TaxTMI 
TaxTMI 
2022 (1) TMI 461
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....Bankruptcy Code, 2016 (hereinafter referred to as the 'Code'). By the Impugned Order, the Learned Adjudicating Authority has dismissed the Application preferred by the Appellants on the following grounds: (a) That the 'Financial Creditor' never authorized the Director to initiate CIRP against 'Corporate Debtor' and the CIRP was initiated without proper authorisation. (b) The Loan Agreement is dated 02.12.2015, but the disbursement took place on 07.11.2015, which puts a question mark on the genuineness of the purported transaction. (c) In paras 5 and 6 of the Memorandum of Understanding dated 23.03.2018, it is recorded that the amounts, if any, to be paid to M/s. Rushabh Civil Contractors Private Limited/the Appellant herein would be paid only after receipt of the full amounts by SRBL from all the Creditors; that the Appellant has confirmed that an amount of Rs. 2 Crore was given to Mr. J. Vamshidhar Rao and Rs. 5 Crore to Mrs. Shailima Kalvakuntla respectively during the 'Satra Group Management of SRBL' and is likely to be not recoverable from these two parties. If this amount of Rs. 7 Crores is not recovered, it shall be debited by SRBL to the account an....
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....Balance Sheet of the Respondents for the FY 2016-17 and 2017-18 that clarify the loan transaction as 'Current Borrowing - Loan Repayable on Demand. TDS Certificate dated 10.05.2018 wherein the new management paid the TDS. Share Purchase Agreement dated 23.02.2018, wherein the Respondent Company was transferred to the new management. * It is argued that the Members of the new management i.e., the MJ Shah Group were very well aware of the existing liabilities of the 'Corporate Debtor' even before they took the entire management and the Company on 09.04.2018 since they were already Directors and Shareholders of the Respondent Company much before 09.04.2018. It is submitted that the MJ Shah Group was 49% Shareholder in the erstwhile Company and was well aware of the business dealings of the Respondent Company and hence Mr. Jignesh Shah who is currently the Director in the Respondent Company and the signatory to the Balance Sheet of FY 2017-18 has also signed on the Applications and Affidavit and therefore a change in management cannot be said to be having any effect whatsoever in the existing liabilities. * Learned Counsel relied on the following Jud....
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....or any third party will not affect the rights of the Appellant to invoke the jurisdiction of the Adjudicating Authority under Section 7 of the Code. * The financial assistance provided by the Appellant to the 'Corporate Debtor' under the Loan Agreement dated 02.12.2015 was an independent transaction with no relation to the other transactions of the Appellant Company. 3. Submissions of the Learned Counsel appearing on behalf of the Respondent: * It is contended that the Loan Agreement dated 02.12.2015 is a fabricated document and that the purported date of disbursement of the loan to the 'Corporate Debtor' is 07.11.2015, which is much prior to the alleged loan document. * The Appellant Company is under the control and management of 'Satra Group of Companies' and the Appellant has filed the Original Company Petition and the present Appeal on behest of the 'Satra Group'. * The Bank Statements/Balance Sheet relied upon by the Appellant show maximum no. of transactions between the Appellant Company and the 'Satra Group' without any documentation backing such transactions and hence, the Appellant Company is nothing but an adjustment Company of the '....
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.... 6. As regards the discrepancies in the dates of the Loan Agreement and the dates of transactions, which are subsequent to the Loan Agreement, we observe that the first date of disbursal is on 09.11.2015 whereas the Loan Agreement is dated 02.12.2015. The confirmation of account statement dated 01.04.2017 to 30.01.2018 and 01.02.2018 (exhibit F) from the Appellant to 'Satra Realty and Builders Limited' shows that an amount of Rs. 10,86,65,265/- is confirmed. It is the main case of the Appellant that since the confirmation of accounts establishes these amounts, the ratio of 'M/s. Innoventive Industries' (Supra), has to be applied i.e., the Adjudicating Authority has only to see whether there is a 'date of default' and not go into the other aspects of the transactions. Learned Counsel strenuously argued that the terms of the MOU are inconsequential, if it is conditional, that it is a Section 7 Application and therefore any disputes or conditions laid down are insignificant and that the Adjudicating Authority has erred in not applying the ratio laid down by the Hon'ble Supreme Court in 'M/s. Innoventive Industries' (Supra). 7. As against this argument, Learned Counsel for the Res....
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....nings respectively assigned to them in clauses (d) and (zn) of section 2 of the Real Estate (Regulation and Development) Act, 2016 (16 of 2016);] (g) any derivative transaction entered into in connection with protection against or benefit from fluctuation in any rate or price and for calculating the value of any derivative transaction, only the market value of such transaction shall be taken into account; (h) any counter-indemnity obligation in respect of a guarantee, indemnity, bond, documentary letter of credit or any other instrument issued by a bank or financial institution; (i) 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) of this clause; 10. Placing reliance on the transactions shown in the table in aforenoted para 7, it is the main case of the Respondent/'Corporate Debtor' that the transaction in question is collusive. The Hon'ble Supreme Court in the case of 'Phoenix ARC Pvt. Ltd.' Vs. 'Spade Financial Services Ltd.' (2021) 3 SCC 475, in paras 48, 55, 56, 106.1 & 106.2 has dealt with this issue and observed as follows: "G.3.3. Collusive transaction....
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.... agreement to sell was entered to purchase FSI/flats equivalent to 38.3% of the total FSI in relation to specific units identified and allotted in the agreement. Apparently, the sale consideration was re-negotiated and enhanced from Rs. 32.80 crores under the development agreement to Rs. 86.01 crores under the agreement to sell. Mr Viswanathan has submitted that there was no partnership clause in the agreement to sell. However, Clause 3 of the side letter dated 25-10-2012 shows that the intent of the parties was to continue to co-develop the land. Clause 3 of the side letter provides: "3. It is agreed that ALPL shall share the cost of the Project in the same ratio as the share of respective development in the Property i.e. Villas-50% and other developments (group housing, etc.) 36.33%]. The cost of the Project shall include: (a) Land Cost (b) Licence and approval costs (c) Construction cost (d) Direct project management costs (people at the site) (e) Marketing & sales promotion cost (f) Liaison cost (g) Maintenance cost for unsold inventory (h) Government levies and charges including EDS & IDC and any ....
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....any Petition is signed by the same Mr. Praful Satra. We observe that this statement of account records free reserves of the Company as on 31.03.2015 to be Rs. 2,53,08,746/- which exceeds the 100% benchmark set under Section 186 of the Companies Act, 2013, as the loan amount is Rs. 12 Crs. 12. It is vehemently contended by the Respondent Counsel that an amount of Rs. 7 Crore was legally withdrawn by the Appellant and 'Satra Group' jointly from the account of the Respondent Company between January 2015 and April 2015 and an amount was paid to unknown parties Mr. J. Vamshidhar Rao and Mrs. Shailima Kalvakuntla. The said transaction was written off in the books of accounts of the Respondent Company on 31.12.2017. A perusal of the Rejoinder filed by the Appellant shows that there is no specific denial with respect to these amounts, though it was categorically pleaded by the Respondent. It is the case of the Respondent that the amount transferred to these parties is not recoverable as the same was executed in relation to satisfying some other transaction entered into with 'Satra Group'. Garnishee Notices were issued by the Income Tax Department under Section 226(3) of the Income Tax A....
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....ctive of the IBC is to be cautious in admitting an Application and not encourage recovery proceedings. For all these reasons, we are of the considered view that the ratio of 'Phoenix ARC Pvt. Ltd.' (Supra) is squarely applicable to the facts of this case. Having held so, we do not wish to go into the technicalities of the authorisation of the Petition and also the issue of genuineness and veracity of the MOU. 16. For all the aforenoted reasons, this Appeal is dismissed confirming the Impugned Order passed by the Learned Adjudicating Authority. No Order as to costs. 17. The Registry is directed to upload the Judgement on the website of this Tribunal and send the copy of this Judgement to the Learned Adjudicating Authority (National Company Law Tribunal, Mumbai Bench) forthwith. ============= Document 1 Annexure A-11 NOTA UDA PRAKASH GOVERNMENT CENTRIO LIFESPACES LIMITED (Formerly known as Satra Realty and Builders Ltd.) EXHIBIT`'J' 1M MJ SHAH CREATING VALUE SINCE 1959 310 To, Rushabh Civil Contractors Pvt Ltd, Reg Office F-29, Prime Mall, Besides Irla church, Irla Road, Vile Parle (West), Mumbai-400056. Dear Sir, NOTARY ....
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.... For Centrio Lifespaces Ltd una Girnasi Authorised Signatory LIMITED Document 3 Loan Agreement Annexure A-2 68 RUSHABH CIVIL CONTRACTORS PRIVATE LIMITED 8th Floor, Dev Plaza, Opp. Andheri Fire Station, S V. Road, Andheri (West), Mumbai- 400 058 Date: 02.12.2015 To. The Director, Satra Realty & Builders Limited, Dev plaza, 2 Floor, Opp. Andheri Fire Station, S.V. Road, Andheri (West), Mumbai-400 058. Dear Sir, We hereby confirm that the loan has been given to you at the following terms and condition. Loan Amount Rate of Interest Repayment Terms Principal and interest I.T. Pan No. :Up to Rs. 12.00.00.000. : 12% pa. Repayable on demand or as and when mutually of decided by both the parties. AABCR0195G Kindly Acknowledge receipt on the duplicate of this letter & oblige. Thanking You, Yours faithfully, For Rushabh Civil Contractors Pvt Ltd. OTARY Director/Authorized Sig I We accept the above Terms and Conditions For Satra Realty & Builders Ltd. Director/ Authorized Signatory E Mail: [email protected] Te-9967004537 CIN: U45202MH2008PTC181967 Document 4 Annexur....