TaxTMI 
TaxTMI 
2026 (2) TMI 290
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....ed. 2. Background facts of the case necessary to be notice for deciding the appeal are: i. The corporate debtor Uniexcel Developers Pvt. Ltd. was established in 2007 as private company engaged in the business of construction. The corporate debtor was to set up a project for the information technology sector on the part of land allotted by Noida Authority. ii. The R-1 is a company registered under the International Business Companies Act, Territory of the British Virgin Island. The R-1 hereinafter referred to as the financial creditor remitted a sum of US $ 1,24,000/- on 05.05.2008 to the corporate debtor and other sum of US $ 1,42,000/- was remitted by a company to corporate debtor on 22.09.2008. The aforesaid amount was remitted on agreement with the financial creditor shall be allotted shares in the corporate debtor's company. iii. Due to dispute with Noida Authorities the project could not materialise on request made on behalf of the financial creditor allotment of shares was put on hold. The financial creditor in the year 2015, wrote to the corporate debtor to refund the amount remitted by financial creditor. iv. The corporate debtor wrote....
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.... letter dated 02.07.2015 for remitting the amount in favour of the financial creditor. In spite of sending the desired letter dated 06.12.2019 amount was not remitted by financial creditor. xi. A Section 7 application was filed by financial creditor on 12.01.2021 which was registered as IB 21/2021. The application came to be dismissed by adjudicating authority in limine by order dated 10.02.2021 on the ground that application is barred by limitation. xii. Comp. App. (AT) (Ins.) No. 771/2021 was filed by financial creditor challenging the order dated 10.02.2021, which appeal was allowed on 21.11.2022 holding that application under Section 7 filed by the financial creditor is well within limitation and the appeal was allowed, order dated 10.02.2021 was set aside and matter was remitted for a fresh consideration. xiii. In pursuance of the order dated 21.11.2022 the Section 7 application was heard by the adjudicating authority and by impugned order dated 12.12.2023 the application has been admitted. Adjudicating authority held the application to be well within time. Adjudicating authority by impugned order has held that the findings returned by earlier order ....
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....hat it is not open for the adjudicating authority to rule on the proposition that share application money with financial debt has admitted Section 7 application. The binding judgment of this Tribunal in 'Pramod Sharma' (supra) has after being noticed has not been followed by the adjudicating authority. Judgment of this Tribunal in 'Sree Bhadra Parks & Resorts Limited' Vs. 'Sri Ramani Resorts & Hotels Pvt. Ltd.', [Comp. App. (AT) (CH) (Ins.) No. 95/2021] was not applicable which has been relied by adjudicating authority for passing the impugned order. The share application money disbursed was only equivalent to Rs. 1,14,02,640/- and no amount above, the said amount could have been claimed in Section 7 application. Adjudicating Authority has erroneously proceeded on the premise that R-2 has admitted his liability and committed default. The allotment was put on hold on the request of the financial creditor through its then director, Sh. Suresh Kumar Chauhan. Appellant to show his bona fide already deposited the amount of Rs. 1,14,02,640/-. 5. Learned counsel Mr. Gaurav Mitra appearing for the respondent refuting the submissions of the counsel for the appellant submits that issue as....
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....amount of financial debt. The amount paid advanced by the financial creditor is financial debt, which has become final between the parties and cannot be allowed to be re-agitated. The issue which has become final between the parties cannot be allowed to be raised by the appellant. The finding of financial debt has become final by judgment and order dated 26.11.2019 of this Tribunal, which judgment was not challenged or questioned by corporate debtor any further. 6. We have considered the submissions of the counsel for the parties and perused the records. 7. From the facts which has been brought on the record, following facts are undisputed between the parties: i. The amount of US $ 1,24,000/- was remitted by financial creditor to the corporate debtor on 05.05.2008 and another amount of US $ 1,42,00,000/- was remitted on 22.09.2008 to the corporate debtor. The said amount was remitted for as a share application money for allotment of share in the R-2 company. ii. On a request made on behalf of financial creditor, the allotment of share was put on hold due to dispute of R-2 company with the Noida Authority with regard to plot which was allotted where project h....
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.... Deposit Rules that if the shares are not allotted within 60 days of the receipt of the money the share application money has to be refunded and of the refund does not take place within 15 days from the expiry of the 60 days' time limit, then the share application money will be treated as a deposit. On the non-allotment of shares, after the expiry of the time limit of 75 (60+15) days the share application money will be a deposit advanced to the company, which has to be returned by the company at the rate of 12% per annum from the expiry of the 60th day. The person applying for the shares will get compensation for the time vale of the share application money given by him to the company, which makes the money advanced a financial debt to be repaid by the company. Thus, the Respondent's plea that the nature of the money given will not change into a loan does not stand as the Act itself allows such recategorization. In the present case the money was transmitted in 2008 and the allotment has not been made till date, thus, the money transmitted is a deposit and can be treated as a financial debt." 12. Adjudicating authority, however, observed that respondent (R-2 company) has ....
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....een noticed: "2. Thus, this appeal has been filed by the Corporate Debtor mainly challenging the last part of the impugned order in paragraph-11 of the impugned order." 14. Paragraph 11 which is under challenge in the appeal has been noticed in paragraph 5 of the judgment which is as follows: "5. Thereafter the Adjudicating Authority in paragraph-11 which is mainly disputed in this appeal has observed as under: "11. However, the third issue cannot be answered in favour of the Applicant as a perusal of the documents show that the Respondent has been ready to refund the money after it receives the required letter from the Applicant. Although the Applicant has placed on record a letter dated 03.07.2015 signed by the Applicant's representative, there is nothing to show that the said letter was actually delivered to the Respondent. Even if it was delivered by hand as claimed by the Applicant, there should have been an acknowledgement of receipt by the Applicant on the copy of the letter. In the absence of anything to show that the delivery was actually made and that the Applicant has fulfilled all its formalities, it cannot be said that it is the Respon....
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.... "10. We are disposing this appeal with liberty to the Respondent - Financial Creditor to take necessary steps (which were found wanting in paragrqaph-11 of the Impugned Order) and it may file fresh application under Section 7 of IBC, if so advised. In the circumstance, we keep question of limitation open for consideration when such application is moved. 11. Disposed accordingly. No costs." 17. From the judgment of this Appellate Tribunal, following two findings can be culled out: i. Appellate Tribunal did not interfere with the finding of the adjudicating authority recorded in paragraph 10 of the order dated 25.07.2019 that amount advanced by the financial creditor is a financial debt; ii. The order of the adjudicating authority dated 25.07.2019 passed in paragraph 10, the observation giving liberty to appellant to revive the application was set aside (as noted in para 9 above); iii. Appellate Tribunal, however, gave liberty to the financial creditor to file fresh application, if so, advised. 18. Subsequent to the aforesaid order dated 26.11.2019, Section 7 application being C.P. IB No.21/ND/2021 has been filed which has been admitted....
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.... vide its judgment dated 26.07.2019. Thus, the issue as to whether the amount advanced by financial creditor to the R-2 company of US $ 1,24,000/- and US $ 1,42,000/- is a financial debt has become final between the parties and cannot be allowed to be questioned by appellant in the proceeding emanating from C.P. IB No.21/ND/2021. It is submitted that in the earlier proceeding of Section 7 arising from C.P. IB No.403/2019, liberty was granted by this Appellate Tribunal to file a fresh Section 7 application. 20. We need to notice judgment of the Hon'ble Supreme Court in the matter of 'Neelima Srivastava' Vs. 'State of Uttar Pradesh & Ors.' reported in [(2021) 17 SCC 693]. Hon'ble Supreme Court in the above case had occasion to consider finality of judgment between the parties and the principle of res judicata. It was held by the Hon'ble Supreme Court that once a judgment between the parties have attained finality, it was not permissible for the parties to reopen concluded judgment. Hon'ble Supreme Court in the above judgment from paragraph 31 to 35, laid down following: "31. The Division Bench of the High Court proceeded as if it was hearing an appeal against the judgment....
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.... judgments of the court as the same may not only tantamount to an abuse of the process of the court but would have far-reaching adverse effect on the administration of justice." 21. The law laid down by the Hon'ble Supreme Court in the above judgment is fully attracted in the above case. In earlier proceeding between the parties under Section 7 of the IBC, the issue was decided in favour of the financial creditor that amount of US $ 1,24,000/- and US $ 1,42,000/- remitted by financial creditor to the corporate debtor as a financial debt. The said issue cannot be allowed to be reopened by the appellant by raising precedents of this Tribunal. 22. When issue between the parties has become final and has been decided, the parties to reopen the issue is clearly impermissible by principle of res judicata and further permitting agitation of such issues is akin to abuse of process of a court as has been held by the Hon'ble Supreme Court in paragraph 35 of the judgment in 'Neelima Srivastava' (supra). In the earlier proceeding initiated by financial creditor under Section 7 decided on 25.07.2019 application was rejected by adjudicating authority, relying on the case set up by R-2 that ....