AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2019 (11) TMI 1425
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....pees Ten Crore and Forty Four Lakh Only) as on 17.06.2019. 3. The Applicant submitted that the Applicant and the Corporate Debtor entered into a Business Transfer Agreement dated 07.04.2018 (hereinafter referred as 'BTA'), and pursuant to the said agreement the Applicant transferred, and Corporate Debtor acquired the undertaking (Precipitated Silica Plant), as a going concern on Slump Sale Basis, in compliance with the provisions of Section 2(42C) of the Income Tax Act, 1961 (hereinafter referred as 'IT Act'). The Applicant submitted that Transfer Consideration for the aforesaid transfer of undertaking was agreed to be Rs.123,00,00,000/- (Rupees One Hundred and Twenty Three Crore Only). Copy of the BTA dated 07.04.2018 is annexed to the application. 4. The Applicant submitted that pursuant to the terms and conditions of BTA and Satisfaction Letter issued by the Corporate Debtor on 18th June 2018, the transfer of undertaking as a going concern on 'as is where is' basis was completed. The Applicant submitted that admittedly the slump sale was consummated on 18.06.2018 and on the same day the possession of undertaking was handed over by the Applicant to the Corporate Debtor, accordi....
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....,00,000/- for the transfer of undertaking on Slump Sale basis, the Applicant sent a Notice dated 13.05.2019 to the Corporate Debtor and requested to release the balance consideration due along with interest. The Applicant further submitted that upon refusal of the Corporate Debtor to pay the requested balance consideration, the Applicant proceeded and sent Demand Notice in Form 3 dated 03.06.2019 and Demand Notice in Form 4 dated 22.06.2019 to the Corporate Debtor under Section 8 of the I&B Code demanding payment of outstanding balance consideration of Rs.58,00,00,000/- along with interest. The copy of the Notice dated 13.05.2019 and Demand Notices under Section 8 of the I&B Code are annexed to the application. 7. Before proceeding further, it is pertinent to note that, the Applicant through present application is claiming a default of Rs.58,00,00,000/- along with interest, and the Applicant is claiming such default on account of outstanding balance consideration due out of the total consideration of Rs.123,00,00,000/- which was agreed between the parties herein for the transfer of undertaking as a going concern on Slump Sale Basis as recorded in the BTA. Further, the Applicant in....
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....tion of Rs.65,19,00,000/-, and thus the Applicant is consciously misinterpreting the BTA to extort money from the Corporate Debtor. Therefore, the present application deserves to be dismissed. The copies of the documents mentioned supra are annexed to the Affidavit in Reply of the Corporate Debtor. 9. We have heard the arguments of counsels for the parties and have perused the records. 10. On detail perusal of the Business Transfer Agreement dated 07.04.2018 and correspondence exchanged between the parties, this Bench has come to the conclusion that, present application is liable to be rejected mainly upon following two grounds, reasoning for which is detailed in the following paragraphs: I. Existence of the operational debt and its default is not satisfactorily proved- a. The Applicant contended that, Transfer Consideration for transfer of undertaking on Slump Sale Basis was Rs.123,00,00,000/- and consideration under 3 Tranches totalling to Rs.58,00,00,000/- was for Additional Works. The said 2 (Two) sets of considerations were distinct and separate from each other and could not be combined. Therefore, the Corporate Debtor was liable to pay balance consideration of Rs.58,00,....
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.... from the above admissions made by the Applicant, it is clear that Applicant was well aware of, and agreed that, Transfer Consideration for BTA of Rs.123,00,00,000/- be divided into parts, as more specifically mentioned in the BTA. c. Also, the above contention of the Applicant is not supported by any documentary evidence. The primary document relied upon by the parties is Business Transfer Agreement dated 07.04.2018 and its execution is not disputed by the parties. Clause 1.1.103 of the BTA has defined "Transfer Consideration" to mean: "Transfer consideration means the aggregate of an amount of upto INR 123,00,00,000 (Indian Rupees one hundred and twenty three crores) only, which may be adjusted and paid in accordance with this Agreement" (emphasis supplied) Further, under clause 3 of BTA, payment of Transfer Consideration is detailed as: "3.1.1-The Closing Transfer Consideration shall be calculated in accordance with Part A of Schedule II, and paid by the Transferee on the Closing Date in the manner set out in paragraph 1 of Part B of Schedule II; and 3.1.2-The Balance Consideration payable, if any, shall be paid in accordance with the provisions of paragraph 2 of Part....
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....ment of sale consideration and lump sum consideration has to be paid in one single payment rather than in instalments. The definition of Slump Sale as per Section 2(42C) of the IT Act, is as follows: "slump sale" means the transfer of one or more undertakings as a result of the sale for a lump sum consideration without values being assigned to the individual assets and liabilities in such sales. Therefore, it is evident that, definition of Slump Sale given under the IT Act is silent upon the mode of payment of consideration. Therefore, the Applicant cannot draw suitable inferences at its own will, from the said definition, in order to favour its claim against the Corporate Debtor. e. Also, it is admitted fact that the undertaking was transferred on 18.06.2018 and the Corporate Debtor made part payment of Rs.65,19,00,000/- on 18.06.2018. Further, as per the contention of the Applicant, from 18.06.2018 the Corporate Debtor was liable to pay an amount of Rs.58,00,00,000/-, independent of Tranches payment of Rs.58,00,00,000/-. However, from 18.06.2018, it was only on 13.05.2019 that the Applicant for the first time, demanded the payment of balance consideration of Rs.58,00,00....