TaxTMI 
TaxTMI 
2018 (7) TMI 2183
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....thin the jurisdiction of this bench of National Company Law Tribunal. 3. The Brief facts of the present case are as follows : 3.1 That the Corporate Debtor (Respondent Company) has issued Debentures to the applicants (17 Debenture Holders ) as listed in Form 1 amounting to Rs. 81,34,000/- (Rupees Eighty one Lakh and Thirty Four Thousand). Debenture certificates issued by the Corporate Debtor to the applicant debenture holders (financial creditors) is attached to the Application. 3.2 That as per agreed terms, the loan amount should have been repaid on the date of Redemption along with monthly income in some cases. In case of monthly income scheme, for the initial months, the amount as agreed has been transferred to debenture holders' bank account. But, later on, the Corporate Debtor has stopped paying the monthly return. In lump sum payment scheme, the Corporate Debtor has not paid any amount on redemption date. Even after constant reminders and visits, respondent company has not shown, any inclination in paying the redemption amount and monthly return. Therefore, Corporate Debtor has defaulted in payment of Rs. 96,15,553/- ((Rupees Ninety Six Lakh Fifteen Thousand Five Hun....
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....ovisions of Section 71(10) and 73(4) of the Companies Act, 2013 for the refund/ redemption of debentures and deposits. About 100 petitions, which were collectively filed by approximately 2960 debenture holders/depositors have been disposed off with the direction to company i.e. Prism Industrial Complex Limited (i.e. Corporate Debtor in this case) to make repayment of the Deposit (s)/ Debenture (s) along with interest due thereon by the Terms and Conditions of the Deposit/ Debenture within 15 days from receipt of the order. In all such cases order has ben passed against the company Prism Industrial Complex. In one of the company petition No 88/Allahabad/2016, which was. filed against the same corporate debtor, Sri R P Agarwal was appointed as Amicus Curiae, who has filed his report wherein it is stated that; "Important facts gathered from documents filed with the ROC by Prism Industrial Complex Limited: Company has filed its annual accounts only up to financial year 2012-13. Annual accounts for the FY 2013-14, 2014-15, 2015-16 and 2016-17 have not been filed. Hence it is not possible to ascertain the current state of affairs of the company and its properties. From perusal o....
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.... highly suspicious and shrouded with mystery. Why the land mortgaged under the trust deed is not offered for sale? Why the details of properties of prism industrial complex Limited are not being disclosed? Why the audited accounts for the financial year 2013-14 to 2016-17 have not been filed with the ROC? All these questions raise a suspicion that the mortgaged property might have been sold/disposed of illegally with the connivance of the trustee. The offer for sale of land now is nothing but farce and a clever device to prolong the Proceedings. Since this land is owned by Prism Infracon Ltd and not by Prism Industrial Complex Limited, it cannot be sold and Proceeds utilised for meeting the liabilities of Prism Industrial Complex Limited. Whether the land will at all be sold or when it will be sold, at what price it will be sold and whether the proceeds will at all be available for discharging the liabilities of Prism Industrial Complex are all doubtful and uncertain. The intention of the Companies highly suspicious and malafide and intended to divert the attention of this Tribunal from the main issue and linger on the proceedings." The report of the Amicus Curiae indicates that th....
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....ed deposits from retail investors, by instruments purporting to be debentures. The debentures were issued to more than 3000 investors. In accordance with the provisions of sec. 67 of the Companies Act, 1956, these debentures were deemed to have been issued to public. ---- The debentures were issued in breach of the public issue norms, and therefore, the debentures must be redeemed immediately. Additionally, some of the debentures were regarded to be "deposits", being unsecured debentures, and orders have been passed by the NCLT for immediate repayment of the said debentures. Even while the said orders of NCLT are pending for execution, and have not been acted upon, application has been made by some of the financial creditors for insolvency of the Corporate Debtor under sec. 7 of the IBC. There are two essential reasons why such an application for declaration of insolvency and moratorium under sec. 7 cannot be granted. First reason is purely a question of bonfide reasons for making the application, and the implications of the insolvency declaration and ensuing moratorium. There is no doubt that the enactment of the insolvency resolution process under the IBC is ....
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....the definition of "financial services". A financial services provider, as per sec. 3(17) is one who is engaged in the business of providing financial services, in accordance with authorization or registration granted under the law. Where an authorization or registration is required by statute, not obtaining the same cannot grant the entity the right to get out of the provisions which are intended to apply to an entity engaged in similar services. Itis notable that sec. 3(7) excludes a financial services provider from the ambit of the Code. The intent of the exclusion is simple - if an entity is engaged in financial services business, it has a systemic significance. It involves money belonging to public. If such a company is put into a situation of moratorium, and the payments made by such entity are halted, the financial system could get into a tail spin. Such a serious implication to the financial system does not become irrelevant if the entity in question is accepting deposits without proper registration. In fact, keeping such entities outside a benevolent, remedial law such as IBC, is all the more important for such a truant entity, which is sitting with public money, and tha....