TaxTMI 
TaxTMI 
TaxTMI 
2024 (1) TMI 185
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....imited-the present Respondent. Aggrieved by the impugned order, the present appeal has been filed by Mr. Vijay Jain and 13 others-the present Appellants. 2. The Learned Senior Counsel for the Appellants submitted that the Appellants had extended loans to M/s Laxmi Foils Private Limited-the Corporate Debtor for business purposes. The Appellants had extended the credit facilities to the Respondent in the form of interest-free unsecured loans as erstwhile shareholders of the Corporate Debtor. It was further stated that a Memorandum of Understanding (hereinafter referred to as "MoU") was entered into between the Corporate Debtor, a company named OFB and Appellants (the Promoter Group) in terms of which the OFB was to purchase the shareholding of the Corporate Debtor for Rs.51 crore. Subsequent to the MoU being signed, the OFB and the Appellants entered into a Share-Purchase Agreement (hereinafter referred to as "SPA") on 03.02.2022. In terms of MoU dated 25.11.2021 and SPA executed on 03.02.2022, the entire shareholding of the Appellants in the Corporate Debtor was agreed to be sold to OMAT which was a subsidiary of OFB. OFB was to purchase the shares of the Appellants for Rs.10.62 cr....
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.... of the Respondent before the Adjudicating Authority that the Appellants did not bring on record any documentary evidence to show that FFAs were ever executed between the parties. The Adjudicating Authority had also recorded the submissions of the Respondent that their email of 07.02.2022 had conveyed only a draft FFA which never got firmed up or executed. The so-called FFAs were signed by Appellants and did not bear the signature of any person from the management of the Respondent. 6. We find that the Adjudicating Authority has recorded the finding that the Facility Agreement relied upon by the Appellants in support of their debt is un-dated and hence discounted the same to be credible evidence to prove the existence of debt. More importantly, if the email of 07.02.2022 from the Respondent to the Appellants sharing the FFA is perused as has been placed at page 231 of the Appeal Paper Book ('APB' in short), we find that it is only a draft agreement seeking comments/observations of the Appellants. Furthermore, we notice that the FFA which has been placed on record at Annex A-5 of the APB does not have the signature of the Respondent but it is the Appellant No. 6 who has signed for ....
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....eir favour was surprisingly signed by one of the Appellants (Rajesh Jain) on 04.03.2022 and therefore cannot be treated as cheques having been sent by the Corporate Debtor. It was also pointed out before the Adjudicating Authority that Mr. Rajesh Jain did not have any authorization for signing these cheques on behalf of the Corporate Debtor. The alleged cheques were therefore forged instruments made with the intent to extort money from the Respondent and subject them to insolvency proceedings fraudulently and maliciously. Submission had also been made before the Adjudicating Authority that because of this mala-fide intent of the Appellants, several police complaints were filed against them and in retaliation of which, the Section 7 application has been filed. 12. Furthermore, pursuant to the SPA, the entire shares of the Corporate Debtor held by the Appellants was transferred at a consideration of Rs.10.62 crore of which Rs.7.96 crore was already paid to the Appellants. Payment of Rs.2.65 crore was deferred to verify the authenticity of the transactions and the warranties of promise, assurances, undertakings, indemnities and other covenants contained in the SPA. In view of the fal....
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....ainst the company or company's past or present directors, officers, employees, agents, assigns, successors, shareholders investors (collectively , "the Released Parties") in relation to any and all claims and all amounts payable and or due in respect of any event prior to the closing date and arising from or relating to company's obligations and all liabilities arising out of or in relation to, any past event, actions, inactions, omissions or activities or any contact between any Releasing Party and any Released Party prior to the closing date, whether asserted by any Releasing party or any person on behalf of any releasing party or by any successor, assignee or transferee of any Releasing Party." 15. A plain reading of the Clause 6.5 leaves no doubt in our minds that the erstwhile shareholders had released/waived/discharged all/any rights and claims against the Corporate Debtor/Respondent. Having relinquished their rights/claims under the SPA, the contention of the Respondent that debt claims of the Appellant stood discharged is prima-facie logical. The absence of proof of crystallized debt is also validated by the balance sheet of the Corporate Debtor dated 04.03.2022 which has ....
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....s un-dated, (b) as per the Provisional Balance Sheet of the Respondent as of 04.03.2022 (which has been signed and authenticated by the Applicant No. 1 and 6 themselves), the unsecured loan owed to the Directors and Shareholders of the Respondent Company is shown as 'Nil', (c) the new management of the respondent has reportedly paid an amount of Rs.7,96,88,812/- out of the total consideration of Rs. 10,62,51,750/- to the all the shareholders and the debt of the Respondent is discharged in terms of Clause 6.5 of the Share Purchase Agreement dated 03.02.2022, and (d) the Respondent had shown cogent reasons, by bringing on record the Section 8 Demand Notices issued to it as the reason for non-payment of the balance amount of Rs.2,65,62,937/- 18. Thus, in our considered view, Applicants No. 1-10 have failed to prove the existence of any debt that is crystallized or exists beyond any doubt. As regards the alleged debt claimed on behalf of non-shareholders/Applicants No. 11 to 14, it is noticed that their default amount is less than the minimum threshold amount of Rs. 1 Crore prescribed under Section 4 of IBC, 2016. Hence, we have no option but to reject the Application. The Applicatio....