TaxTMI 
TaxTMI 
TaxTMI 
2023 (12) TMI 312
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....ating Authority has dismissed the Section 7 application filed by Ansal Housing Limited- Financial Creditor/present Appellant seeking initiation of Corporate Insolvency Resolution Process ("CIRP" in short) against the Corporate Debtor- M/s Samyak Projects Private Limited-the present Respondent. Aggrieved by the impugned order, the present appeal has been filed by Ansal Housing Limited, the Financial Creditor. 2. The Learned Counsel for the Appellant making his submissions stated that the Appellant and the Respondent were jointly developing four real estate projects for which separate Joint Venture Agreements ("JVA" in short) were executed between them for each such project. In terms of the collaboration envisaged under the JVA, the Appellant was to be the Developer of the real estate project while the Respondent was to provide the land for the project and they were to enjoy a sharing ratio of 67.5% and 32.5% respectively from the sales receivable. 3. Towards purchase of land for one of these real estate projects- Ansal Hub 83-II, the Respondent had sought financial assistance of Rs.25 crore from the Appellant. The Appellant extended an inter-corporate loan of Rs.25 crore which tra....
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.... but they did not liquidate the entire debt. The defence raised by the Respondent that it had repaid the entire loan partially in the form of payments and partially in the form of adjustments was not correct. However, this aspect was not examined properly by the Adjudicating Authority. The contention of the Respondent that payments made by them to third parties were in the nature of repayment of the ICD loan was also contested by the Appellant by stating that these repayment transactions were not reflected in the ledger statement signed by the Respondent. Hence, the defence of such illusionary payments does not stand to reason. Furthermore, the Respondent had acknowledged the debt in its balance sheet under the head "Interest on borrowings". It was submitted that the accounting entries of receipts and payments in respect of the ICD; copies of TDS certificates issued by the Respondent for the FY 2014-15 and 2015-16, certified copies of Bank statement, audited Accounts of Corporate Debtor for the FY 2016-17 proves the existence of debt. 7. It has been strongly argued that the Adjudicating Authority failed to appreciate that it was the sole and exclusive obligation of the Respondent ....
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....scharged before the expiry of 24 months but it was paid in excess. It was emphatically asserted that there was no liability against the Respondent. Further adding that 15 post dated cheques had been issued by the Respondent to the Appellant of which 8 cheques remained un- encashed, it was contended that it is incomprehensible as to why the Appellant did not encash these cheques if there was actually a debt in existence. In any case, the Respondent had unconditionally assigned its share of receivables from the four projects in favour of the Appellant and hence it remains unexplained as to why this right went unexercised by the Appellant. 10. It was vehemently contended that the amount that was jointly invested in land cannot be termed as financial debt. In support of their contention, the Learned Senior Counsel for the Respondent placed reliance on the judgment of this Tribunal in the matter of Mukesh N Desai v. Piyush Patel & Ors. in CA (AT) (Ins.) No.789 of 2020 wherein it has been held that any amount invested in the purchase of land cannot be said to be a financial debt under Section 5(8) of the IBC. Further, reference was also made to the decision of this Tribunal in Samyak Pr....
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.... amount of any liability in respect of any lease or hire purchase contract which is deemed as a finance or capital lease under the Indian Accounting Standards or such other accounting standards as may be prescribed; (e) receivables sold or discounted other than any receivables sold on nonrecourse basis; (f) any amount raised under any other transaction, including any forward sale or purchase agreement, having the commercial effect of a borrowing; [Explanation. -For the purposes of this sub-clause,- (i) any amount raised from an allottee under a real estate project shall be deemed to be an amount having the commercial effect of a borrowing; and (ii) the expressions, "allottee" and "real estate project" shall have the meanings 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 respec....
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....ated developments in all respect, in accordance with Licence No.76 0f 2010 and the Building Plans to be sanctioned in due course. 13 Sharing of areas/Receivables 13.1 That in consideration of the contribution/obligation of the First Party and the Developers under this Agreement, it has been mutually agreed that the entire sales realizations from sale of saleable/super built up areas to be developed/constructed in terms of this Agreement by the Developers shall be shared by the parties in the ratio as given hereunder:- First Party = 32.50% Developer = 67.50% " ( Emphasis supplied ) 15. We next embark upon the exercise of outlining the salient terms entered into between the two parties in the ICD wherein the present Appellant is described as the 'Lender' and the present Respondent as the 'Borrower'. The relevant portions are as extracted below: - "WHEREAS the Borrower had approached the Lender for grant of an Inter Corporate Deposit (ICD) of Rs. 25 crores (Rupees Twenty Five Crores only) for making the payment to the land owners pertaining to the land purchased by the Borrower in Sector 83, Gurgaon for development of the Project Ansal's Hub 83-11 by the Lender in co....
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....irector of the Company. b) Post dated cheques towards payment of Principal as per Schedule given above......" ( Emphasis supplied ) 16. We have already noted the submissions and counter-submissions of both the parties in copious details in the preceding paragraphs. Concisely put, it is the case of the Appellant that the loan of Rs 25 crore was disbursed to the Respondent exclusively for utilization by the Respondent and the disbursement of the said loan was made with 24% compound interest which sufficiently establishes that money was disbursed against the consideration for time value of money. It was also added that the promissory note and post- dated cheques issued by the Respondent in favour of the Appellant also establishes the ingredients of a financial debt. Further, it is their contention that adjustment against the future receivables of the Respondent under the JVA was just a security under the ICD which has been wrongly construed by the Adjudicating Authority to come to the conclusion that the JVA and the ICD were interdependent. The Adjudicating Authority erred in holding that the advancement of money is not a financial debt simply because the real estate projects wer....
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....e Hon'ble Apex Court in Pioneer Urban Land and Infrastructure Ltd. v. Union of India (2019) 8 SCC 416 that any debt to be treated as financial debt, there must happen disbursal of money to the borrower for utilization by the borrower and that the disbursal must be against consideration for time value of money. In the matter of Anuj Jain, Interim Resolution Professional for Jaypee Infratech Ltd. v. Axis Bank Limited & Ors. (2020) 8 SCC 401, the Hon'ble Supreme Court has also held that the essential condition of financial debt is disbursement against the consideration for time value of money. Further in the most recent judgment of Hon'ble Supreme Court in Orator Marketing (P) Ltd. v. Samtex Desinz (P) Ltd. (2023) 3 SCC 753, it has been clearly held that financial debt also includes an interest free loan. 19. Given this backdrop of settled law, it may now be relevant to refer to the impugned order to see how the Adjudicating Authority has approached the JVA and the ICD in deciding whether the Appellant falls within the purview of the definition of "Financial Creditor" and whether the loan extended by the Appellant falls within the ambit of "Financial Debt" as defined respectively und....
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....hat these are independent. In our considered opinion, both JVAs and ICD are linked together for the development of projects. 30. For the aforementioned reasons, we are of the opinion that the said contract is in nature of joint development of projects, rather than a loan agreement simpliciter. Both parties are more particularly involved in the development/construction of said project whereas as per the definition of Sec 5(8) "financial debt" means "a debt alongwith interest (if any) which is disbursed against the consideration for the time value of money." In our opinion, the ICD agreement cannot be read alone and is not covered in the definition of Financial Debt rather the parties appear to have entered into an agreement with a different motive i.e. development of the project and sharing the proceeds therefrom. There is no case to hold that it is a case of admitted debt and default. No case is made out under the code. Parties may pursue the matter to seek appropriate remedy as per law." 22. The above findings of the Adjudicating Authority has been premised on the fact that both the JVAs and ICD are linked together for the development of real estate projects. In both these agre....