TaxTMI 
TaxTMI 
2019 (11) TMI 1522
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....with this Bench of the Tribunal. 2. The application in Form 1 is signed by Shri Aman Doon, Director of the S-Tech. His affidavit verifying the contents of the application is at pages 19 to 21 of the petition. 3. In Part-III of Form 1, Sh. Vijay Kumar Sharma, Registration No. IBBI/IPA-002/IP-N00035/2016-17/10074 has been proposed as Interim Resolution Professional. 4. In Part IV of Form 1, it is stated that an amount of Rs. 50,00,000 was paid on the date of signing of Memorandum of Understanding (MOU) dated 10.04.2015 and an amount of Rs. 2,50,00,000 was paid through cheque No. 486626 dated 23.04.2015 drawn on Indian Overseas Bank, Cantonment Branch, Delhi which was debited to the account of S-Tech on 25.04.2015 and thereby total amount of debt is Rs. 3,00,00,000. The amount claimed to be in default is stated to consist of principal of Rs. 3.00 crores and simple interest calculated at 15% amounting to Rs. 1,95,80,137, aggregating to Rs. 4,95,80,137 and the date on which default occurred is stated to be 16.03.2017. 5. Vide order dated 12.09.2019, it was stated that the MOU i.e. Annexure A-4 basing on which the instant CP has been filed by S-Tech, describing itself to be a....
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.... of any interest on the amounts of Rs. 50.00 lacs and Rs. 2.50 crores paid by S-Tech on 10.04.2015 and 25.04.2015 respectively. Therefore, the issue for consideration is whether there is a debt which is disbursed against the consideration for the time value of money and including any amount raised under any other transaction, including any forward sale or purchase agreement, having the commercial effect of a borrowing. 9. The learned authorized representatives for S-Tech have relied on Pioneer Urban Land and Infrastructure Ltd. and Anr. Vs. Union of India & Ors. supra in which the Hon'ble Supreme Court held that Section 5(8)(f) does appear to be residuary provision which is "catch all" in nature and that this is clear from the words "any amount" and "any other transaction" which means that amounts that are "raised" under "transactions" not covered by any other clauses would amount to a financial debt if they had the commercial effect of a borrowing. It was further held that sub-clause (f) Section 5(8) thus read would subsume within it amounts raised under transactions which are not necessarily loan transactions, so long as they have the commercial effect of a borrowing. In p....
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....uch amount would be subsumed within Section 5(8)(f) as the sale agreement between developer and home buyer would have the "commercial effect" of a borrowing, in that money is paid in advance for temporary use so that a flat/apartment is given back to the lender. 11. In the present case, the MOU dated 10.04.2015 states that the first party (Victory Buildestates) and confirming party (Step Reality Pvt. Ltd.) are now desirous to transfer the complete project of affordable group housing with regard to the land and measuring 5.03125 acres situated in the revenue estate of Village Devlawas, Sector 27, Rewari by way of transfer of the complete management and control of the first party (Victory Buildestates) in favour of the second party (S-Tech) against fulfilment of the conditions mentioned therein including payment of total consideration amount of Rs. 29,800,4,480. The MOU provides for payment of Rs. 50.00 lacs as first instalment; second instalment of Rs. 2.50 crores, vide cheque No. 486626 dated 23.04.2015 drawn on Indian Overseas Bank, Delhi Branch; another instalment of Rs. 3.00 crores by 20.05.2015; and balance payment to be made within six months from the date of signing the ag....
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....ctuations in market and the risks to which it is exposed, a Company may at times feel the heat of resource crunch and the stakeholders like Promoter, Director or a Shareholder may, in order to protect their legitimate interests be called upon to respond to the crisis and in order to save the company they may infuse funds without claiming interest. In such situation such funds may be treated as long term borrowings. Once it is so, it cannot be said that the debt has not been disbursed against the consideration for the time value of the money. The interests of such stakeholders cannot be said to be in conflict with the interests of the Company. Enhancement of assets, increase in production and the growth in profits, share value or equity enures to the benefit of such stakeholders and that is the time value of the money constituting the consideration for disbursement of such amount raised as debt with obligation on the part of Company to discharge the same. Viewed thus, it can be said without any amount of contradiction that in such cases the amount taken by the Company is in the nature of a 'financial debt". 14. It has therefore, been held by Hon'ble NCLAT that it is manif....