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2020 (8) TMI 383
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....w Delhi, Court No. IV, New Delhi) in Company Application No. 184 of 2018 in Company Petition (IB) No. 492/ND/2018 dated 9th July, 2019 whereby the Adjudicating Authority has declared that the Appellants are not falling under the category of Financial Creditors but may be un-secured Creditors who may avail other remedies to recover their debts. Appellants also challenged the subsequent modification order dated 29th July, 2019 modifying the order/Judgment dated 09.07.2019 passed in CA No. 184 of 2018 whereby the Adjudicating Authority rectified the corrections. Brief Facts: 2. M/s Vaiva Metals and Alloys Pvt. Ltd. - Operational Creditor filed Company Petition(IB) bearing No. 492/ND/2018 against M/s Sungil (I) Pvt. Ltd. (Corporate Debtor)- Respondent No. 2 herein before the Adjudicating Authority and the Company Petition was admitted on 01.06.2018. Consequent to admission, Respondent No. 3 herein was appointed as Resolution Professional. Respondent No. 3 issued Public Notice calling upon the Creditors of the Respondent No. 2 (Corporate Debtor) to submit proof of claims. Pursuant to the said Public Notice, the Appellants filed their respective Claims before the Respondent No. 3 and ....
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....ing rights of the Appellants. At the bottom of the Report dated 29.11.2018 it is stated that "the claims admitted are preferential and based on the information/documents received from the Financial Creditors. Only principle amount has been considered in case of Financial Creditors other than Shinhan Bank i.e., Respondent No. 1 herein. The rate of interest has not been finalised and will be taken up for discussion in CoC subject to the approval by the Hon'ble Adjudicating Authority. The claims are subject to further clarifications/documents to be provided by the Creditors. 4. Learned Counsel for the Appellants submitted that the learned Adjudicating Authority without going into the factual aspects, passed the Impugned Order and declared that the Appellants are not falling under the category of Financial Creditors but may be unsecured creditors who may avail other remedies to recover their debts. Learned Counsel further submitted that the Appellants advanced loans to the Corporate Debtor against which interest was also paid for a stipulated period of time and Appellants cannot be Operational Creditors. He further submitted that the loans advanced by the Appellants fall within the pu....
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....ittee of Creditors. True, allottees are unsecured creditors, but they have a vital interest in amounts that are advanced for completion of the project, maybe to the extent of 100% of the project being funded by them alone. As has been correctly argued by the learned Additional Solicitor General, under the proviso to Section 21(8) of the Code if the corporate debtor has no financial creditors, then under Regulation 16 of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016, up to 18 operational creditors then become the Committee of Creditors or, if there are more than 18 operational creditors, the highest in order of debt owed to operational creditors to the extent of the first 18 are then represented on the Committee of Creditors together, with a representative of the workers. If allottees who have funded a real estate project of the corporate debtor to the extent of 100% are neither financial creditors nor operational creditors, the mechanism of the Committee of Creditors, who is now to take decisions after the Code is triggered as to the future of the corporate debtor, will be non-existent in a case where there are ....
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....o. 1 submitted that the Appeal is devoid of merits on the ground that the learned Adjudicating Authority has correctly held that 2nd to 5th CoC meetings made as nonest on account of Appellants taking part in the said meetings as members of CoC. The RP had re-constituted CoC and admitted the claims of the Appellants as Financial Creditors which is illegal. On the basis of re-constitution of CoC, the voting rights of Respondent No. 1 herein had been reduced from 100% to 0.25% in the CoC. It was observed that large amount of claims had been admitted on behalf of individuals. 9. Learned Counsel for the Respondent No. 1 submitted that on 29.08.2018, they sent an e-mail to the IRP- Respondent No. 3 herein requesting him to furnish the documents relating to re-constitution of CoC and the documents filed before the Adjudicating Authority. While so, re-constitution of CoC consisting of Respondent No. 1 herein and Appellants constituted the 3rd Meeting held on 29.08.2018, 4th meeting held on 12.09.2018 and 5th meeting held on 29.09.2018 respectively in which by virtue of voting rights of the Appellants, various resolutions have been passed. However, Respondent No. 1 herein dissented to the ....
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....ransaction is prohibitary in nature. The amounts/monies alleged advanced by the Appellants did not follow the procedure laid down under Section 73 of the Companies Act, 2013. As such, individual transactions entered into by the Appellants are illegal as they are in violation of Section 73 of the Companies Act, 2013. Therefore, by virtue of Sections 23 and 24 of the Indian Contract Act 1872, such transactions are void. He further submitted that the Appellants advanced monies/loans at extortionate rates of interest i.e., 48 to 60%. Such extortionate rate of interest gave a clear indication that the Appellants are participating in money lending activities and they are well aware of their illegal transactions. Learned Counsel further submitted that the claims of the Appellants cannot fall within the definition of Financial Debt under Section 5(8) of IBC. The alleged transactions fall within the meaning of "Extortionate Credit Transaction" under Section 50 of IBC read with Regulation 5 of Corporate Insolvency Resolution Process Regulation. Hon'ble NCLT has power under Section 51 IBC to strike of such transactions. In view of the reasons aforesaid, learned Counsel for the Respondent No. ....
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....It is clearly evident from paragraph XVII at page 14 of their Reply, which states as under: ... "XVII. It is submitted that the Appellants may not be made to suffer on account of ill intension and oblique motive of the Respondent No. 1. Whereas, the nature of transaction between the Appellants and Respondent No. 2 make it amply clear that the debt is well within the definition of section 5(8) of IBC i.e., Financial Debt and accordingly the Appellants are also well within the definition of the Section 5(7) of the IBC. Therefore, in view of the peculiar fact and circumstances, the Appeal filed by the Appellants deserves to be allowed in the interest of justice and equity." ... Findings : 14. Heard learned Counsel for the respective parties, perused the pleadings, documents filed in their support and citations relied upon by them. After hearing the parties, this Tribunal would consider whether the Appellants have made out any case on the basis of the grounds as made in the instant Appeal. The Adjudicating Authority vide impugned order dated 09.07.2019 allowed CA No. 184 of 2019. The Adjudicating Authority while passing the impugned order framed issue at paragraph -22 of the i....
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.... dated 02.08.2016 4% per month 8. Appellant No. 8 Rs. 15 lakhs [Rs. 10 lakhs & Rs. 5 lakhs] RTGS dated 07.04.2014 & Cheque No. 308683 dated 04.09.2014 4% per month 9. Appellant No. 9 Rs. 20 lakhs Cheque No. 119152 dated 21.03.2017 4% per month 18. From the above table it is evident that the rate of interest shown as 40% to 60% per annum. The stand of the Appellants that the loans were advanced by the individuals to the Corporate Debtor for the business purposes. The Appellants failed to provide any evidence showing that the Corporate Debtor required the loans and Board of the Corporate Debtor decided and resolved in its Board Meetings to take loans @ 3.3%,4% & 5% rates of interest that too from the individuals. In normal course of business, the Company takes loans from the Public Sector Bank or the Private Banks at the rate of interest charged by the Banks or Private institutions. But in the present case, Respondent-Corporate Debtor accepted loans from the individuals with an exorbitant rates of interest and the said advancement of loans by the individuals may be at the behest of Directors in collusion with the individuals. No reasonable person would agree t....
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....ment date, the liquidator or the resolution professional as the case may be, may make an application for avoidance of such transaction to the Adjudicating Authority if the terms of such transaction required exorbitant payments to be made by the corporate debtor." ... 21. It is admitted position that the Appellants No. 2,3,4,6,7 & 9 have purportedly advanced loans to the Corporate Debtor with exorbitant rates of interest on 04.07.2016, 22.08.2016, 23.08.2016, 10.10.2017, 02.08.2016 and 21.03.2017 which are within period of two years preceding insolvency commencement date i.e., 01.06.2018. Even as per submission of the learned Counsel for the Appellants, these transactions are considered to be Extortionate Credit Transactions and the same needs to be quashed and set aside. The transactions of the Appellants No. 1, 5 & 8 which are prior to two years preceding the insolvency commencement date. However, taking into consideration, the exorbitant rates of interest charged by the Appellants, the said transactions are unconscionable. 22. In so far as the stand of the Appellants that for seeking appropriate direction with respect to make an Application for avoidance of such transaction....