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TaxTMI 
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2025 (11) TMI 1453
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....hich were filed under Section 7 of the IBC praying for initiating Corporate Insolvency Resolution Process (CIRP) against the Corporate Debtor- 'Cadillac Infotech Pvt. Ltd.'. Both the Appellants claiming to be Financial Creditors of the Corporate Debtor have filed these Appeals challenging the impugned order dated 13.06.2025. 2. Brief background giving rise to these Appeals need to be noted first. 2.1. The Appellant- Airwil JKM Infrastructure Pvt. Ltd. is a company incorporated on 02.08.2013. JKM Infrastructure Pvt. Ltd. is also the group company of Airwil JKM Infrastructure Pvt. Ltd. The Corporate Debtor is a company which was incorporated in the year 2005. The Corporate Debtor owned plots bearing municipal no. 1, 2, 11 and 12 located at Sector 135 Noida, the Corporate Debtor approached the Appellant for acquiring an adjoining plot bearing municipal no.10 located at Sector 135 Noida and jointly developing the plots owned by Corporate Debtor with the Appellant- Airwil JKM Infrastructure Pvt. Ltd. as Developer. A MoU was entered between Airwil JKM Infrastructure Pvt. Ltd. and Cadillac Infotech Pvt. Ltd. (Corporate Debtor) where parties agreed that the Corporate Debtor shall obt....
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.... preferred by the Corporate Debtor to which reply was filed by Infracon Company who was Respondent in the arbitration proceeding. Arbitral Tribunal gave an Award on 16.10.2018 holding that arbitration dispute relates to Property Development Agreement. Issues touching MoU could not be adjudicated in the arbitration proceeding. The Arbitral Tribunal directed Infracon Company to handover the possession of the subject plots to the Corporate Debtor within four weeks. Arbitral Tribunal also directed Infracon Company to pay charges for unauthorised use and occupation of the said plots @ Rs. 20 Lacs per month and also directed Corporate Debtor to refund the amount received from Infracon Company. Aggrieved by the Award dated 16.10.2018, Infracon Company preferred objections under Section 34 of the Arbitration and Conciliation Act, 1996 which were decided by the Learned Single Judge of the Delhi High Court on 29.11.2021 upholding the order of the Arbitral Tribunal except to the direction to pay sum of Rs. 20 Lakh per month which was set aside. The order of the Single Judge of the Delhi High Court dated 29.11.2021 is challenged both by Infracon Company and Corporate Debtor in Appeal which App....
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....olated. It is a fact that a Property Development Agreement (PDA) was later executed between the Corporate Debtor and M/s Airwil JKM Infracon Pvt. Ltd., a sister concern of the applicant financial creditors, indicating an intent to proceed with the development as envisioned in the original MoU. Ultimately, the key legal question is whether the amounts paid under the MoU can be classified as a financial debt. 27.1. Going back to the facts mentioned in para 15 of this order, we notice that in the said MOU, it was the owner's obligation to acquire the additional 1 acre of land, if the payment is made by the developers within the stipulated schedule, and the owner was to complete the said acquisition within six months. It was mutually decided that all expenses and costs for the development/construction of the project shall be exclusively borne by the developer, and it would also get the requisite approvals from the authorities after obtaining a power of attorney from the owner of the land. This sharing of responsibility is even extended to the handling of the project, which was decided to be maintained jointly by the owner and the developer, who would constitute a maintenan....
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.... dated 07.08.2013 indicates a legal and binding relationship with mutual and financial obligations between the parties, and in the present case, the advance paid was an investment for profit and not a disbursement for the time value of money as defined in Section5(8) of IBC, 2016. Hence, we are of the view that there is no basis for initiation of CIRP under Section 7 of IBC, 2016 in both these petitions." 2.2. Aggrieved by the aforesaid order, these two Appeals have been filed by Airwil JKM Infrastructure Pvt. Ltd. and JKM Infrastructure Pvt. Ltd. respectively challenging the orders rejecting their respective Section 7 applications. It shall be sufficient to refer the pleadings in Company Appeal (AT) (Insolvency) No.1187 of 2025 for deciding both the Appeals. 3. We have heard Shri Gaurav Mitra, Learned Senior Counsel for the Appellant and Ms. Pooja Mehra Sehgal, Learned Senior Counsel appearing for the Corporate Debtor. 4. Shri Gaurav Mitra, Learned Counsel for the Appellant challenging the orders submits that the Adjudicating Authority committed error in holding the transaction in question not a financial debt within the meaning of Section 5(8). It is submitted that the M....
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....5 Crore but has neither refunded the amount nor has been adjusted the amount in PDA which was executed on 06.09.2014 with Infracon Company which is a Group Company of Airwil JKM Infrastructure Pvt. Ltd. There being default committed by the Corporate Debtor of the amount received from the Appellant, Section 7 application was clearly maintainable. The Corporate Debtor has also acknowledged the amount received from Appellant in financial statements of 2013-14 to 2020-21 as "advance for which value is to be given". There is clear acknowledgment of obligation to repay the amount affirming financial nature of transaction. Existence of repayment clause link to the non- fulfilment of the condition precedent, acquisition and amalgamation of the land clearly satisfied statutory requirement of financial debt under Section 5(8)(f) of the IBC. The Respondents have acknowledged execution of MoU, hence, they were bound to refund the amount. The Adjudicating Authority could not have ignored or disregarded the finding of the Arbitral Tribunal as well as Learned Single Judge of Delhi High Court which held that PDA is not sequel to the MoU executed between the Appellant and the Respondent. There is n....
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.... for recovery of the same money forming part of Section 7 proceeding. Appellant has been taking contradictory stand in different proceedings. The Appellant is adopting an inconsistent position that the money under the MoU were required to be either adjusted or refunded which is mentioned under Section 7 whereas a receipt dated 09.10.2014 is relied by the Appellant mentioning that amount has been adjusted. Appellant on one hand is alleging adjustment and on the other hand, proceeded with Section 7 proceedings which have rightly been dismissed. Section 7 application filed by the Appellant was for recovery of money has rightly been rejected. 6. We have considered the submissions of the Counsel for the parties and perused the record. 7. The only question which need to be considered in this Appeal is as to whether transaction undertaken by MoU dated 07.08.2013 is a transaction reflecting a financial debt owed by the Corporate Debtor to the Appellant. Section 5(8) of the IBC defines 'financial debt'. Section 5(8)(f) on which reliance is placed is as follows:- "5. Definitions. - (8) "financial debt" means a debt alongwith interest, if any, which is disbursed against the con....
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....' has been referred to as 'developer'. The MoU contains statement that the owner is the absolute owner and seized and possessed with right and sufficiently entitled to all those pieces of parcel of lease hold lands admeasuring about 16,000 Sq. Mts. bearing plots no. 1,2,11 & 12, situated in Sector 135, Noida from NOIDA Authority which land is eligible for development under relevant clause and land has been allotted to the owner for the purpose of construction and setting up of IT & IT enabled Services. MoU contained following statement with regard to developer:- "WHEREAS, the developer is engaged in the business of construction and development or Real Estate Projects and has good reputation, goodwill and. substantial experience and considerable expertise in the development of colonies, residential and Commercial Complexes, IT/TES, etc. and has expressed its desire to develop the project in collaboration with the Owner provided that owner is able to get permission for part sale of the built up space." 10. The above statement as recorded in MoU clearly indicate that the developer has expressed its desire to develop the project in collaboration with the owner. The MoU furt....
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....and conditions which would govern the Development Agreement and pending execution of the same the parties have decided to reduce in writing broadly agreed terms and conditions of the proposed Development Agreement. This MOU shall remain binding between the parties till a proper JDA is executed between the parties." 12. Further obligation of the owner is also separately dealt which are as follows:- "OBLIGATION OF THE OWNER: 1. The Owner hereby agrees and assures the Developer that, subject to Developer adheres to the payment schedule herein agreed, within a period of six months of the date of execution of this MOU, the owner shall acquire said additional one acre of land which is adjacent to the existing land of the owner and will get both the lands amalgamated so that plot(s) available for development of the. Project admeasures minimum 20,000 sq. mts, which would be qualified for part sale(s) as per existing NOIDA Policy. 2. That once the aforesaid condition precedent is achieved and a plot(s) admeasuring minimum 20,000 sq. meters the developer will be obliged to enter into Development Agreement with the Owner and would develop and construct a IT Proje....
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....) Rs. 25,00,000/- (Rupees Twenty Five Lacs Only) vide ch no.754176, dated 20.05.13 drawn on Allahabad Bank Tughlakabad, New Delhi. ii) Rs. 25,00,000/- (Rupees Twenty Five Lacs Only) vide ch No.754175 dated 17.05.13 drawn on Allahabad Bank Tughlakabad, New Delhi. iii) Rs. 25,00,000/- (Rupees Twenty Five Lacs Only) vide ch. no.754.77 dated 22.05.13 drawn on Allahabad Bank Tughlalabad, New Delhi. iv) Rs. 1,00,00,000/- (Rupees One Crore Only) vide ch no.354558 dated 11.06.13 drawn on Allahabad Bank Tughlakabad, New Delhi. v) Rs. 50,00,000/- (Rupees Fifty Lacs Only) dated 02.08.2013 drawn on Allahabad Bank, Tughlakabad, New Delhi thru RTGS. vi) Rs. 50,00,000/- (Rupees Fifty Lacs Only) vide ch no.020772 dated 07.08.2013 drawn on Allahabad Bank, Tugnlakabad, New Delhi. vii) Rs. 25,00,000/- (Rupees Twenty Five Lacs Only) vide ch.no.020773 dated 12.08.2013 drawn on Allahabad Bank, Tughlakabad, New Delhi. And balance amounting to Rs. 12,00,00,000/- (Rupees Twelve crore Only) within two months from the signing of this MOU. This amount shall be utilized by the Owner for payment of the balance consideration for the acquisition of th....
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....arties agreed which was governing the development agreement to be entered between the parties was with the object and purpose of the development. Even though development agreement between the Appellant and the Corporate Debtor was not entered and Development Agreement was entered with Group Company of the Appellant i.e. Infracon Company and the Corporate Debtor but even without taking into consideration of the development agreement subsequently entered the terms agreed between the parties, it is clear that MoU was only for the purposes of development of the plots which was jointly undertaken by the parties. Counsel for the Respondent has also referred to pleadings in Section 7 application, in which application Part V Column 8 Clause 5, following has been pleaded:- 8. LIST OF OTHER DOCUMENTS ATTACHED TO THIS APPLICATION IN ORDER TO PROVE THE EXISTENCE OF FINANCIAL DEBT, THE AMOUNT AND DATE OF DEFAULT 5. The CD through its director Mr. D.K. Gupta approached the director of the FC i.e. Mr. Vinod Kumar Sachdeva and represented that the CD is the owner of Plots bearing municipal no. 1, 2, 11 and 12 located Sector, 135, Noida, UP. It was further represented by th....
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....pondent is judgment of this Tribunal in "Ansal Housing Limited vs. Samyak Projects Private Limited- Comp. App. (AT) (Ins.) No.542 of 2023" which was also a case where Adjudicating Authority dismissed Section 7 application by Ansal Housing Limited holding that financial debt did not exist in the proceeding. This Tribunal after noticing the facts of the said case and details of the agreement which was entered between the parties, following observations in paragraph 24 and 25:- "24. Undisputedly both parties being partners in developing the project together, the purchase and availability of land for the project was an essential ingredient thereof and hence any assistance by the Appellant to the Respondent tantamount to financing the operations of the joint venture. When shared liability for profit is so clearly manifested in the JVA and the ICD and responsibilities well demarcated in the execution of the real estate projects, it cannot be overlooked that both parties are development partners and co-sharers in the real estate projects. The JVA and ICD laid the foundations of a legal and binding relationship with mutual financial obligations towards each other. Given this backd....
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....dent to the Appellant are governed by certain obligations to be fulfilled by the Appellant herein and likewise compensation to be paid by the Appellant to the Respondent is also governed by the condition that the Appellant should complete the construction within a specified period of time." 22. Applying the ratio of the judgments as noticed above, it is clear that the true nature of transaction which was entered between the parties through MoU dated 07.08.2013 was MoU by the parties to jointly carry on development of plots owned by the Corporate Debtor. The developer has made advance payment and was to make further payment so as to Corporate Debtor can acquire plot no.10 and amalgamate the same for carrying the development in 20000 sq. mtr. which is under the policy of NOIDA permitted the sale of spaces. Acquiring of plot no.10 was integral part of the project and amount of Rs. 15 Crore which was given to the Appellant in addition to Rs. 1.75 Crore was towards the project of development in which ultimately the owner and developer has to receive their percentage of share in entire sale able built up area and share in the covered and open parking space(s) with pro rata share in th....