TaxTMI 
TaxTMI 
TaxTMI 
2024 (9) TMI 1814
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....ers (Shri Sandeep Mittal and Shri Ravi Mittal) of the Corporate Debtor, challenging order dated 13.12.2023 passed by National Company Law Tribunal, New Delhi, Court-III, admitting Section 7 Application filed by M/s ASREC (India) Ltd. Aggrieved by the order admitting Section 7 Application, these Appeal(s) have been filed. 2. Brief facts of the case necessary to be noticed for deciding the Appeal(s) are: (i) Gujarat State Financial Corporation ("GSFC"), Gujarat Industrial Investment Corporation ("GIIC"), Bank of Baroda, and Dena Bank had advanced Term Lan of Rs. 30 lakhs; Rs. 60 lakhs; Rs. 16.50 lakhs; and Rs. 16.50 lakhs respectively to M/s Ganpati Pulp and Paper Ltd. (hereinafter referred to as the "GPPL"), Bavla, District, Ahmedabad. (ii) The GPPL has created charge over the immovable assets in village Rajoda, Bavla, District Ahmedabad, admeasuring about 24 acres, along with all building and structures thereon. On account of default committed by GPPL, GSFC took possession of the assets. GSFC in exercise of powers conferred under Section 29 of the State Financial Corporation Act, 1951 issued a sale notice by public advertisement for sale of the assets of GPPL. M/s Rama Finance....
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....endency of the writ petition, one time settlement was entered into between GSFC and SIL. (vi) The Guarantors of GPPL had filed a writ petition claiming ownership over the assets of GPPL being Special Civil Application No.12979 of 2009 in the matter of Lalitaben Govindbhai Patel and Ors. vs. Gujarat State Financial Corporation & Ors. challenging the one time settlement dated 10.06.2009 between GFSC and SIL, which Application came to be dismissed by the Gujarat High Court, against which Letters Patent Appeal (LPA) No.2480 of 2010 was filed by Lalitaben Govindbhai Patel and Ors. vs. Gujarat State Financial Corporation and Ors. Writ Petition filed by Guarantors of GPPL was dismissed on 06.10.2010. The Gujarat High Court also noticed that winding up petition, which was filed by some unsecured creditors of the GPPL in the High Court was pending. The Division Bench of the Gujarat High Court vide its judgment and order dated 26.07.2021 disposed of the LPA as well as Special Civil Application. It is useful to notice paragraph 10.8 and 10.9 of the judgment, which are as follows: "10.8 In the inherent & plenary jurisdiction under Article 226 of the Constitution of India read with Clause 1....
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...., which was filed before it by the Guarantors of GPPL, as well as the GSFC, in which proceedings Bank of Baroda had also come on the record, disposed of all proceedings with direction for transferring of winding up proceedings to NCLT, Ahmedabad. The Division Bench of the Gujarat High Court made it clear that it is not making any pronouncement on the merits of the claims or counter-claims of any of the parties in the matter. It is also relevant to notice that Bank of Baroda vide its Assignment Agreement dated 29.03.2011 has assigned its debt to M/s ASREC (India) Ltd. (viii) On 15.03.2016, an OTS proposal was submitted by the SIL to ASREC (India) Ltd. for a sum of Rs. 5.50 crores, which could not be complied with. The Respondent M/s ASREC (India) Ltd. sent a Notice of default on 01.03.2021 to SIL in regard to outstanding amount payable by the Corporate Debtor. (ix) Claiming an amount of Rs. 92,35,21,674/- calculated as on 30.06.2022, Section 7 Application was filed by the Respondent before the NCLT, New Delhi dated 23.11.2022, in which Application, notices were issued and the Corporate Debtor appeared and filed its reply. The Corporate Debtor in its reply has pleaded that there ....
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....titutions. There was no disbursement of any amount in favour of the Corporate Debtor by the Financial Institutions and the Financial Institutions were only vendors of the assets, which was agreed to be purchased by the Corporate Debtor for Rs. 3.88 crores. The Corporate Debtor paid down payment of Rs. 50 lakhs and also paid different amounts from time to time, totaling to Rs. 3.05 crores. However, in event there was any default on the part of purchaser, i.e. Corporate Debtor, it was open for Financial Institutions to recover the amount from sale of the assets, on which the Financial Institutions have charge. It is submitted that the Corporate Debtor has settled the dues with GSFC and Dena Bank. The Adjudicating Authority in the impugned order has accepted the submission of the Appellant that Agreement dated 27.11.1990 was a Sale Agreement. However, after recording the said finding, the Adjudicating Authority jumped on the conclusion that there was disbursement by Financial Institutions in favour of the Corporate Debtor, whereas disbursement of Term Loan was in favour of GPPL and not in favour of the Corporate Debtor. The Corporate Debtor was only purchaser of the assets in a sale, ....
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....the Corporate Debtor, which can be accepted as financial debt. It is further submitted that disbursement of the property, which was handed over to the Corporate Debtor, after down payment of Rs. 50 lakhs is clearly a transaction, which is covered by Section 5, sub-section (8) of the IBC. It is submitted that vide Agreement dated 27.11.1990, facility was extended to Corporate Debtor to pay the balance amount in installments with interest, which is clearly in the nature of financial transaction, covered by definition of Section 5, sub-section (8). It is submitted that Corporate Debtor itself subsequently in its letter dated 04.03.2021, which was written to the Managing Director of Respondent No.1 has admitted that sale consideration was converted into loan by the Consortium Members as per the terms and conditions mentioned in the Agreement dated 27.11.1990, by which the GSFC and other Consortium Members, became lenders and SIL became a lonee. It is submitted that Deed of Guarantee was also given by the Corporate Debtor to discharge the sale consideration and charge was created on the assets, which was subject matter of the Agreement dated 27.11.1990. It is further submitted that Guja....
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....rd/1965 Date: 7/11/90 To M/s. Rama Finance Company Ltd. Delhi Cold Storage Building 15, New Subzemandy Azadpur NEW DELHI - 110 033, Dear Sirs, Re : Sale of assets, viz. Land, building, Plant and machinery of M/s. Ganpati Pulp & Paper Mills Ltd., in exercise of powers conferred under section 29 of the SFCs Act, 1951. With reference to the above, we are pleased to inform you that the Board of Directors of the Corporation in its meeting held on 23/10/1990 has considered you offer for purchase of assets viz, land, building, plant, and machinery of M/s. Ganpati Pulp & Paper Mills Ltd., at Vill: Rajorda, Bavla, Dist: Ahmedabad, and decided to accept your offer of Rs. 388.00 lacs (Rs. Three hundred eighty eight lacs) in. exercise of the powers conferred upon the Corporation under Section 29 of the State Financial Corporation's Act-1951, on the following and additional terms and conditions stated in Annexure - '1' enclosed herewith. 1. Payment of 50,00,000/- (inclusive of Earnest Money Deposit (ED) of Rs. 10,00,000/-) shall be made as 'Down Payment' within a period of 30 days from the date of acceptance letter failing which this offer is liable to be cancelled and-EMD ....
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....te of Gujarat, having its Head Office situated at 'Jaldarshan' Building, Opp. Natraj Cinema, Ashram Road, Ahmedabad 300 009, hereinafter for brevity's sake referred to as "GSFC" (which expression shall, unless it be repugnant to the subject or context thereof, include its successors and assigns), GSFC acting for itself and as agent of GUJARAT INDUSTRIAL INVESTMENT CORPORATION LIMITED (GIIC), BANK OF BARODA (BOB) AND DENA BANK (DNB), of the Other Part. The expression GSFC, GIIC, BOB and DNB shall hereinafter collectively be referred to as "the financial institutions". WHEREAS the Company had charged its immovable properties and hypothecated its movable plant and machinery by way of pari passu charge to secure the financial assistance by way of Term Loans sanctioned by the financial institutions, namely: Rs.30.00 lacs provided by GSFC; Rs. 60.00 lacs provided by GIIC; Rs.16.50 lacs provided by BOB, and Rs.16.50 lacs provided by DNB, Together with interest and charges thereon. The financial institutions have thus pari passu charge on the assets of the Company consisting of Survey Nos. 725, 729, 730/1, 730/2, 731, 732(part), 782 and 787/2 of Village Rajoda, Ba....
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....90. AND WHEREAS in response to the said advertisement the purchaser made offer for purchase of the assets of the Company as "as it where is basis" for Rs. 2,12,12,121/- which has been subsequently raised to Rs. 3,88,00,000/- (Rupees three hundred eighty eight lacs only). With the approval of GIIC, BOB and DBN, the offer of the purchaser has been accepted by GSFC as per the resolution of the Board of Directors of GSFC passed in their meeting held on October 23, 1990, subject to the terms and conditions set out in the letter No. Sec. Section/Sale/B-1/Board/1965 dated November 7, 1990 which is the basis of this agreement and in case of any doubt or dispute regarding the same the decision of GSFC shall always be final and binding to the purchaser." 10. After noticing the aforesaid, the Agreement enumerates the terms and conditions. It is useful to notice Condition Nos.1 to 12, which are as follows: "NOW THIS AGREEMENT ON THE ABOVE PREMISES WITNESSETH THE TERMS AND CONDITIONS AS UNDER: 1. Pursuant to the offer made by the purchaser and the acceptance thereof by GSFC, GSFC acting for itself and on behalf of GIIC, BOB and DNB, by the Resolution of its Board of Directors passed in t....
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....r of GSFC, GIIC, BOB and DNB in any of the following manner: (i) a bank guarantee from a nationalized bank. (ii) a corporate guarantee of the Company (the purchaser) and the personal guarantee of its Directors. 5.1 The amount of bank guarantee, Corporate guarantee and / or personal guarantee shall be for the balance amount due and payable by the purchaser inclusive of interest, cost and other expenses mentioned in this agreement. 6. On payment of Rs. 50.00 lacs and on furnishing guarantee in favour of the financial institutions as mentioned above for securing the balance purchase prices, the GSFC shall handover possession of the assets of the Company to the purchaser on behalf of the financial institutions referred to above. 7. In case of the purchase furnishing corporate guarantee or collateral security as per clause 5(i) or 5(ii), until the entire sale consideration is paid in accordance with the terms and conditions stipulated herein, the assets of the Company shall be subject to the charge for the amount of the sale consideration and the purchaser shall hold the assets of the Company on behalf of GSFC, GIIC, BOB and DNB. 8. The purchaser agrees and gives their conse....
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.... on which Financial Institutions have pari pasu charge, which were taken possession by GSFC, in the year 1986 or the transaction can be treated to be a loan transaction extended by Financial Institutions in favour of the Corporate Debtor, as contended by learned Counsel for the Respondent? The 'financial debt' as defined in Section 5, sub-section (8) of the IBC, provides as follows: "5(8) "financial debt" means a debt alongwith interest, if any, which is disbursed against the consideration for the time value of money and includes- (a) money borrowed against the payment of interest; (b) any amount raised by acceptance under any acceptance credit facility or its dematerialised 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 othe....
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.... of money given for a particular purpose." 71. In the present context, it is clear that the expression "disburse" would refer to the payment of instalments by the allottee to the real estate developer for the particular purpose of funding the real estate project in which the allottee is to be allotted a flat/apartment. The expression "disbursed" refers to money which has been paid against consideration for the "time value of money". In short, the "disbursal" must be money and must be against consideration for the "time value of money", meaning thereby, the fact that such money is now no longer with the lender, but is with the borrower, who then utilises the money. Thus far, it is clear that an allottee "disburses" money in the form of advance payments made towards construction of the real estate project. We were shown the Dictionary of Banking Terms (2nd Edn.) by Thomas P. Fitch in which "time value for money" was defined thus: "present value : today's value of a payment or a stream of payment amount due and payable at some specified future date, discounted by a compound interest rate of discount rate. Also called the time value of money. Today's value of a stream of ca....
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....preme Court in the above case has clearly laid down that for deciding as to whether the debt is a 'financial debt' the real nature of the transaction reflected in the writing has to be dealt with. It needs no emphasis that real nature of transaction need to be found out by the Court, when the issue is raised before the Court that transaction is not a 'financial debt'. 15. Before we proceed further, it is relevant to notice the pleadings in Section 7 Application filed by the Financial Creditor and the reply, which was filed by the Corporate Debtor. In Part-IV, Respondent No.1 has only referred to the total amount and working for computation. There was no other fact mentioned regarding the financial debt. Part-IV of the Application is as follows: "PART IV PARTICULARS OF FINANCIAL DEBT 1. Total amount of debt granted date(s) of disbursement Total amount of debt is Rs. 92,35,21,674.03/- as on 30.06.2022. The schedule of disbursement is as follow:- Date of Disbursals/ Adjustments Amount of disbursals/Adjustment(in INR) 23.10.1990 48,16,500/- Total outstanding 92,35,21,674.03 2. Amount claimed to be in default and the date on which the default occurred (attach the workings....
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....n, where the Corporate Debtor denied the claim of the Applicant that there was any loan transaction between the parties. In paragraph 8 of the reply, relevant clauses of Agreement dated 27.11.1990 was extracted. After extracting the relevant clauses in paragraph 9, 10, and 11, following was stated: "9. A bare perusal of the above said clauses as well as agreement as a whole would clearly demonstrate that the above said agreement dated 27.11.1990 was an agreement to sale and not a loan agreement. 10. Under an agreement to sale, entitlement to the proposed seller is to seek relief of specific performance, if the proposed seller wants the Sale to be effectuated. The proposed seller is not entitled to claim the unpaid sale consideration as debt and initiate proceedings under the IBC Code. 11. The lead member of the consortium, Le., GSFC had submitted to the Hon'ble BIFR, in Case No. 129/97, a representation dated 29.09.2006 on behalf of the Consortium, which stated as follows- "The original unit Mis. Ganpati Pulp and Paper Mills Ltd. Was sold out to the applicant unit Mis. Shree Industries Ltd. by the Corporation on behalf of 4 Institutions (GSFC, GIIC, BANK OF BARODA AND D....
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.... by the letter it communicated its acceptance of sale of assets of offer at Rs. 388.00 lacs. The letter dated 07.11.1990 in no manner can be read as any loan transaction of any 'financial debt', which is owed by Corporate Debtor to the Financial Creditor. The Agreement dated 27.11.1990, which is an Agreement containing all terms and conditions of sale of the assets, which was issued after approval of the Bank of Baroda, Dena Bank and GIIC has been referred to and relied by both the parties. The Corporate Debtor in its reply has also referred to the said Agreement, which Agreement has been filed by both the parties in this Appeal. The Agreement dated 27.11.1990 has already been extracted above. The opening part of the Agreement as extracted above, clearly indicates that offer of purchase given by M/s Rama Finance Company Ltd. was accepted by the GSFC. Clauses of the Agreement as extracted above, also fully supports the case of the Appellant that Agreement was for sale and purchase of the assets of GPPL. Clause 1 of the Agreement, containing terms and conditions provides following: "1. Pursuant to the offer made by the purchaser and the acceptance thereof by GSFC, GSFC acting for i....
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....financial transaction. The copy of Deed of Guarantee dated 12.12.1990 has been brought on record by Respondent No.1 along with its reply. The Deed of Guarantee in paragraphs 1, 2 and 3, give the details of loan advanced by the GSFC and other Financial Institutions to GPPL and the charge of the Financial Creditor on the assets, which properties were offered for sale by public advertisement. Paragraphs 1 and 2 of the Deed of Guarantee are as follows: "1. The GSFC had advanced Term Loan of Rs. 30.00 Lacs GIIC Rs. 60.00 ., Lakhs, Bank of Baroda Rs. 16.50 Lakhs and Dena Bank Rs. 16.50 Lakhs together *with interest and charges thereon to. M/S Ganpati Pulp & Paper Mills Limited (in liquidation), Bavla, Distt Ahmedabad. (Hereinafter referred to as "the Company"). GSFC, GIIC, Bank of Baroda and Dena Bank are financial Institutions having pari passu charge over the assets of the Company in liquidation. 2. The company had charged its immovable property and hypothecated its movable plant and machine1y by way of passu charged to secure the financial assistance of Rs. 30.00 Lakhs provided by the corporation; Rs. 60.00 Lacs granted by Gujarat Industrial Investment Corporation Ltd. (GIIC); Rs.....
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....hs 1 and 2 as incorporated in the Deed of Guarantee in the heading 'Now this Deed witnessth as under' are as follows: "NOW THIS DEED WITNESSTH AS UNDER:- 1. The guarantor hereby irrevocable and s unconditionally guarantees that the purchaser shall make due payment of the balance purchase price of Rs. 338.00 Lakhs together with interest thereon at the aforesaid rate and all other charges as and when payable by the purchaser in the manner mentioned and within the period stipulated in the letter of Acceptance of the offer furnished by GSFC, a copy whereof is annexed hereto and marked as "Annexure 'A'". 2. We hereby agree that the demand duly signed by the officer of GSFC, GIIC, Bank of Baroda and Dena Bank as the case may be shall be final and binding upon as to the question as to the amount of such default and the demand by GSFC, GIIC, Bank of Baroda and Dena Bank or any one of them would be conclusive and that we shall not be entitled to question the Correctness of the same. In the event of default being committed by the purchaser in payment of balance purchase price with interest thereon at the aforesaid rate and other charger if any, as aforesaid the guarantor shall....
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.... as follows: "Ref. No.GSFC:ACCTS: DATE: 17/10/2000 M/s G.I.I.C Ltd.; Jdhyo* Bhavan, GANDHINAGAR M/s. Bank of Baroda Opp: Natraj Cinema Ashram Road Branch AHMEDABAD M/s Dena Bank 188 A, Ashram road, Der*laxmi Building P.B. No.4089, Na**angpura AHMEDABAD Dear Sirs, Reg: Maintenance of account of M/s. Shree Industries Limited - The purchaser of M/s. Ganpati Pulp & Paper Mills - A/c No.C/C/316/97. A reference is please requested to the Sale Order No.GSFC/SEC.SEC/SAL.E/B-1 Board/1965 Dated 07/11/1990. We have been maintaining the accounts since inception on your behalf as per the sharing ration approved. However, since the purchaser is not making the payments regularly, we find it very difficult to continue with the maintenance of account on your behalf. We have, therefore, separated the accounts based on the sharing ration agreed to between GSFC, GIIC, Dena Bank and Bank of Baroda. We are forwarding herewith the account in details from the date of possession given to the purchaser. The details in gist based on which the accounts are opened are given below: Total sale price : Rs. 3,88,00,000/- Loss: Expenses as : GSFC : 6,58,617/- &nb....
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....payments received after down payment is again bifurcated based on the ratio agreed to and date wise credit is given in the accounts on the date on which the same is received. The total payment received after down payment comes to Rs. 3,05,72,307/-. The proportionate credit has been given in the different accounts. The final dues recoverable based on interest and penalty calculated upto 31/12/2000 as well as the dues recoverable from the party, institution wise, as on 01/11/2000 are also shown at the bottom of the statement. Since, the purchaser is not making regular payment, we request you to maintain your part of account at your level henceforth. You are requested to please let us know the details of payment made by us till date so as to reconcile the same. We regret the inconvenience caused to you in this regard. Thanking you, Yours faithfully, Sd/ Dy. Manager (A/cs.)" 26. The above letter, which has been written after 10 years of the sale of the assets, clearly notes that account of Corporate Debtor as purchaser of the Ganapati Pulp & Paper Mills has been maintained and net sale price is bifurcated based on the sharing ratio of Bank of Baroda was mentioned as 14....
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....meaning of Section 5(7) of the IBC, 2016." 29. The Adjudicating Authority after noticing the judgment of the Hon'ble Supreme Court in Innoventive Industries vs. ICICI Bank and M. Suresh Kumar Reddy vs. Canara Bank & Ors. has noted that under the consortium loan agreement, the Financial Institutions advanced certain amount to M/s. Ganpati Pulp and Paper Limited by way of term loans and Respondent No.1 stepped into the shoes of Bank of Baroda by assignment deed dated 29.03.2011. The Adjudicating Authority further noticed that assets of the GPPL were sold by GSFC and were purchased by the Corporate Debtor. However, after recording the said finding, the Adjudicating Authority jumped on the conclusion that it is not in dispute that the amount in question has been disbursed to the Corporate Debtor which was disbursed against the consideration for the time value of money. Paragraphs 38 and 39 of the order of the Adjudicating Authority are as follows: "38. The assets of the GPPL were put on sale by the GSFC. The said assets were purchased by the Corporate Debtor i.e. Shree Industries Limited (previously known as M/s. Rama Finance Ltd.) and the Corporate Debtor was put in possession of t....
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....ition of 'financial debt' under Section 5, sub-section (8). 33. The learned Counsel for Respondent No.1 has relied on letter dated 04.03.2021, which was written by Corporate Debtor to Respondent No.1 on the subject "Settlement proposal - towards term loan". It is submitted that in the said letter, the Corporate Debtor has also admitted that sale consideration was converted into loan by Consortium Members. Copy of the said letter has been brought on the record as Annexure R1/9 in the reply of Respondent No.1. Paragraphs 5 and 9 of the said letters are as follows: "5. SIL, under the terms and conditions of the said agreement was required to pay a sum of Rs. 50.00 lacs as down payment and the balance sale consideration was converted into loan by the aforesaid consortium members as per the terms and conditions as mentioned in the Agreement. After the payment of Rs. 50.00 lacs, by virtue of the said agreement, GSFC as well as the other consortium members became lenders and SIL became a lonee for the amount of the balance purchase price, which SIL had to pay to such institutions. The consortium members, therefore, attained a status of secured creditors of SIL." 9. Though the other c....
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....ature of transaction. The Hon'ble Supreme Court in (2015) 16 SCC 787 in Yellapu Uma Maheshwari and Anr. vs. Buddha Jagadheeswararao and Ors. has held that the nature and substance of the transaction has to be determined with reference to the terms of the documents and it cannot be determined on the basis of pleadings set up by the parties, who seeks to introduce the document in question. In paragraph 15 of the judgment, the Hon'ble Supreme Court has laid down following: "15. It is well settled that the nomenclature given to the document is not decisive factor but the nature and substance of the transaction has to be determined with reference to the terms of the documents and that the admissibility of a document is entirely dependent upon the recitals contained in that document but not on the basis of the pleadings set up by the party who seeks to introduce the document in question. A thorough reading of both Exts. B-21 and B-22 makes it very clear that there is relinquishment of right in respect of immovable property through a document which is compulsorily registrable document and if the same is not registered, it becomes an inadmissible document as envisaged under Section 49 of....
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....b National Bank and Cash Credit Facility of Rs. 150 lakhs from Punjab National Bank. For the said purpose, pari passu charges against the properties transferred to it by GSFC were created in favour of IFCI and Punjab National Bank and second charge for working capital. The said charge was created with the consent of GSFC, GIC, Dena Bank and Bank of Baroda who were the members of the consortium." * Order dated 17.02.2021 passed in LPA 2480/2009 "This, prima facie, means that while the productive Assets of the Company are going junk because of disuse and no effective resolution of the matter is happening, either by payment to the Secured Creditors and other Creditors nor the Secured Creditors are allowed to take further recovery measures, subject to the rights and contentions of the various parties involved in the matter, therefore, as an interim measure at this stage, we feel it appropriate to modify the aforesaid blanket Status Quo (1) We direct the Respondent No. 5 - Shree Industries Ltd. and the Respondent No. 9 - ASREC {India) Ltd., the Assignee of Bank of Baroda and other Secured Creditors, who have not yet been finally settled and paid off by the Respondent No.5 - Shree In....
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....edly so left the said aspects to be considered and decided by the NCLT afresh, once the proceedings are transferred by learned Company Judge, who may pass appropriate orders in its his discretion in this regard and for that purpose only the impugned orders and OTS Settlement will not stand in the way of NCLT. (underlined by us)" 39. The Gujarat High Court having itself held that High Court is not making any observation on the claims and counter-claims of the parties, order of the High Court relied by Respondent No.1 does not help them with regard to nature of transaction, which was entered between the parties on 27.11.1990. 40. Coming to the order of the AIFR as relied by Respondent. In the said order, it was observed by the AIFR that "The appellant's rights as a secured creditor of the company whose dues have to be settled at par with the other secured creditors have been protected". The AIFR was not examining or expressing any opinion on the nature of transactions between the Corporate Debtor and the Financial Institutions and the said observation in no manner help Respondent No.1. 41. Now, we come to the judgment relied by learned Counsel for the Respondent. The Respondent h....
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....ke sure you borrow enough." * * * "commercial.-adj. 1. of or engaged in commerce. 2. sponsored or paid for by an advertiser : commercial television. 3. having profit as the main aim : commercial music. 4. (of chemicals, etc.) unrefined and produced in bulk for use in industry. 5. a commercially sponsored advertisement on radio or television." 77. A perusal of these definitions would show that even though the petitioners may be right in stating that a "borrowing" is a loan of money for temporary use, they are not necessarily right in stating that the transaction must culminate in money being given back to the lender. The expression "borrow" is wide enough to include an advance given by the homebuyers to a real estate developer for "temporary use" i.e. for use in the construction project so long as it is intended by the agreement to give "something equivalent" to money back to the homebuyers. The "something equivalent" in these matters is obviously the flat/apartment. Also of importance is the expression "commercial effect". "Commercial" would generally involve transactions having profit as their main aim. Piecing the threads together, therefore, so long as an amount is "raised"....
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.... the allotment of land was cancelled by TSIIC. Section 7 Application was filed by Respondent No.1, which Application was admitted by Adjudicating Authority. Aggrieved by which order, the suspended Director has filed the Appeal. This Tribunal while dismissing Appeal, in paragraphs 19 and 23 observed following: "19. The aforenoted Clauses enumerated in Para 13, specify that the first Respondent shall make the payment of the consideration directly to the Lenders towards the amount payable under the OTS by the 'Corporate Debtor'. The consideration for the purchase of the Scheduled Property structure together with the plant and machinery standing thereon shall move to the Lender from the first Respondent, at the instance of the 'Corporate Debtor'. Hence, it is seen from the aforenoted clauses that the Agreement to Sell emanates from the One Time Settlement entered into between the 'Corporate Debtor' and the Lender Bank and it is only in lieu of the consideration paid by the first Respondent to the Lender Bank on behalf of the 'Corporate Debtor', that the Agreement of Sale for the subject property was executed. Therefore, the contention of the Learned Counsel appearing for the Appellan....
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....ancial Creditors' of the 'Corporate Debtor JIL'. The facts are distinguishable in the instant case as the disbursal of funds was by the first Respondent to the Lender Bank on behalf of the 'Corporate Debtor' in pursuant to an OTS Settlement. There is no parent subsidiary relationship involved in this present matter. The loan was advanced to the Corporate Debtor and the amounts were disbursed by the first Respondent to the account of the 'Corporate Debtor'. For reasons cited in Para 19, we are of the considered view that the debt in question is a 'Financial Debt'. It was also pleaded that the specific intention of the first Respondent was to take over the land with the structures and the plant and machinery so as to commence the business for which purpose the land was initially allotted by TSIIC. Hence, it can be safely construed that the first Respondent cannot be said to be having only a security interest over the assets of the 'Corporate Debtor'. Keeping in view the facts of the attendant case, we are of the considered opinion that the 'debt' is a 'Financial Debt' and the first Respondent a 'Financial Creditor'. 44. In the above case, the amount was deposited by the first Respon....