TaxTMI 
TaxTMI 
2024 (2) TMI 377
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....the IBC by observing that the amount in default is not financial debt and Appellant is not a financial creditor under the provisions of IBC. 2. The facts of the case are that in December 2014, Shri Shabir Nirban, director shareholder and promoter of the Respondent Company approached the Appellant and offered to sell the Appellant 100% shares held with the Respondent along with all assets and liabilities of the Respondent by executing a share purchase agreement. The Appellant has further stated that based on the representations, undertakings and assurances provided by the director of the Respondent, the Appellant agreed to acquire all assets and liabilities of the Respondent as per its audited balance sheet dated March 31, 2013, after carrying out valuation of the shares of the Respondent, for a lump sum consideration of Rs.4,50,00,000/-. 3. The Appellant has further stated that it made an advance payment of Rs.1,25,00,000/- on 17.12.2014 out of the total amount of Rs.4,50,00,000/- to the Respondent and the said payment was made subject to execution of the share purchase agreement after due diligence to be carried out by the Appellant regarding the assets, financial data and compl....
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....nsofar as the Section 7 application being in limitation is concerned, the petition was filed on 28.7.2021, which was well within three years of admission made in the balance sheet for the financial year ending 31.3.2019 and therefore, section 7 application is within limitation in accordance with section 18 of the Limitation Act, 1963. 10. The Learned Counsel for Appellant has also submitted that section 5(8) of the IBC covers any amount paid in respect of Share Purchase Agreement and the definition is quite exhaustive. He has claimed that this reason seemingly given by the Adjudicating Authority does not appear to be a valid ground in rejecting the section 7 application. Furthermore, he has argued that whether the said transaction of Rs. 1.25 crores had commercial effect of borrowing was also required to be considered by the Adjudicating Authority to arrive at a conclusion. But since it was not reasoned out in the Impugned Order, the Impugned Order may be set aside, and the matter remanded for fresh consideration by the Adjudicating Authority. 11. The Learned Counsel for Appellant has cited the judgment of this Tribunal in the matter of Sanjay D. Kakade vs. HDFC Ventures Trustee ....
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.... that with a view to acquire the tenancy rights, the Petitioner deposited a sum of Rs. 1,25,00,000/- (Rupees One Crore Twenty-Five Lakhs only) "as advance" out of the total consideration of Rs. 4,50,00,000/- (Rupees Four Crores Fifty Lakhs only) in December 2014. He has submitted that it is for this reason, the amount of Rs. 1,25,00,000/- (Rupees One Crore Twenty Five Lakhs only) is shown as "Advance from Debtors" in the balance sheet of the Respondent Company. He has added that thereafter, the Petitioner made no further payments and hence it is not entitled to make any claim against the Respondent, in view of its own default. He has also argued that the value of the tenanted premises is actually much more than Rs. 4,50,00,000/- as the Petitioner would become entitled to receive an ownership flat with sea view of an area of minimum 950 sq. ft. carpet on Walkeshwar Road, Mumbai and, therefore, the story peddled by the Appellant is a falsehood. 15. The Learned Counsel for Respondent has further submitted that even if, at the highest argument, it is considered that the purported oral agreement existed between Shri Shabir Nirban, ex-Director and ex-shareholder of the Respondent Compan....
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.... 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 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-clause (a) to (h) of this clause;" 18. We now look at the transaction that took place betw....
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.... section 7 petition nor any pleadings or documents submitted by the Appellant, have any document to show that there was a Share Purchase Agreement to be signed nor any covered fact of the borrowing have been evidenced. In such a situation, it is difficult to accept the contention of the Appellant that the transaction of Rs.1.25 cores was in fact repayment of a 'financial debt'. 21. Further, we note from the definition of 'debt' and 'default' as enumerated in section 3(11) and 3(12) of the IBC that the financial debt had to be in the shape of liability and non-payment of such liability in the given time would cause default. In the present situation again, no date of default is made out and so we find that neither the said transaction is in the shape of a financial debt or in commercial effect of borrowing is evidenced and no default is also made out. 22. As argued by the Learned Counsel for Respondent, and also admitted by the Learned Counsel for Appellant, the said transaction of Rs. 1.25 crores was ostensibly against the purchase of the property situated at Teen Batti, Walkeshwar Road, Mumbai, which was capable of redevelopment under the provision of the Development Control Regu....