TaxTMI 
TaxTMI 
2025 (5) TMI 580
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....ebtor - M/s Mansfield Cables Company Ltd. has been filed challenging order dated 27.05.2022 passed by the Adjudicating Authority (National Company Law Tribunal), New Delhi, Bench - IV by which order Section 7 application filed by M/s Arun Enterprises - Respondent No.1 herein has been admitted. Aggrieved by which order this appeal has been filed by a Suspended Director of the Corporate Debtor. 2. Brief facts of the case necessary to be noticed for deciding this appeal are: (i) The Corporate Debtor owned a property C-3, Site - C, Surajpur Industrial Area, Greater Noida, Uttar Pradesh. An agreement to sell dated 08.02.2016 was entered between Mr. JPS Chadha and Mr. Arun Dhir of M/s Arun Enterprises for sale of above land for consideration of Rs.3,65,00,000/-. (ii) The Vendor has received an amount of Rs.51,00,000/- from the Vendee, which is noticed in the Agreement to Sell prior to applying for transfer of said property and thereafter the Vendee shall have the right to get the transfer deed of the property executed. Subsequently, another payment was made of Rs.50,00,000/-. (iii) An agreement for cancellation of Sale Agreement dated 25.03.2017 signed by JP....
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....ng finding was retuned in Para 19 and 20 of the order: "19. Apparently, there is no dispute between the parties qua returning of the amount. On the basis of record available, it is established that only part payment has been made and still a sum of Rs. 1,31,00000 is due against the corporate debtor. The said fact also stands substantiate from the balance sheet of corporate debtor, wherein the said amount has been disclosed as unsecured loan. 20. In view of the above said discussion, this Tribunal is of affirm view that a Respondent/Corporate Debtor failed to return the amount of Rs. 1,31,00,000/- to the operational creditor and there was no genuine pre-existing dispute between the parties." (viii) Aggrieved by order admitting Section 7 application, this appeal has been filed. 3. When the appeal came for hearing on 15.07.2022, Appellant submitted that the Appellant is ready to deposit amount of Rs.1,31,00,000/-. This Tribunal by order dated 15.07.2022 subject to deposit of Rs.1,31,00,000/- by Demand Draft passed an interim order that no steps shall be taken by the IRP, however, IRP shall ensure that the Corporate Debtor remains a going concern. Order dated 15....
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....g the submissions of learned counsel for the Appellant submits that it was the Corporate Debtor who approached the Appellant to advance money in return of his property situate at C-3, Site - C, Surajpur Industrial Area, Greater Noida, Uttar Pradesh. Amount was transferred in the bank account of the Corporate Debtor on 05.02.2016. The Corporate Debtor through its Director JPS Chadha entered into agreement to sell dated 08.02.2016. The Respondent further transferred Rs.50 Lakhs on 11.02.2016 and further Rs.23 Lakhs by wife of one of the partners was transferred in the bank account of the Corporate Debtor. The Corporate Debtor failed to transfer said property in the name of the Respondent, hence, cancellation of sale agreement dated 25.03.2017 was entered which contain a clause that Corporate Debtor agreed to return the money advanced with 2% p.m. interest. JPS Chadha agreed and admitted that he failed to pay instalment due on 20.04.2017, 15.05.2017. Only instalment of an amount totaling to Rs.20 Lakhs on 21.10.2017 and 31.08.2017 were received by the Respondent and post-dated cheques handed over to the Respondent were returned. It is submitted that amount is reflected in the balance ....
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....d immovable properties of the Vendor. 5. That the expenses to be incurred for the execution of the Sale Deed/Lease Deed/Transfer Deed on stamp duty, registration fees and other legal expenses will be borne by the Vendee. Vendor shall provide all the required set of papers with details of property under consideration as a working unit as required for transfer of property 6. That the Vendee shall have the rights to get the Transfer Deed of the same property executed in his/her favour or in favour of his/her nominee(s) tor which the Vendor has got no objection. 7. That the vendor shall be responsible for all outstanding dues and demands in respect of the said property up to the date of final transfer deed and that all future dues thereafter shall be paid by the Vendee. 8. That the vendor shall hand over the vacant possession of the said property to the vendee at the time of execution of final Transfer Deed. 9. That in case of breach of any clause by the VENDOR aforesaid or tail to get the plot transferred in the name of Buyer/Vendee on his nominee, the VENDEE shall have the right to get the Transfer Deed/ Sale Deed registered through Court ....
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....ated as a financial debt within the meaning of Section 5 Sub-section (8) of the I&B Code. 11. Part IV of the Section 7 application claims total amount disbursed as Rs. 2,17,68,723/- and with interest the claim was of Rs. 3,28,69,026/-. The brief synopsis and list of events which is part of Section 7 application filed by Respondent No.1 itself pleads that amounts were transferred to the Corporate Debtor against transfer of land and building situate at Surajpur Industrial Area. First two paragraphs of brief synopsis are as follows: "The Petitioner had transferred various amounts in the account of corporate debtor against which corporate debtor had to transfer its land & building situated at SurajPur, Greater Noida, owned by the Corporate Debtor. The corporate debtor also agreed that the amount transferred by the Petitioner would be returned along with an interest of 2% per month if the land was not transferred in the name of Petitioner." 12. In the Section 7 application, the Respondent No.1 has annexed Sale Agreement dated 08.02.2016, Cancellation of Sale Agreement dated 25.03.2017, Extract of the minutes of meeting dated 16.11.2016 and other documents which c....
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....claimed in Section 7 application can be accepted as financial debt within the meaning of Section 5 (8). When we look into the real nature of transaction, it is amply clear that the transaction was for sale and purchase of assets of the Corporate Debtor; plot at Surajpur Industrial Area and amounts were paid by the Respondent only for purchase of assets. The present is thus transaction for sale and purchase of plot of Corporate Debtor and the amount transferred to the Corporate Debtor was towards part payment of consideration and the mere fact that agreement between the parties contain a stipulation for 2% p.m. interest cannot make the transaction to be a financial debt. 15. Learned counsel for the Appellant has relied on judgment of this Tribunal in "Sandeep Mittal vs. M/s ASREC (India) Ltd. & Ors., Company Appeal (AT) (Ins.) No.37 of 2024" where this Tribunal had occasion to consider nature of transaction where amount was due towards a sale consideration. In the above case, this Tribunal has considered Section 5(8). In the above case also this Tribunal held that application filed under Section 7 by the Financial Creditor was not maintainable since there was not financial debt a....
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....ing 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;" 12. It is well settled position of law that 'financial debt' means a debt disbursed against consideration for time value and money and includes the transactions as enumerated in sub-clause (8) of Section 5. The 'financial debt', came for consideration before the Hon'ble Supreme Court in large number of cases. We may first notice judgment of the Hon'ble Supreme Court in Pioneer Urban and Infrastructure Ltd. vs. Union of India and ors. -2019) 8 SCC 416. The Hon'ble Supreme Court in the above judgment held that definition of 'financial debt' goes on to state that a "debt" must be "disbursed" against the consideration of time value of money. It was further held that the expression "disbursed" refers to money, which has ....
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.... pay less by way of instalments than he would if he were to pay for the ultimate price of the flat/apartment)." 13. In subsequent judgment of the Hon'ble Supreme Court in Global Credit Capital Limited and Anr. vs. Sach Marketing Pvt. Ltd. & Anr. - (2024) SCC OnLine SC 649, the Hon'ble Supreme Court has again dealt with the definition of 'financial debt' as occurring in Section 5, sub-section (8) of IBC and after noticing the judgments, the law was summarized in paragraph 20, which is as follows: "SUMMARY 20. Subject to what is held above, we summarize our legal conclusions: a. There cannot be a debt within the meaning of subsection (11) of section 5 of the IB Code unless there is a claim within the meaning of sub-section (6) of section 5 of thereof; b. The test to determine whether a debt is a financial debt within the meaning of sub-section (8) of section 5 is the existence of a debt along with interest, if any, which is disbursed against the consideration for the time value of money. The cases covered by categories (a) to (i) of sub-section (8) must satisfy the said test laid down by the earlier part of sub-section (8) of section 5; ....
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....e Debtor which amounts were basis for Section 7 application, the nature of transaction need to be looked into for ascertaining whether there was any financial debt or not. 19. Taking into consideration the entire facts and circumstances and fact that amounts were transferred by the Respondent No.1 to the Corporate Debtor towards sale consideration, which was fixed in the agreement dated 08.02.2016, the amount cannot be held disbursement for time value of money. The amount transferred for purchase of assets cannot be treated to be a financial debt. We, thus are satisfied that the Adjudicating Authority committed error in admitting Section 7 application filed by Respondent No.1. 20. We have noticed above that the Appellant offered to deposit Rs.1,50,00,000/- when the appeal was heard and by our order dated 15.07.2022 while granting interim relief, we have permitted deposit of Rs.1,50,00,000/- by the Appellant by way of Demand Draft. In the Rejoinder Affidavit which has been filed by the Appellant, there is a specific averment that Rs.1.5 Crore which has been deposited with this Tribunal has been issued from the personal account of Mr. JPS Chadha. In Para 3 of the Rejoinder Affi....