TaxTMI 
TaxTMI 
2026 (1) TMI 56
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.... (hereinafter referred to as 'Impugned Orders') passed by the Adjudicating Authority (National Company Law Tribunal, New Delhi Bench-IV) in I.A. Nos. 3020 of 2022 and 1950 of 2023 in C.P. (IB) No. 983 (ND)/2020. By the impugned orders, the Adjudicating Authority has dismissed both I.A. Nos. 3020 of 2022 and 1950 of 2023 and rejected the claims of the Appellants in the Corporate Insolvency Resolution Proceedings of the Corporate Debtor. Aggrieved by the impugned orders, the present appeals have been preferred by both the Appellants. 2. For a better appreciation of the matter at hand, it would be useful to capture the genesis of the case in both the Appeals separately. It is proposed to deal with the facts and issues involved in I.A. No. 3020 of 2022 in the first place to return our findings thereon. Depending on the commonality of the facts and issues at hand with I.A. No. 1950 of 2023 we propose to apply the findings to the extent applicable in the second Appeal. CA(AT)(Ins) No. 1734 of 2025 3. For a better appreciation of the matter at hand, it would be useful to capture the genesis of the case. The Corporate Debtor-Vibrant Buildwell Pvt. Ltd. was admitted into CIRP on 22....
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....a condonation of delay prayer for admission of their claim. Relying on the judgment of the Hon'ble Supreme Court of India in Sesh Nath Singh Vs Baidyabati Sheoraphuli Coop. Bank Ltd. (2021) 7 SCC 313, it was contended that when there was no delay in filing the claim on account of exclusion of limitation period from 15.03.2020 till 28.02.2022, the purported delay could have been condoned by the Adjudicating Authority even in the absence of a formal prayer seeking such relief. Hence the dismissal of I.A. No.3020 of 2022 on the grounds that admission of such a belated claim when CIRP is at an advanced stage would undermine the time-bound objectives of the IBC was misconceived. It was also submitted that the Adjudicating Authority was not required to conduct substantive adjudication on merits at the stage of delay condonation. Assertion was also made that the Adjudicating Authority had erroneously rejected the claim of the Appellant of Rs. 5,10,000/- arising out of a Loan Agreement which amount clearly figured in the balance sheet of FY 2016- 2017 of the Corporate Debtor under the head of 'Other Long-Term Liabilities' which therefore reinforces the existence of financial debt. It was a....
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....s also adverted to the judgement of the Hon'ble Supreme Court in Ghanshyam Mishra & Sons Pvt. Ltd. Vs Edelweiss Asset Reconstruction Company Ltd. 2021 SCC Online SC 313 to emphasise the "clean slate principle' enunciated therein. It was also asserted that the Appellant had filed IA No. 3020 of 2022 under Section 60(5) of the IBC read with Rule 11 of the NCLT Rules. Hence, the Adjudicating Authority in the exercise of its inherent powers to meet the ends of justice had rightly adjudicated on the IA No. 3020 of 2022 not only from the aspect of delay but also from the point of view of merit. In support of their contention that the Adjudicating Authority can make any such order as may be necessary for meeting the ends of justice or to prevent the abuse of process, reliance has been placed on the judgment of this Tribunal in NUI Pulp and Paper Industries Pvt. Ltd. Vs M/s Roxcel Trading GMBH in CA(AT)(Ins) No. 664 of 2019. 6. Echoing similar contentions as made by the RP, Shri Krishnendu Dutta, Ld. Sr. Counsel for SRA-Respondent No.2 submitted that the Loan agreement basis which claim has been filed by the Appellant before the Respondent No.1- RP was a forged and fabricated document a....
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....imitation period in terms of the orders of the Hon'ble Supreme Court in Suo Motu Writ Petition (Civil) No. 3 of 2020 (hereinafter referred to as 'Suo Moto order'). It was emphatically asserted that the Adjudicating Authority in two separate applications vide IA Nos. 2768 and 2769 on identical facts and issues had allowed the claims filed by other financial creditors of the Corporate Debtor by relying on the judgment of the Hon'ble Supreme Court of India in the Suo Motu order. 9. We find credence in the argument canvassed by the Appellant in the light of Para (III) of the Suo Moto order of 10.01.2022 which is as reproduced below: "In cases where the limitation would have expired during the period between 15.03.2020 till 28.02.2022, notwithstanding the actual balance period of limitation remaining, all persons shall have a limitation period of 90 days from 01.03.2022. In the event the actual balance period of limitation remaining, with effect from 01.03.2022 is greater than 90 days, that longer period shall apply." (Emphasis supplied) If this exclusion is taken into cognisance, then there was no delay in filing the claims as the RP had invited the claims with effect....
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....cating Authority does not embrace deciding on the tenability of contractual agreements. Further, the Adjudicating Authority had wrongly raised doubts on the enforceability of the loan agreement merely on the ground of absence of any authorisation or board resolution while failing to appreciate that such documents could not be expected to be produced by the Appellant at a time when the RP was himself in control of the management of the Corporate Debtor and had access to all documentation of the Corporate Debtor. 12. Rebutting the arguments of the Appellant, it was vehemently contended by both the Respondents that the genuineness of the Loan Agreement was doubtful since the stamp paper was not valid as it was not supported by the stamp of a licensed vendor. The stamp paper was also devoid of any serial number or date of purchase and did not indicate the State of origin. Moreover, the Loan Agreement was unilaterally executed between the Appellant and his brother without any formal authorisation by the Corporate Debtor which buttressed the fact that the Loan Agreement was executed as an afterthought with malafide intention to suit their nefarious designs. In these circumstances, the....
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....xecuted solely by two brothers, both of whom served as directors of the Corporate Debtor and that the Loan Agreement was devoid of any formal authorization by way of board resolution thus undermining its enforceability. 15. When we undertake a cursory glance at the Loan Agreement, placed at page 89 of the Appeal Paper Book, we concur in the findings of the Adjudicating Authority that the stamp paper on which the Loan agreement was executed does not carry the stamp of the licensed vendor, serial number and date of purchase. Clearly, therefore, the Stamp Paper was not obtained from regular, identifiable, authorised or verifiable sources. Further, no material has been placed on record to show that there was any formal authorisation from the Corporate Debtor by way of Board Resolution for execution of the Loan Agreement for any signatory to execute the Loan Agreement on their behalf. The Corporate Debtor had also allegedly not submitted the original Loan Agreement with the RP. All these factors, seen cumulatively, casts a shadow of doubt on the authenticity and bonafide of the Loan Agreement. Hence, we are inclined to agree with the Respondents that there existed substantial and com....
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.... 400,000.00 400,000.00 Surender Modi 510,000.00 510,000.00 Lalit Modi 4,850,000.00 4,850,000.00 ERA Constructions Pvt. Ltd. 500,000.00 500,000.00 DSL Properties Private Limited 28,186,053.00 28,186,053.00 Total 37,541,053.00 38,123,069.00 18. Coming to our findings, when we look at the above audited financial statement for FY 2016-2017 of the Corporate Debtor, we find that the Notes forming part of the balance sheet of the Corporate Debtor as on 31.03.2017 provides separate categories for "Long Term Borrowings" under Note 3 and "Other Long Term Liabilities" under Note 4. It is also clear therefrom that Rs. 5,10,000/- appearing against the name of Surender Modi appears in the head of 'Other Advances' rather than as an unsecured loan as claimed by the Appellant. Had the amount of Rs. 5.10 lakh appeared under the heading of "Long Term Borrowings", there would have been no doubt that the same was a transaction in the nature of financial debt. However, we find that the sum appears under the sub-category of "Other Advances" under the category of "Other Long Term Liabilities". It is clear from the above categorisation that the sum was pro....
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....Pvt. Ltd. 2021 SCC Online SC 513, even interest free loans are financial debt for the purposes of IBC. 21. We are not persuaded by this argument of the Appellant. The Appellant was admittedly a shareholder of the Corporate Debtor when the Loan Agreement was signed in 2007 and later became one of the Directors of the Corporate Debtor from 2009-2012. Thus, it is undisputable that the Appellant was very much in control of the management of the Corporate Debtor until 2012. We also notice that either the Appellant or his brother who was a signatory of the Loan Agreement remained at the helm of affairs of the Corporate Debtor all along. That being the case, the Appellant cannot absolve itself of the responsibility of explaining as to why the financial statement of the Corporate Debtor did not reflect levy of interest till FY 2011-12 even when they were in control of the Corporate Debtor. Having said that, we are however not inclined to subscribe to the finding of the Adjudicating Authority that the amount of interest @ 24% claimed by the Appellant being exorbitant, it was sufficient ground for rejection of the claim of the Appellant. The Adjudicating Authority, at best, had a limited ....
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....nsaction and was bereft of cogent supporting proof. We do not find any error on the part of the Adjudicating Authority in passing the impugned order rejecting the claims filed by the Appellant. CA(AT)(Ins) No. 1735 of 2025 25. Coming to the factual matrix of I.A. No. 1950 of 2023, we notice that for the same Corporate Debtor-Vibrant Buildwell Pvt. Ltd. which was admitted into CIRP following which the RP had invited claims from the creditors of the Corporate Debtor by way of public announcement made on 24.02.2022, the Appellant-M/s Primex Estates Pvt Ltd submitted a total claim of Rs. 9,43,54,070/- on 27.05.2022. The claim amount comprised of principal amount of Rs. 30,95,000/- and interest component of Rs. 9,12,59,070/- which claim of the Appellant was rejected by the RP-Respondent No.1 on grounds of limitation. Following the rejection of their claim, the Appellant filed IA No. 2768 of 2022 on 07.06.2022 before the Adjudicating Authority for admission of their claim. The RP in the meantime on 29.10.2022 had filed IA No. 5458 of 2022 for approval of the resolution plan which plan was approved with 100% CoC voting. After considering IA No 2768 of 2022, the Adjudicating Authorit....
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....2022 to verify the claim of the Appellant on merits and while giving the said directions had categorically held that the claim filed by the Appellant on 27.05.2022 was within the time-lines in view of the Suo Moto orders of the Hon'ble Supreme Court dated 10.01.2022. The RP however proceeded to reject the claim on 13.02.2023 which rejection was challenged by the Appellant filing IA No. 1950 of 2023 before the Adjudicating Authority. It was emphatically asserted that when the Adjudicating Authority in its order dated 21.12.2022 had clearly held that the Appellant was not a belated claimant, the impugned order by holding their claim to be belated had ended up erroneously reviewing its own decision without jurisdiction. Assertion was also made that the Adjudicating Authority had erroneously rejected the claim of the Appellant on the ground that the same was not supported by the financial records of the Corporate Debtor and that this amount was not a loan. It was emphatically contended that this amount was a loan and this was acknowledged in the balance sheet under the head of 'Other Advances' under the head of 'Other Long Term Liabilities' which classification was sufficient to prove ....
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....being a related party could not have deprived the Appellant of its status as a Financial Creditor and reflection of its claim in the Information Memorandum of the Corporate Debtor. 27. Making his rival submissions, Shri Sumant Batra Ld. Counsel making submissions on behalf of the Respondent No.1-RP, submitted that the Loan Agreement based on which the claims were replete with inconsistencies and infirmities. The Appellant had filed its claim in Form-C under the category of Financial Creditor on the basis of Loan Agreement dated 20.12.2007 which prima facie appears to be forged and fabricated document. Even the alleged Loan Agreement dated 20.12.2007 was never a part of the records of the Corporate Debtor. The alleged Loan Agreement dated 20.12.2007 is executed on stamp paper dated 07.12.2007. Further, whereas the date of execution of Loan Agreement is mentioned as 04.08.2007, the alleged amount of Rs. 30,00,000/- had been transferred on 20.06.2007. Even the purported Addendum to the Loan Agreement allegedly dated 21.12.2007 which supposedly corrected the inconsistencies was surprisingly not filed by the Appellant at the time of submission of Claims Form before the RP or before t....
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.... Tribunal which puts question mark on the maintainability of this Appeal. The claim was thus not a bonafide financial claim. Further, the Appellant had filed a belated claim and springing up of such surprise claims before the SRA is not permissible. Attention was also adverted to the judgement of the Hon'ble Supreme Court in Ghanshyam Mishra judgment supra to emphasise the "clean slate principle' enunciated therein. 28. Articulating similar arguments as canvassed by the RP, Shri Krishnendu Dutta, Ld. Sr. Counsel for SRA-Respondent No.2 submitted that the Loan Agreement basis which claim has been filed by the Appellant before the RP suffered from glaring inconsistencies with discrepancies in the dates therein which puts a question mark on its authenticity and genuineness. Further, while the balance sheet of the Corporate Debtor recorded the sum under the head of 'Other Advances', this was reflected as 'Trade Receivables' in the balance sheet of the Appellant. The perusal of the Loan Agreement and the audited financial statements of FY 2016-17 clearly establish that the alleged amount cannot be treated as a loan. Hence, this sum purportedly given by the Appellant was not a loan as....
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....he claims with effect from 24.02.2022 which date fell within the period 15.03.2020 to 28.02.2022 and therefore the Appellant was clearly entitled to the benefit of Para (III) of the orders of the Hon'ble Supreme Court in Suo Motu Writ Petition (Civil) No. 3 of 10.01.2022. In fact, after considering IA No 2768 of 2022, the Adjudicating Authority on 22.12.2023 in pursuance of the Suo Moto order had held the claim to not barred by limitation and directed the RP to verify the claim on merit. In such circumstances, for the Adjudicating Authority to now having taken the stand that the claim was inadmissible on grounds that it was belated and hit by limitation lacks foundation. 31. We now come to the next limb of argument of the Appellant that the Adjudicating Authority had rejected their claim by erroneously holding that the Loan Agreement is not valid. Contending that any adjudication on the validity and enforceability of the Loan Agreement was beyond the scope of the Adjudicating Authority and fell in the domain of a Civil Court, reliance has been placed on the judgment of this Tribunal in Tulip Hotel judgement supra. We have already held at para 13 above that we have no quarrel wit....
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....he Appellant was not a loan. It was pointed out that the Adjudicating Authority had rightly noticed at para 12 of the impugned order that perusal of the the audited balance sheet of the Corporate Debtor establishes that the aforesaid amount was not in the nature of a loan. We reproduce the relevant excerpts from para 12 of the impugned order as below: "12. We have carefully examined the reply, documents, and clarifications furnished by the Applicant, as well as the verification undertaken by the Resolution Professional from the records of the Corporate Debtor. It is observed that the claim as filed does not find support in the books of the Corporate Debtor, since in the last audited balance sheet for the financial year ending 31.03.2017, available at the commencement of CIRP, the said amount is reflected only under the head "Other Advances" and not as a loan, as alleged. Even in the audited balance sheet of the Applicant as uploaded on the MCA portal, no loan advanced to the Corporate Debtor is reflected and, on the contrary, the same has been shown as "Trade Receivables." 34. We have already reproduced the balance sheet of the Corporate Debtor for FY 2016-17 at para 17....