TaxTMI 
TaxTMI 
2022 (2) TMI 1311
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....lt of Rs. 79,60,00,000/- (Rupees seventy-nine crore sixty lakh only) which includes: a) Short Term Loan amount of Rs.39,60,00,000/- (Rupees thirty-nine crore sixty lakh only); and b) Working Capital Loan amounting to Rs.40,00,00,000/- (Rupees forty crore only) along with interest payable @ 10.50% p.a. 3. The Date of Default as mentioned in the Petition is 30.06.2019. 4. The case of the Financial Creditor is as under: a) The Corporate Debtor approached the Financial Creditor for the purpose of seeking loan. Accordingly, the Financial Creditor sanctioned the following facility to the Corporate Debtor: Sr. No. Particulars Amount Sanctioned Due Date for Repayment 1 Short Term Loan by way of Mortgage with interest @ 14% p.a. Rs.39,60,00,000/- 30.06.2019 2 Working Capital Loan by way of Pledge with interest @ 10.50% p.a. Rs.40,00,00,000/- 31.10.2019 b) The said facilities were disbursed to the Corporate Debtor in the following manner: Sr. No. Amounts Disbursed Date of Disbursement) 1 19,80,00,000/- 26.10.2018 2 19,80,00,000/- 06.11.2018 c) A total amount of Rs.40,00,00,000/- (Rupee....
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.... b) The Corporate Debtor submits that, it is registered as a society with the Central Registrar of Co-operative Societies. Therefore, CIRP cannot be initiated against the Corporate Debtor, in terms of section 2 of the Code. c) The Corporate Debtor submits that, NCLT is Quasi-Judicial Authority created under the Companies Act, 2013 to handle corporate civil disputes under the Act. In view of the same the NCLT has no jurisdiction over the Co-operative Society. 6. The Financial Creditor has filed its written submissions and submitted as under: a) The Financial Creditor has sanctioned Short Term Loan by way of Mortgage with interest @14% p.a. of Rs. 39,60,00,000/- dated 30.06.2019 and Working Capital Loan by way of Pledge with interest @10.50% p.a. of Rs.40,00,00,000/- dated 31.10.2019. b) The repayment of Short-Term Loan was to be made by Corporate Debtor on or before 30th June 2019 along with the applicable interest. However, the Corporate Debtor has defaulted on the repayment. The details are as follows: Principal Amount 29,80,00,000/- Interest 1,04,07,000/- Total Amount Outstanding as on 30.06.2019 30,84,07,000/- c) ....
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....ors; (f) partnership firms and proprietorship firms; and (g) individuals, other than persons referred to in clause (e). in relation to their insolvency, liquidation, voluntary liquidation or bankruptcy, as the case may be. However, the Corporate Debtor stated that it is neither a Company nor Limited Liability Partnership and therefore it fits into the category mentioned in Section 2 (d) for which separate notification is necessary from Central Government. (ii) Section 3(7) apart from Company and LLP also specifically includes any other person incorporated with limited liability under any law for the time being in force. To fit into this category the person must satisfy two conditions, namely: i. Person incorporated with limited liability; and ii. Such incorporation must be under any other law for the time being in force. If the abovementioned two conditions are satisfied then such person shall be a corporate person and if he owes any debt then he becomes Corporate Debtor, thereby comes within the ambit of the code. (iii) The Financial Creditor submits that, Section 3(7) of the code was notified by way ....
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....s. iii. The Financial Creditor submits that, the present application is under the provisions of the Code and the application of the Code is not excluded by the section 121 of the Act. Therefore, such argument is not tenable. iv. In respect of the issue of whether the provisions of Code override any other law, the issue is settled by the Judgement of Hon'ble Supreme Court in Duncan Industries Limited. It was held that: "7.4 Section 16G (1) (c) refers to the proceeding for winding up of the such Company or for the appointment of receiver in respect thereof. Therefore, as such, the proceedings under section 9 of the Code shall not be limited and/or restricted to winding up and/or appointment of receiver only. The Winding Up/ Liquidation of the Company shall be the last resort and only on an eventually when the CIRP fails. As observed by this Court in Swiss Ribbons Pvt Ltd, referred to hereinabove, the primary focus of the legislation while enacting the IBC is to ensure revival and continuation debtor from its own management and from a corporate debtor by liquidation and such CIRP is to be completed in a time-bound manner. Therefore, the entire CIRP as such c....
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....to understand the application of the Code under section 2(d) and the definition of 'Corporate Person' given under section 3(7) of the Code. Section 2(d) and Section 3(7) of the Code are as under: Section 2. Application. - The provisions of this Code shall apply to- (d) such other body incorporated under any law for the time being in force, as the Central Government may, by notification, specify in this behalf; Section 3. (7) "corporate person" means a company as defined in clause (20) of section 2 of the Companies Act, 2013 (18 of 2013), a limited liability partnership, as defined in clause (n) of sub-section (1) of section 2 of the Limited Liability Partnership Act, 2008 (6 of 2009), or any other person incorporated with limited liability under any law for the time being in force but shall not include any financial service provider; 11. After bare reading of the above provisions of the Code, even if we consider the Corporate Debtor to be a 'Corporate Person' as defined under section 3(7) of the Code, the Corporate Debtor is itself a Co-operative Society and hence cannot come under the provisions of section 2(d) of the Code a....
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....e ground that the societies were not "corporate persons" under Section 3(7) of the IBC. Aggrieved by the order of the NCLT, the appellant approached the NCLAT. 16. The NCLAT has held as follows: "31. It does not appear that when this judgment in the matter of "Illachi Devi" (supra) was passed in 2003, the A.P. Act of 2001 was noticed. Section 18 of the A.P. Act appears to have attempted to meet the requirements expressed by Hon'ble Supreme Court (Para 53) in the matter of "Illachi Devi". What appears from reading of Section 18 of the A.P. Act is that the registration of a Society shall render it a body corporate by the name under which it was registered having perpetual succession and a common seal. Thus, although the Society is not incorporated and it is registered, it is rendered a body corporate which can have perpetual succession and have a common seal. Section 18 makes it clear that as the Society will be rendered body corporate, it shall be entitled to acquire, hold and dispose of property, to enter into contracts, to institute and defend suits and other legal proceedings and to do all other things necessary for the furtherance of the aim for which it was constitu....
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....rnment, or by any State Government or Governments, or partly by the Central Government and partly by one or more State Governments, and includes a company which is a subsidiary company of such a Government company."" 19. Further, the NCLAT in case of Asset Reconstruction Company also observed as: "20. Section 3(7) defines "corporate person" and even if this definition is considered, the Respondents are not Companies defined in clause 2(20) of the Companies Act, 2013 or "limited liability partnership" as defined under the Limited Liability Partnership Act, 2008 or any other person incorporated with limited liability under any law for the time being in force. Even if the Appellant was to say that the Respondents should be treated as body corporate under Section 18 of the A.P. Act, nothing is shown that Respondents Societies are persons "incorporated" or that the incorporation is with "limited liability". This has to be further read with Section 2(d) which requires that to apply the Code such other body incorporated under any law for the time being in force needs to be specified by Central Government only then 'I&B Code' would apply to it. 20. From the entire observatio....