TaxTMI 
TaxTMI 
2021 (11) TMI 841
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....extended two separate term loan facilities to the Corporate Debtor and its group companies. Term Loan Agreements dated 30.12.2014 and 27.04.2016 (for brevity, "Term Loan Agreements") were executed between inter alia the Corporate Debtor and the Applicant in pursuance of the same. ii. It is contended that the CIRP against the Corporate Debtor was initiated vide order dated 23.08.2019 and the Respondent was appointed as the Interim Resolution Professional for the Corporate Debtor, and was later duly confirmed as the Resolution Professional by the Committee of Creditors ("CoC"). iii. It is further contended that the Applicant, vide email dated 06.01.2020, filed its claim of INR 10,14,77,065/- in Form C, as the secured Financial Creditor of the Corporate Debtor, on the basis of the Term Loan Agreements. iv. It is further contended that vide email dated 13.01.2020, the Respondent communicated that the claim is rejected as the same was filed beyond a period of 90 days from the commencement of the Corporate Debtor's CIRP. But subsequently, vide email dated 30.01.2020, the Respondent informed the Applicant that the claim submitted by the Applicant in the CIRP of the Corporate Deb....
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....the Applicant. iii. It is further contended that under the agreement dated 18.05.2018, the Corporate Debtor stood guarantor for the loan amount by creating a charge/encumbrance on 31 units admeasuring 47,190 Sq. feet in the commercial colony of the project of the corporate debtor. iv. It is further contended that after initiation of the CIRP against corporate debtor, the applicant filed its claim of Rs. 17,02,07,133/- before the Resolution Professional of the Corporate Debtor and the same was admitted by the Resolution professional to the extent of Rs. 16,39,40,480/- and as such the applicant was inducted into the CoC of the Corporate Debtor with 28.21% voting rights. v. It is stated that vide email dated 21.09.2020 i.e. after one year of initiation of CIRP, the Resolution Professional just reclassified the applicant to "other creditor" from "Secured Financial Creditor" allegedly on the basis of the Judgment of the Hon'ble Supreme Court in the case titled "Anuj Jain Interim Resolution Professional for Jaypee Infratech Ltd. vs. Axis Bank & Ors." bearing Civil Appeal Nos. 8152-8527 of 2019. vi. That the applicant vide email dated 26.09.2020 replied to the aforesaid email ....
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....d under the loan agreement dated 27th April, 2016, considering the fact that Ninex Developers Limited & Redtopaz Real Estate Private Limited. ("Corporate Debtor") were also obligatory under the loan agreements and liable to pay the debt of the Applicant/Creditors, the claim submitted by Applicant/Creditor were accepted by the Resolution Professional in the list of the financial creditors of both these companies. * It is also argued that on examination of the Balance Sheet and other records of the Corporate Debtor suggests that the liability of the Corporate Debtor under the above loan agreements were contingent in nature and the no direct borrowings from the Applicant/Creditor was ever reflected in the financials of the corporate debtor, despite the Corporate Debtor being joint borrower under the above loan agreement. Therefore, in de facto, the liability of corporate debtor under these loan agreements were always contingent and payable only in case of the default by the direct borrower. * Later, the Applicant came to know about the judicial pronouncement in Jaypee Infra Case, which was found similar to the circumstances prevailing in the instant case concerning the corporate i....
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.... days. * It is also stated that after that no response was received by the respondent and the objection regarding right of the respondent to adjudicate the claim of the applicant was never raised before respondent and the order of Hon'ble NCLAT, relied by applicant was passed much later then the decision of the respondent. 5. The Respondent Resolution Professional has also filed its reply in IA 1800/2021 and on the point of reclassification of applicant in this reply too, he has averred almost same statements as stated in the reply filed in IA 4451/2020 except as follows: * It is true that initially the respondent had accepted the claim of applicant of Rs. 16,39,40,480/-, in the category of secured financial creditor. The claim of the applicant was based upon the agreement of corporate guarantee and mortgage dated 18.05.2018. * It is further contended that in terms of Jaypee Infra Case, the relationship of the Applicant/Financial Creditor with the Corporate Debtor was contingent in nature, though the Corporate Debtor has also extended a mortgage of its properties to secure the credit facility to Ninex Developers Limited. Since the Corporate Debtor does not owe any financ....
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....mentioned fundamental principles to the definition occurring in Section 5(8) of the Code, we have not an iota of doubt that for a debt to become 'financial debt' for the purpose of Part II of the Code, the basic elements are that it ought to be a disbursal against the consideration for time value of money. It may include any of the methods for raising money or incurring liability by the modes prescribed in sub-clauses (a) to (f) of Section 5(8); it may also include any derivative transaction or counter-indemnity obligation as per sub-clauses (g) and (h) of Section 5(8); and it may also be the amount of any liability in respect of any of the guarantee or indemnity for any of the items referred to in sub-clauses (a) to (h). The requirement of existence of a debt, which is disbursed against the consideration for the time value of money, in our view, remains an essential part even in respect of any of the transactions/dealings stated in sub-clauses (a) to (i) of Section 5(8), even if it is not necessarily stated therein. In any case, the definition, by its very frame, cannot be read so expansive, rather infinitely wide, that the root requirements of 'disbursement' again....
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....ncludes a 'financial creditor', a 'secured creditor', an 'unsecured creditor', an 'operational creditor', and a 'decree-holder'. Similarly, a "debt" means a liability or obligation in respect of a claim which is due from any person and this expression has also been given an extended meaning to include a 'financial debt' and an 'operational debt'. 46.1. The use of the expression "means and includes" in these clauses, on the very same principles of interpretation as indicated above, makes it clear that for a person to become a creditor, there has to be a debt i.e., a liability or obligation in respect of a claim which may be due from any person. A "secured creditor" in terms of Section 3(30) means a creditor in whose favour a security interest is created; and "security interest", in terms of Section 3(31), means a right, title or interest or claim of property created in favour of or provided for a secured creditor by a transaction which secures payment for the purpose of an obligation and it includes, amongst others, a mortgage. Thus, any mortgage created in favour of a creditor leads to a security interest being created and t....
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....est of realising the value of its security (there being no other stakes involved and least any stake in the corporate debtor's growth or equitable liquidation) while the latter would, apart from looking at safeguards of its own interests, would also and simultaneously be interested in rejuvenation, revival and growth of the corporate debtor. Thus understood, it is clear that if the former i.e., a person having only security interest over the assets of the corporate debtor is also included as a financial creditor and thereby allowed to have its say in the processes contemplated by Part II of the Code, the growth and revival of the corporate debtor may be the casualty. Such result would defeat the very objective and purpose of the Code, particularly of the provisions aimed at corporate insolvency resolution. 47.2. Therefore, we have no hesitation in saying that a person having only security interest over the assets of corporate debtor (like the instant third party securities), even if falling within the description of 'secured creditor' by virtue of collateral security extended by the corporate debtor, would nevertheless stand outside the sect of 'financial credit....
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....#39; of the corporate debtor JIL who is not owing any 'financial debt' to them. The decision in Smt. Kusum does not make out a case in favour of the respondents, the lenders of JAL." 10. On the basis of the decision referred (supra), it is seen that the Hon'ble Supreme Court in Jaypee Case made a distinction between the 'debt' and 'financial debt' as well as financial creditor, operational creditor, secured creditor and unsecured creditor and further held that every creditor would be a creditor and every financial creditor would also be a creditor but every secured creditor may not be a financial creditor. 11. In the light of that decision, now, we examine the case of the applicant No. 1 at first. 12. The contention of the applicant namely, DMI Finance Private Limited, the claim of the applicant is based upon the loan agreement which was executed jointly between (1). Ninex Developers Limited, (2). Redtopaz Real Estate (P) Limited and (3). RMG Developers (P) Ltd. The loan agreement is placed from page 16 of the application. We notice that the Clause 2.4 at page 28 deals with the mode of disbursement. The scanned copy of the same is reproduced below:- ....
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....the default by the direct borrower. And this is not disputed by the Applicant. 17. Therefore, when we consider the claim of the applicant in the light of the decision referred (supra), we are of the considered view that for a debt to become "financial debt", the basic elements are that it ought to be a disbursal against the consideration for time value of money. Since, in the case in hand, there is no disbursal of the amount to the corporate debtor, therefore, the applicant cannot be treated as a financial creditor. Of course, they are a secured creditor in view of the decision (Supra). Hence, we find and hold that the applicant of IA No. 4451/20020 is not a financial Creditor. IA No. 1800/2021; 18. At this juncture, we would like to refer to Para (c) of the application filed by the applicant and the scanned copy of the same is reproduced below:- 19. On the basis of this averments, it is an admitted fact that the amount was not disbursed in the account of the Corporate Debtor. 20. So, applying the same principle, we are of the considered view that the loan amount was not disbursed to the Corporate Debtor. Hence, this applicant is also not a financial creditor. Rather, the appl....