TaxTMI 
TaxTMI 
2023 (1) TMI 1473
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....Brief facts of the case necessary for deciding this Appeal are:- (i) The Respondents extended financial facility to the extent of Rs. 3,10,00,000/- to the Corporate Debtor out of which Corporate Debtor returned an amount of Rs. 15 Lacs to Respondent No. 4 on 23rd August, 2018. No document was executed between the parties regarding the transfer of the money. (ii) On 11th February, 2019, a Demand Notice was sent to the Corporate Debtor by the Respondent Nos. 1,2,3 and 4 demanding repayment of unpaid loan in default. Notice of Demand was separately issued by the Respondent Nos. 1 to 4. For example, Respondent No. 2 issued demand notice on 11th February, 2019 demanding payment of amount of Rs. 2 Crores towards principal amount in default with interest of Rs. 40,85,355/- totaling Rs. 2,40,85,355/-. (iii) Notice of Demand sent by the Respondents was replied by the Corporate Debtor vide Letter dated 21st February, 2019 stating that loan was given for tenure of 5 years hence the notice has mala fidely been issued. Corporate Debtor requested for withdrawal of notice. (iv) On 6th June, 2019, the Respondents again sent Notices to the Corporate Debtor for repayment of the amount includ....
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.... bonds, notes, debentures, loan stock or any similar instrument; (d) the 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 non-recourse 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 transacti....
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....Subhash Place, New Delhi 110034 under Section 7 of the Insolvency and Bankruptcy Code, 2016. Sir, 1. This letter is a demand notice issued on behalf of our client "M/s. KVM Fashion Private Limited" demanding payment of an Unpaid Financial debt due from M/s. Pytex Jewellers Private Limited. 2. Please find particulars of the unpaid financial debt below: Particulars of financial debt M/s. KVM Fashion Private Limited (Financial Creditor) had provided short term loan to M/s. Pytex Jewellers Prviate Limited having CIN U27205DL200PTC154403 situated at unit no. 200,A-9, GD-ITL, Northex Tower, Ring Road, Netaji Subhash Place, New Delhi 110034 (Debtor) from 9th May 2017 to 2nd June 2017 for an amount of Rs. 2,00,00,000/- (Rupees Two Crore Only), repayable within a year. Details of disbursement of loan: S. No. Date of payment Payment amount (Rs.) Mode of payment Bank 1. 09.05.2017 50,00,000 RTGS IDBI Bank Ltd. 2. 15.05.2017 40,00,000 RTGS IDBI Bank Ltd. 3. 15.05.2017 30,00,000 RTGS IDBI Bank Ltd. 4. 17.05.2017 20,00,000 RTGS IDBI Bank Ltd. 5. 19.05.2017 10,00,000 RTGS IDBI Bank Ltd. 6. 02.06.2017 50,00,000 RTGS IDBI Bank Ltd. ....
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....te Debtor in its Reply dated 21st February, 2019. The Reply to Notices given by the M/s. KVM Fashion Pvt. Ltd. by the Corporate Debtor is as follows: "To, 21.02.2019 M/s. KVM Fashion Private Limited C/o Soni Chatrath & Co. (Chartered Accountant) 906, 09th Floor, New Delhi House Building Barakhamba Road, New Delhi - 110001 Sub: Reply to your Notice dated 11.02.2019 Sir, This is in furtherance to your notice dated 11.02.2019, whereby you have called upon us to repay an amount of Rs. 2,40,85,355/- (Rupees Two Crores Forty Lakhs Eighty Five Thousand Three Hundred Fifty Five Only). The undersigned herein came under utter shock and surprise to receive your notice. The undersigned Director of our company and has always been in a cordial relations from past so many years and on the basis of that relationship, a loan for 2,00,00,000/- (Rupees Two Crores Only) was extended by you, for a tenure of 5 years and repayable on or after 01.06.2022. Despite knowing the fact that the loan was given for a tenure of 5 years, you have malafidely issued the said notice dated 11.02.2019 in order to unnecessarily pressurize us in the times of our financial crunch. However, if y....
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....ng: "18. Thus, we are of the view that on 14.02.2018 aforesaid amount after deduction of TDS has been paid to the Financial Creditor on this basis it cannot be concluded that the transaction in question is a financial debt. ..... 20. On the other hand, as per the Corporate Debtor in absence of a Financial Contract defined in Rule 3(1) (d) the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016 between the Corporate Debtor and Financial Creditor, the transaction cannot be termed as Financial Debt. RBT on 18.02.2013 issued guidelines to Non-Banking Finances Companies for fair practices which states that the Non-Banking Finances Company should convey in writing to the borrower in vernacular language as understood by the borrower by means sanctioned letter or otherwise, the amount of loan sanctioned alongwith the terms and conditions including annulised rate of interest. Thus, it is obligatory on the part of the Financial Creditor that there should be a loan agreement in writing only. 21. We have considered the submissions, the Financial Creditor has not furnished any document to show that the transaction in question is a loan transaction. So far as....
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....A COPY OF SUCH ORDER) 3. RECORDS OF DEFAULT WITH THE INFORMATION UTILITY, IF ANY (ATTACH A COPY OF SUCH RECORD) 4. DETAILS OF SUCCESSION CERTIFICATE OR PROBATE OF A WILL, OR LETTER OF ADMINISTRATION, OR COURT DECREE (AS MAY BE APPLICABLE), UNDER THE INDIAN SUCCESSION ACT, 1925 (10 OF 1925) 5. THE LATEST AND COMPLETE COPY OF THE FINANICAL CONTRACT REFLETING ALL AMENDMENTS AND WAIVERS TO DATE (ATTACH A COPY) 6. A RECORD OF DEFAULT AS AVILABLE WITH ANY CREDIT INFORMATION COMPANY (ATTACH A COPY). 7. COPIES OF ENTRIES IN A BANKERS BOOK IN ACCORDANCE WITH THE BANKERS BOOKS EVIDENCE ACT, 1891 (18 OF 1891) (ATTACH A COPY) 8. LIST OF OTHER DOCUMENTS ATTACHED TO THIS APPLICATION IN ORDER TO PROVE THE EXISTENCE OF FINANCIAL DEBT, THE AMOUNT AND DATE OF DEFAULT. 20. Column 8 of Part-V refers to list of other documents to prove the existence of financial debt. The Rules thus clearly contemplates that financial debt can be proved on "OTHER DOCUMENTS" also. 21. In the above judgement, in paragraph 21, this Tribunal has held that financial creditor has not furnished any document to show t....
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.... Default)'. It is useful to extract Column 3 under the above heading:- "PART-V PARTICULARS OF FINANCIAL DEBT (Documents, Records and Evidence of Default) 3. Record of default with the information utility, if any (attach a copy of such record) Balance Sheets for the Financial Years 2013-2014, 2014-2015, 2015-2016, 2016-2017 and 2018-2019. Copies of the Balance Sheets are annexed as Exhibit 'G' to 'L' hereto. 21. When we consider all the above documents and correspondences including the Balance Sheets, the conclusion is inescapable that the amount of Rs. 40.75 Crores advanced by the Appellant was nothing but was a financial debt within the meaning of 'I&B Code' and the Adjudicating Authority committed error in holding that the Appellant is not a 'Financial Creditor'." 23. This Tribunal in the above case referring to documents and correspondences between the parties concluded that financial debt was there despite there being no MoU formerly executed between the parties containing the terms and conditions of transaction. Further when we look into the definition of transaction as contained in Section 3(33) of the Code as extracted above, the definition is an inclusive de....