nothing but "financial debt". The Civil Suits filed by the Corporate Debtor are false and merely a moonshine. In the rejoinder it is denied that there was existence of two separate financial debts. Placing reliance on the claim Form-C it is informed that there was no bifurcation of claims but an amount of Rs. 936,59,00,000/- were demanded and there was no bifurcation in the said Form dated 07.09.2018. 7. Both the sides were heard at length and the voluminous pleadings have also been discussed in detail in the light of annexed evidences and case laws relied upon. At the outset this Bench is of the view that the issue of the alleged claim has already been considered not only by this Bench but also by Hon'ble NCLAT, however, the nature of claim viz-a-viz Insolvency Proceedings was rejected. The entire matter is also subject to challenge before Hon'ble High Courts as referred in above paragraphs, thus demonstrating that the claim of the Applicant/Nityank is disputed one. All the judicial forums have gone in depth to understand the nature of transaction and several agreements to analyse the complexi....
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....quirement is that the money borrowed must be against the payment of interest. Facts of this case are complex as well as depending upon various terms and conditions or happening of certain events, therefore, in plain terms the transaction did not appear to be that the said transfer of money was only for the purpose of earning interest. It has also not been established that the money was transferred to get a fixed value of the money, that too, without element of risk or loss. Interestingly against the transfer of total amount of Rs. 11,08,00,000/- almost 50% was returned as per the terms of the business deal narrated supra. This fact itself has proved that the money was not exchanged between the parties to earn interest but it was a convoluted business deal amongst the parties. The business deal was admittedly in respect of a Real Estate Project. The Petitioner had failed to complete the project. During the progress of the project initially, a sum of Rs. 50,00,000/- (Rupees Fifty Lakhs) was paid by the Respondent on 26.10.2010 vide a Cheque of Bank of India. Since the Respondent had also invested and in lieu 16 flats were to be purchased by the Respondent, therefore, further mutual a....
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....dividend or interest. Investment of funds automatically itself earn interest. Such investor is not even concerned about the business profit or loss of the borrower, but only concerned about his time value of money lent. A fine line of distinction is very much in existence between the two. These are few points, not exhaustive, nevertheless distinguishing a business deal with a financial deal. On these parameters at present in this case the transfer of money was nothing but a business transaction and not a financial debt as defined in the Code. 10. Keeping brevity in mind the case laws are not reproduced, however, on careful reading it is legally sustainable that, every business transaction is not a loan transaction so as to be held as "financial debt". Resultantly, following the law already laid down we find no force in this Petition. Hence Petition is dismissed, to be consigned to records." 8. It is important to note in this case that the impugned transaction between the two parties was in fact not a direct transaction in the nature of a transaction where the relationship between the two parties is of "borrower" and "lender". Rather as per the facts narrated hereinabove....
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....greement ("SPA") executed on 01.02.2018 entered into between Debenture Trustee and Share Holder of Videocon D2H Ltd. As per the SPA the Corporate Debtor had pledged 50,900 equity shares of Videocon D2H Limited in favour of the Debenture Trustee (for the benefit of the Applicant herein) and agreed to pledge further 4,08,00,000 equity shares of Videocon D2H Limited. The grievance is that HOVL and the Corporate Debtor had committed default in respect of the impugned payment obligation. However, one more event took place that on occurrence of default on 12.04.2018 the Applicant invoked the pledge of 50,90,000 shares in Videocon D2H Limited. The Debenture Trustee sold the pledged 50,90,000 shares and remitted to the Applicant an amount of Rs. 1560.04 Crores realized through such sale, but leaving behind an amount of Rs. 348,43,00,000/-, alleged to be payable by the Corporate Debtor as on 21.08.2018. In respect of the said claim on Public Announcement under section 15 of the Insolvency Code this Applicant had lodged a claim before RP on Form-C dated 07.09.2018. Further it is informed in this Application that certain letters were exchanged however the RP kept the claim undecided. Meanwhil....