TaxTMI 
TaxTMI 
2023 (1) TMI 1473
X X X X Extracts X X X X
X X X X Extracts X X X X
....dmitted by the Adjudicating Authority. 2. 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 agai....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s de-materialised equivalent; (c) any amount raised pursuant to any note purchase facility or the issue of 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 ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....i Subhash Place New Delhi - 110034 Subject: Demand notice demand payment in respect of unpaid financial debt due from M/s. Pytex Jewellers Private Limited situated at unit no. 200,A-9,GD-ITL, Northex Tower, Ring Road, Netaji 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. 09.0....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ipt of this letter shall result in initiating corporate insolvency resolution process against M/s. Pytex Jewellers Private Limited. Yours sincerely, For Soni Chatrath & Co. Parv Bansal (Partner)" 12. A perusal of the Demand Notice indicates that in addition to repayment of principal debt of Rs. 2,00,00,000/- and interest amounting to Rs. 40,85,355/- has been claimed. The notices dated 11.02.2019 by all the Respondents were replied by the Corporate 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 a....
X X X X Extracts X X X X
X X X X Extracts X X X X
....st, the Corporate Debtor never at the relevant time refuted that no interest is payable or there was no interest with the loan. 17. Learned Counsel for the Appellant relying on a Judgement of this Tribunal in Company Appeal (AT) Ins. No. 251 of 2020 in "Pawan Kumar Vs. Utsav Securities Pvt. Ltd. & Anr." submits that there being no loan agreement between the parties, financial debt cannot be proved. It is submitted that in the above case, this Tribunal has also held that deduction of TDS does not prove a financial debt. This Tribunal in paragraph 18 and 20 to 22 laid down following: "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 Financ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e debt, interest payable and date of repayment;" 19. Form 1 under above Rule, 2016 contains the details which are required to be submitted in an Application by the Financial Creditors. Part-V of the Form 1 is as follows: PART V PARTICULARS OF FINANCIAL DEBT [DOCUMENTS, RECORDS AND EVIDENCE OF DEFAULT] 1. PARTICULARS OF SECURITY HELD, IF ANY, THE DATE OF ITS CREATION, ITS ESTIMATED VALUE AS PER THE CREDITOR. ATTACH A COPY OF A CERTIFICATE OF REGISRATION OF CHARGE ISSUED BY THE REGISTRAR OF COMPNAIES (IF THE CORPORATE DEBTOR IS A COMPANY) 2. PARTICULARS OF AN ORDER OF A COURT, TRIBUAL OR ARBITRAL PANEL (ATTACH 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 INFOR....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ction between the parties. The Balance Sheet of the Respondent, as noted above, also clearly mentions the aforesaid acknowledgement of amount of Rs. 40.75 Crores as advance which debt is clearly acknowledged and as noticed above in Notes-25(7)(a) in the Balance Sheet of 2014-15, it was mentioned by the Corporate Debtor that in event BIFR directs after-sale of the property, the amount of Rs. 40.75 Crores shall also be refunded with interest to the Appellant. The Adjudicating Authority has not referred to the Balance Sheets which were also part of the Application filed under Section 7 by the Appellant in Part-V under the heading as 'Particulars of Financial Debt (Documents, Records and Evidence of 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 correspo....