TaxTMI 
TaxTMI 
2020 (1) TMI 1398
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....ustrial Park, Jedcherla at Polopally (V) Jedcharla Mandal, Mahaboobnagar District by the Andhra Pradesh Industrial Infrastructure Corporation Limited (now Telangana Industrial Infrastructure Corporation Limited-TSIIC) vide registered deed of sale dated November 13, 2009, registered with the Sub-Registrar of Jedcharla vide document no. 7062/2009 for the purpose of setting up a unit for manufacturing bulk drugs, formulations etc. The said Deed of Sale with TSIIC states that the terms and conditions relating to sale were settled in the agreement of sale between TSIIC and the Corporate Debtor entered into on 5-1-2008 and rectification of sale agreement on 30-4-2009 (clause 12 on page 71 of Petition). One of the key conditions of sale/allotment was that the prior approval of TSIIC had to be obtained for transfer of the said land to any person. 2.2 It is stated that for the purpose of setting up the Unit, the Corporate Debtor approached, and was sanctioned facilities by the State bank of India, Industrial Finance Branch, Hyderabad ("Lender") to an extent of Rs. 21.50 crores, for civil works and purchase of machinery and equipment, for establishing manufacturing facilities on the above....
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....e OTS, the parties have agreed that the Financial Creditor shall, on behalf of the Corporate Debtor pay the amount under the OTS directly to the Lender as a part of the sale consideration for the purchase of the schedule property, together with the structures standing thereon, and the plant and machinery. 2.7 It is stated that one of the key terms of the Agreement of Sale (in clause II in page 53 of the Petition) was the condition precedent that the Corporate Debtor shall obtain all the necessary and applicable permissions from the statutory authorities, including the Lenders, wherever required, for alienating the assets under the Agreement. Thus, the Corporate Debtor had agreed to obtain all necessary permissions, including obtaining an NOC from TSIIC, the Statutory Authority who had allotted the said land to the Corporate Debtor, for the Financial Creditor to pay the balance amount under the OTS and enter into a Sale Deed with the Corporate Debtor. Further, clause 11 under 'Indemnity' in the Agreement (Clause V on page 56 of the Petition) sets out certain 'Indemnification Events' under which, on the happening of certain event, the Corporate Debtor shall indemni....
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....t the project in the above plot with in stipulated period, and no transfer of the subject land to the third party shall be allowed without prior permission from APIIC (presently TSIIC). ...............Since proposal of cancellation of allotment and NOC also stipulated that you are bound to return the Original Documents sent to you vide reference 2nd cited." 2.10 From the above, it is abundantly clear that in February 2018, TSIIC which had originally allotted the said land to the Corporate Debtor, had informed the Lender that it was in the process of cancelling the said allotment as the Corporate Debtor has failed to commence the project in time, and asked the Lender to return the original title deeds which were placed by the Corporate Debtor with the Lender at time of seeking the said loan. 2.11 As no permission from TSIIC was forthcoming, and the time under the OTS offer letter dt. 13-11-2017 had expired in May 2018, the Financial Creditor, even as there was no requirement as prescribed under the Code to do so, issued a notice to the Corporate Debtor in October 2018, asking the Corporate Debtor to repay the entire amount of Rs. 2.35 crores paid by the Financial Cred....
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....f the Corporate Creditor, Dr. S.K. Krishnaveni is neither arrayed in the notice by the Financial Creditor dated 3-10-2018 nor is the said person arrayed as a Financial Creditor in the instant proceedings. There is also no whisper in the pleadings of any authorization by the said Dr. S.K. Krishnaveni to the Financial Creditor in this matter. The entire amount is not due as the failure of the Financial Creditors to deposit the balance of the money let to the loss and the Corporate Debtor is at no fault in the matter. 3.6 That the amount paid is a payment under an Agreement of Sale, which could not be completed not on account of any fault of the Corporate Debtor but on account of the failure of the Financial Creditor in raising of the necessary funds and honouring the terms of the Scheme sanctioned by the Bankers of the Corporate Debtor. Reiterating above, the counsel for the Respondent prayed to dismiss the Application. 4. Counsel for the Financial Creditor filed Rejoinder and written submissions reiterating the averments made in the Petition and further prayed to allow the Application as prayed for. 5. Heard both the sides and perused the record. 6. It is undisputed f....
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....r the Code, the following definition have to be referred to: Sec. 5(8) - Financial Debtor "financial debtor" means a debtor along with interest, if any, which is disbursed against the consideration for the time value of money and includes- (a) money borrowed against the payment of interest; (b) any amount raised by acceptance under any acceptance credit facility or its dematerialised equivalent; (c) any amount raised pursuant to any note purchase facility or the issue of bonds, notes, debentures, loan stock or any similar instrument; (d) the amount of any liability in respect 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; 1 Ins. by Act No. 26 of 2018, sec. 3 (w.e.f 6-6-2018). 8 (f) any amount raised under any other transaction, including any forward sale or purchase agreement, having the commercial effect of a borrowing; (g) any derivative transaction entered into in connection with ....
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....nts that noscitur a sociis being a mere rule of construction cannot be applied in the present case as it is clear that wider words have been deliberately used in a residuary provision, to make the scope of the definition of "financial debt" subsume matters which are not found in the other sub-clauses of section 5(8). This contention must also, therefore, be rejected. 76. It remains to deal with arguments on the effect of a deeming fiction. Under the explanation added to section 5(8)(f), 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. 77. In every case in which a deeming fiction is to be construed, the observations of Lord Asquith in a concurring judgment in East End Dwellings Co. Ltd. v. Finsbury Borough Council (1952) Appeal Cases 109 are cited. These observations read as follows: "If you are bidden to treat an imaginary state of affairs as real, you must surely, unless prohibited from doing so, also imagine as real the consequences and incidents which, if the putative state of affairs had in fact existed, must inevitably have flowed from or"' 14. It is cle....
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....n. 17. The instant petition is hereby admitted and this Adjudicating Authority Orders the commencement of the Corporate Insolvency Resolution Process which shall ordinarily get completed as per the time line stipulated in section 12 of the IB Code, 2016, reckoning from the day this order is passed. 18. This Adjudicating Authority hereby appoint Mr. Anjaneyulu Sadhu, having IP Regn. No. IBBI/IPA-001/IP-P00963/2017-2018/11584 (IRP) as the name proposed by the Financial Creditor and his name is reflected in IBBI website. He has also filed his written consent in Form - 2. The IRP is directed to take charge of the Respondent/Corporate Debtor's management immediately. He is also directed to cause public announcement as prescribed under section 15 of the I&B Code, 2016 within three days from the date of this order, and call for submissions of claim in the manner as prescribed. 19. This Adjudicating Authority hereby declares the moratorium which shall have effect from the date of this Order till the completion of corporate insolvency resolution process for the purposes referred to in section 14 of the I&B Code, 2016. We order to prohibit all of the following, namely: ....