TaxTMI 
TaxTMI 
2021 (11) TMI 466
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.... Bench has jurisdiction to deal with this petition. Brief Background: 3. The Present application being CP No. 1806 of 2019 (the "Applicant") under Section 7 of the Insolvency and Bankruptcy Code, 2016 ("Code") has been filed by Dr. Vilas Pandurang Sable and Ors. (hereinafter referred to as the "Applicants"), claiming, inter alia, alleged default of a purported financial debt of Rs. 2,60,00,000/-. The brief factual conspectus in which the present appeal has arisen is set out here under in the following paragraphs. 4. The Financial Creditor being the former directors of the Corporate Debtor had given loan on various occasions to it to carry out its activities. The aggregate loan amount given by the Financial Creditors amounted to Rs. 3,14,00,000/-. Thereafter the Corporate Debtor has paid an amount of Rs. 54,00,000/-. Thus, the total amount of Financial Debt liable to be paid by the Corporate Debtor to the Financial Creditor amounts to Rs. 2,62,00,000/-. Date on which Default occurred was 07.04.2017 as the Financial Creditors resigned from the directorship of the Corporate Debtor. The resignation letters were handed over to existing directors of the Corporate Debtor with understan....
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....efault' is defined in section 3(12) to mean non-payment of a debt when the whole or any part or installment 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. 13. The amount of loan payable is found under the heading 'Current Liabilities' in the financial statements files by the Corporate Debtor along with their Affidavit in Reply (Exhibit B at Pg. 16 at Para 4). 14. Current liabilities are those that are required to be repaid by a Company in the same financial year. The Current Liabilities represent loans and financial obligations due within one year. 15. The Civil Suits (refer Exhibit C and D of the Affidavit in Reply) filed by the Corporate Debtor is nothing but an afterthought pursuant to the Financial Creditor (in the capacity of a Operational Creditors) filing an Application u/s. 9 of the IBC, which is pending before this Tribunal. Further, the said suits have been incorrectly filed, in that, the Civil Courts do not have jurisdiction to hear matters involving deletion of entries made in the financial statements (the same rests solely with NCLT). The filing of Civil suit was as act done in ....
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....nce it becomes due and payable, which includes non-payment of even part thereof or an installment amount". The transaction between the parties is a 'financial debt' within the meaning of 5(7) of the code: 18. As per S. 5(7) of the Code, a Financial Creditor is a person to whom a financial debt is owed. A financial debt is defined under S. 5(8) of the Code as a debt along with interest, if any, which is disbursed against the consideration for the time value for money and includes all components enlisted under S. 5(8) from sub-clauses (a) to (i) of the Code. 19. In the present case the Financial Creditors have advanced interest free unsecured loans to finance the business of the Corporate Debtor. As held by the Hon'ble Supreme Court, the definition of financial debt under S. 5(8) of the Code and the Applicants are Financial Creditors within the meaning of S. 5(7) of the Code. The Applicant is competent to initiate Corporate Insolvency Resolution Process against the Corporate Debtor. In Orator Marketing Pvt. Ltd. Vs. Samtex Desinz Pvt. Ltd. it was observed that:- "22. The NCLT and NCLAT have overlooked the words "if any" which could not have been intended to be otios....
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....itors for declaration for striking off impugned entries in balance sheets of Corporate Debtor in 2018, much prior to the filing of present application by Financial Creditors. The Corporate Debtor also filed criminal complaint against present Financial Creditors. The said entries have been relied by Financial Creditors to move the present application. The Financial Creditors deliberately concealed all these facts in its application. The Financial Creditors were duty bound to disclose all material facts before this Hon'ble Tribunal which Financial Creditors have miserably failed to. 23. The Financial Creditors have completely failed to satisfy statutory requirements of Financial debt as defined u/s. 5 of IB Code. Merely referring to bank entries without submitting details of transaction does not fulfill statutory requirement of filing claim under S. 7 of IB Code. The Financial Creditors has moved S. 7 application to extract money from Corporate Debtor by abusing the process of law. 24. Financial Creditor have failed to show the amount of interest agreed upon between the parties, and the amount deposited comes under the financial debt and that the petitioner comes under the defi....
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....ant Paras - 27-32 To sustain an Application Under Section 7 of the 'I & B' Code, the Applicant is to establish the existence of a 'Debt', which is due from the 'Corporate Debtor'. Put it in precise term, his existence of undisputed 'Debt' is 'Sine Qua Non' for triggering the 'Corporate Insolvency Resolution Process'. Always, it is open to the 'Corporate Debtor' or its Directors to point out that the 'Debt' is not payable by the 'Corporate Debtor' in 'Law' and in fact. .... As far as the present case is concerned, there exist serious dispute as to whether the Respondent/'Corporate Debtor' owes any sum to the Petitioner/'Financial Creditor' and the said dispute cannot be determined in a summary proceeding under the 'Insolvency & Bankruptcy Code' in the considered information of this Court. Suffice it for this Tribunal to make a pertinent mention that the dispute between the parties requires to be thrashed out by adducing necessary documentary and oral evidence before the 'Competent Forum'. Admittedly, the Adjudicating Authority under the 'I & B' Code is not a ....
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....nition of financial debt under Section 5(8) of IBC and deposited amount as claimed is not barred by law of limitation. 26. So for the reasons discussed above, in my opinion the application filed under Section 7 is not according to the provision of law and is not complete thus this application is not liable to be admitted. 27. Therefore, in my opinion, the applicant failed to bring on record the default recorded with the information utility ýor such other record or evidence as may be specified which is necessary to proceed for admitting the petition Under Section 7 of the I & B Code. Accordingly. It is therefore, ORDERED that the prayer to initiate proceedings U/S. 7 IBC against the "Desiya Hotel & Resorts Pvt. Ltd." is hereby rejected and the application stands dismissed. 31. We have heard the arguments of Financial creditor and Corporate Debtor and perused the records. 32. We also consider the facts of the case in the lights of the Hon'ble Supreme Court in Swiss Ribbons Pvt. Ltd. & Ors. Vs. Union of India & Ors. [Writ Petition (Civil) No. 99 of 2018] upholding the Constitutional validity of IBC, the position is very clear that unlike Section 9, there is no scope....
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....osing of by the Corporate Debtor any of its assets or any legal right or beneficial interest therein; (iii) Any action to foreclose, recover or enforce any security interest created by the Corporate Debtor in respect of its property including any action under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest (Sarfaesi) Act, 2002; (iv) The recovery of any property by an owner or lessor where such property is occupied by or in possession of the Corporate Debtor. (c) Notwithstanding the above, during the period of moratorium:- (i) The supply of essential goods or services to the corporate debtor, if continuing, shall not be terminated or suspended or interrupted during the moratorium period; (ii) That the provisions of sub-section (1) of section 14 of the IBC shall not apply to such transactions as may be notified by the Central Government in consultation with any sectoral regulator; (d) The moratorium shall have effect from the date of this order till the completion of the CIRP or until this Adjudicating Authority approves the resolution plan under sub-section (1) of section 31 of the IBC or passes an order for liquidation of C....