TaxTMI 
TaxTMI 
2020 (8) TMI 740
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....ave duly acknowledged payment of Rs. 17,51,10,000/- from them towards the cost of components i.e. (Residential Plots, Group Housing, Commercial, EWS & Institutional Land) no allocation has been made by the petitioner so far. On payment of the acknowledged amount the Respondent was immediately entitled to all rights, title and interest in various project components allocated as its share detailed in the Annexure 'VI' to the MDA. Having paid this amount, the Respondents have been repeatedly asked the petitioners for compliance of their obligations. It is pointed out that the request for the same had been last made vide their letter dated 09.4.2018 and to counter this request, the Petitioner issued the demand notice U/s 8 of IBC on 17.04.2018, culminating in the present Petition. 5. Learned Counsel for the Respondent has argued that to enable a Financial Creditor trigger section 7 of the Code for initiating CIRP of the Corporate debtor, the default should be in respect of a "Financial debt' owed to any financial creditor, the essential requisites of which includes: * There must be a disbursal of loan amount; * Such disbursal should be made against the consid....
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....action to be a commercial transaction against consideration of time value of money, having an effect of borrowing and constitutes a financial debt under the provision of 5(8)f and h of IBC. 4. The Learned Counsel for the Appellant placed reliance on the following clauses of the MDA which are reproduced as hereunder for better understanding of the case; '7.9.2. The terms of the MDA and Addendum to MDA have categorically envisaged the position of the Respondent as a collaborator and participating entity. The relevant clauses substantiating the nature and role of Respondent as collaborator are being reproduced hereunder for ready reference. 'Clause 3.1 of the MDA: "3.1. Parties agree that in consideration of aggregate amount of Rs. 17,51,10,000/- (Rupees Seventeen Crores Fifty One lacs Ten Thousand only) paid by Solitaire to Vipul, receipt of which is hereby acknowledged by Vipul and in lieu of the participation, obligation and rights of Solitaire in development and proceeds the project and the Project Land under the JDA. Solitaire shall be entitled to the rights, title and interest in various projects components of project and have obligation....
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....itaire makes the payment of its share of Government charges towards external development charges for PAPRA Exemption Phase I and pays the Vipul the current Solitaire's Dues prior to sale of School Site and Balance Acquired Land or (ii) sale of School Site and/or Balance Acquired Land have not been concluded pursuant to clause 3, 4 and 5 of this Addendum even on the expiry of twelve months from Execution Date, then Clauses 3, 4 and 5 of this Addendum shall not be applicable and School Site and/or Balance Acquired Land (as shall have remained unsold) shall be dealt with in the manner provided in this Agreement." 7.9.3. That, based on the conjoint reading of the aforesaid clauses, it is substantiated beyond doubt that the Appellant and Respondent were collaborators for the purposes of joint development of the Project based on the terms and conditions of MDA and Addendum to MDA.' (Emphasis Supplied) 5. Learned Counsel for the Appellant argued that based on the conjoint reading of the aforenoted clauses it is proved that the Appellant and the Respondent were collaborators for the purpose of Joint Development Agreement and therefore the Appellant is a 'Fi....
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....onents and further on making of such payments, the Respondent was immediately entitled to all rights, title and interest in the Project components and since the Appellant failed to comply with these obligations, it committed a breach of the MDA and hence no amounts are due and payable by the Respondent. He further contended that the MDA was executed by the Respondent in its capacity as an 'Investor' and hence the underlying nature of MDA was that of the 'Works Contract'. He placed reliance on clauses 2.1, 2.3, 3.1, 3.2.3, 3.2.4 and 3.2.5, 3.5.4 and 3.7.8 of the MDA together with clauses 6.1, 6.6, 6.7 and 6.8 of MDA read together with clauses 1, 1(a), 2 and 11 of the Addendum, to establish his case. 8. The counsel for the Respondent submitted that the obligation to pay Rs. 1.11 Crores was due after a period of 90 days of the execution date whereas the components on the other hand were to be transferred within 30 days of the execution date; the components have not been transferred in favor of the Appellant and therefore, the Respondent is not liable to pay any amounts; that Agreement pertains to mutual rights and obligations and as per Section 51 to 54 of the Indian Contract Act, ....
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....ct of any lease or hire purchase contract which is deemed as a finance or capital lease under the Indian Accounting Standards or such other accounting standards as may be prescribed; (e) receivables sold or discounted other than any receivables sold on non- recourse basis; (f) any amount raised under any other transaction, including any forward sale or purchase agreement, having the commercial effect of a borrowing 1[Explanation.- For the purposes of this sub-clause,- (i) Any amount raised from an allottee 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 obli....
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....s Dues beyond 60 days (including the grace period) shall attract interest at the rate of 18% p.a. till such payment (including interest thereon) is discharged by Solitaire.' 14. At this Juncture, we find it significant to reproduce to the legal definition of "Joint Venture". Joint Venture An association of two or more individuals or companies engaged in a solidary business enterprise for Profit without actual partnership or incorporation. 15. At the outset, we address ourselves to the relevant clauses of the Agreements entered into between both the parties to determine the nature of relationship and transactions, which is necessary to ascertain the nature of 'debt'. 16. For easy reference, the Appellant is hereinafter referred to as 'Vipul' as specified in the terms of the Agreement. Likewise the Respondent is referred to as 'Solitaire'. As per clause 2.1 of the MDA, 'the party shall share the compensation received pursuant to such acquisition or requisition in the ratio of 75% to Vipul and 25% to Solitaire'. Clause 2.2 states 'the definition and other benefits and obligations provided under this Agreement are given effect to, in a manner that sharing int....
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....re, there is a tri- party Agreement between Vipul, Solitaire and the Plot Buyer. Clause 3.2.13(d) further specifies that Vipul shall sign such document for the limited purpose of transfer of ownership of land comprised in Solitaire Residential Plots. This further establishes that Vipul too is a signatory for transfer of ownership of land and therefore viewed from any angle the said Agreement can only be construed as a Joint Venture Agreement. Additionally, clauses 3.3.1 and 3.3.5 refer to 'Group Housing'. It is further stated that 2.48 acres out of the total Layout Plan is allocated to Solitaire and 7.47 acres is allocated to Vipul towards its share. Clause 3.3.5 specifies that Vipul shall, at the request of discretion of Solitaire, execute necessary documents for assignment of such Agreement to sell in respect of Solitaire Group Housing area in favor of any third Party as may be nominated by Solitaire in its discretion. Further, Vipul shall execute and deliver and co-operate for registration of sale deed for transfer of right, title and interest of Solitaire Group Housing area in favor of Solitaire/ its transferee. All payments, receivable, proceeds assigned from such sale/transfe....