TaxTMI 
TaxTMI 
2021 (2) TMI 901
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.... .... " If we shall read the provisions contained under Section 73, 74 and 76 of the Companies Act along with (Acceptance of Deposits) Rule, 2014, then it can be said that all these provisions have come into force with effect from 01st April, 2014 and in view of the aforesaid provisions after commencement of this Act, no company can in view, accept or renew deposit in this Act from the public except in the manner provided in this Chapter and a special provision is made regarding the repayment of the deposited amount which was deposited prior to the enforcement of this Section and as per Section 74(1)(b), the company is liable to repay the amount within 3 years from such commencement on or before expiry of the period from which the deposit is accepted, whichever is earlier and if the company fails to repay the amount then there is a penal provision U/S 74(3) of the Companies Act, 2013. Here, in the case as we have already held that the 'Financial Creditors' everywhere mentioned the word 'deposit', therefore, the amount which he has deposited with the Corporate Debtor does not come within the purview of the definition of Financial Debt rather the Financial Creditors, admittedly, de....
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....pondent/Corporate Debtor' by the 'Appellant' & other 'Financial Creditors' for a default of Rs. 16,28,300/-(Rupees Sixteen Lakhs Twenty Eight Thousand Three Hundred only) which includes a sum of Rs. 13,70,000/-(Rupees Thirteen Lakh Seventy Thousand only) towards the amount payable by the 'Corporate Debtor' to the 'Financial Creditors' at the time of expiry of the various schemes floated by the 'Corporate Debtor' along with Rs. 2,58,300/- (Rupees Two Lakhs Fifty Eight Thousand and Three Hundred only) towards the interest at the rate of 12% per annum payable by the 'Corporate Debtor' to the 'Financial Creditors' which was calculated from the 'Date of Registration'/'Date of Investment' by the 'Financial Creditors' in the schemes of 'Corporate Debtor' till October, 2019. 4. The Learned Counsel for the 'Appellant'/Financial Creditors' points out that the 'Respondent'/'Corporate Debtor' floated 2 'Investment Schemes' under the plans entitled the 'Recurring Investment Plan' and the 'Lumpsum Investment Plan' to collect investments from individual Investors hailing from small towns and villages in India and these schemes were floated after the incorporation of the 'Respondent'/'Corporate....
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....and they had not given 'Debt' to the 'Corporate Debtor', in as much as they are entitled to get refund under the Companies Act, 2013. 7. The Learned Counsel for the 'Appellant' points out that 'Adjudicating Authority' in the 'Impugned Order' does not consider Section 3(6) and 3(11) of the Code to give a finding whether or not the investment made is a 'Debt' or not, and erroneously referred to the 'Companies (Acceptance of Debts) Rules, 2014', along with Section 73,74 and 76 of the 'Companies Act, 2013' to declare that since the investment made was to be refunded as per 'Companies (Acceptance of Debt) Rules', 2014 and as such the investments made by the 'Appellant' is not a 'Financial Debt' under Section 5(8) of 'Insolvency & Bankruptcy' Code. 8. The Learned Counsel for the 'Appellant' proceeds to point out that the 'Adjudicating Authority' (National Company Law Tribunal) ignored the fact that the 'Insolvency & Bankruptcy' Code is a complete code in itself and the same overrides 'Companies (Acceptance of Debts) Rules, 2014'. 9. It is represented on behalf of the 'Appellant' that the 'Adjudicating Authority' (National Company Law Tribunal ) had failed to appreciate an import....
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.... will prevail over Section 28A of the 'SEBI Act, 1992' etc. 16. In support of the proposition that collective investments schemes are 'Financial Debt' and further that the 'Insolvency & Bankruptcy' Code overrides 'SEBI', the Learned Counsel for the 'Appellant' seeks in aid of the decision of this 'Tribunal' in Bohar Singh Dhillon V Rohit Sehgal reported in 2019 SCC online NCLAT 233. 17. The Learned counsel for the 'Appellant' refers to the decision of this 'Tribunal' in Encore Asset Reconstruction Company Pvt. Ltd. V. Charu Sandeep Desai & Others reported in 2019 SCC online NCLAT 284 to the effect that 'Insolvency & Bankruptcy' Code overrides SARFAESI Act. 18. The Learned Counsel for the 'Appellant' refers to the decision of the Hon'ble Supreme court in Embassy Property Developments Pvt.Ltd. V. State of Karnataka and Ors (Civil Appeal No.9170 of 220 dated 3.12.2019) in regard to the jurisdiction of 'National Company Law Tribunal' V. Debt Recovery Tribunal' under the Code. ASSESSMENT : 19. It is to be pointed that before the 'Adjudicating Authority'(National Company Law Tribunal) New Delhi Bench, the 'Appellant'/'Financial Creditors' had filed the 'Application' under ....
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....stand of the 'Appellant' is that the 'Adjudicating Authority' (National Company Law Tribunal) had failed to take into consideration that the amount paid by the 'Applicants' to the 'Respondent' was clearly of 'Financial Debt'. The other contention of the 'Appellant' is that in terms of the 'Insolvency & Bankruptcy Code' and the 'Companies Act,' 2013 the 'Deposits' made by the 'Appellants' were 'Debts'/'Borrowings' upon the 'Corporate Debtor'. 23. It is to be pointed out that Section 3(11) of the Code defines 'Debt' meaning, a liability or obligation in respect of 'claim' which is due from any person and includes a 'financial debt' and 'operational debt'. Section 3(12) of the Code defines 'default meaning, non-payment of debt when whole of any part or instalment of the amount of debt has become due and payable and is not (paid) by the debtor or the corporate debtor, as the case may be. 24. It is to be remembered that for a 'default', there must be a subsisting debt. After all, the word 'default' is like not doing something which one should do. In fact, the term 'default' refers to an 'omission' or 'failure' to perform a legal or contractual duty. Suffice it to point that the wo....
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....Deposits) Rules, 2014' provides that a Company shall be liable to pay penal interest' at 18% p.a. to the 'depositor', if there is any failure to repay 'Deposits' within due date. In fact, the 'penal interest' is payable when the payment was overdue after maturity of the 'deposits'. 31. At the stage of 'Admission', the 'Adjudicating Authority' (National Company Law Tribunal) is to be satisfied that a 'Default' had occurred and the 'Corporate Debtor' is entitled to point out that the 'Default' had not occurred. No other person has the right to be heard at the state of 'Admission'. 32. There is no second opinion of an important fact that distinction between 'Deposits' and 'Loans' may not be a significant factor for interpreting the word, 'Deposit'. One cannot ignore a candid fact that 'maturity of claim', 'default of claim' or 'invocation of guarantee' has no nexus in regard to the filing of claim before the 'Interim Resolution Professional' under section 18(1)(b) of the 'Insolvency & Bankruptcy Code' and the 'Resolution Professional' under section 25(2)(e) of the Code. 33. As per the 'Companies (Acceptance of Deposits) Rules, 2014', the term 'deposit' is defined under rule 2....