Aaj Finance & Credit Ltd vs Keltech Infrastructure Ltd

[Arising out of Order dated 13.09.2019 passed by the Adjudicating Authority (National Company Law Tribunal), New Delhi (Court No. III) in No. IB- 28/ND/2018]

IN THE MATTER OF:

M/s Aaj Finance & Credit Limted Registered Office at 803, Shakuntala Apartments, 59 Nehru Place, New Delhi ....Appellant

Vs

M/s Keltech Infrastructure Ltd. Registered Office at 7,I.P. Building, U.G.F. 2&3, E-109, Pandav Nagar (Near Akahardham Temple) Patparganj, Delhi-110092 ....Respondent

Present: Shri Arun Sharma and Shri Saral Sharma, Advocates for Appellant Shri Niraj Kr. Singh, Advocate for Respondent.

[05th March, 2020]

Justice A.I.S. Cheema.

The Appellant/Financial Creditor has filed this Appeal against

Respondent/Corporate Debtor against Impugned Order dated 13.09.2019

passed in IB-28/ND/2018 passed by Adjudicating Authority, National Company

Law Tribunal, New Delhi, Bench III, vide which the Adjudicating Authority -2-

dismissed the Application under Section 7 of the Insolvency and Bankruptcy

Code, 2016 (I&B Code in Short) which was filed by the Appellant.

2. It has been argued and it is the Case of the Appellant that on 30th May,

2018 a Memo of Understanding (MoU) was executed between the Parties. The

said document is at Annexure 2 (Colly) Page 50. As per this 'MoU', the Appellant

gave a loan of Rs. 50 Lakhs by cheque dated 01.06.2013 to the

Respondent/Corporate Debtor for 12 months with monthly interest of 2 %. The

loan was given for a period of 12 months. The Respondent issued post dated

cheques for next 12 months. For security the parties agreed that the Respondent

will mortgage two flats bearing No. K-1/1802, K-1/2102 from plot No. GH-01 B,

Sector 16 Noida Extension G. Noida (West) in favour of the Appellant. It is

claimed that the said flats were offered only as security and actually mortgage

was never executed.

3. It is stated that the Appellant in view of the 'MoU' had issued cheque of

Rs. 50 lakhs dated 01.06.2013 which amount was received by the Corporate

Debtor. On 3rd June, 2013 between the Parties there was execution of two

"Buyer/Seller Agreements" (Page 137 &139) providing for Agreement by the

Appellant to buy the above two Flats. The Appellant however, claims that even

this was only by way of security for the amount which was advanced as loan.

Company Appeal (AT) (Insolvency) No. 1248 of 2019 -3-

4. After such Buyer/Seller Agreement, it appears from record that between

the Parties still similar 'MoU's like one dated 30th May, 2013 were executed on

01.06.2014 (Page 52), 01,06,2015 Page (54) and 01.06.2016 (Page 56) in each of

which Agreements, the Respondent similarly issued post dated Cheques, each

time for 12 months. According to the Appellant, till July 2016 all the Post-Dated

Cheques were honoured except three, where-after other cheques were not

deposited in the Bank. Appellant claims that in view of this situation, Appellant

issued letters on 2nd May, 2017 (Page 283) and 5th June 2017 (Page 187) asking

for repayment of the Loan. First letter returned unserved and the second letter

was not replied, Appellant claims that then notice dated 27.10.2017 (Page 189)

was sent but the same was also not replied.

5. The appellant claims that there was debt due and there was default and

hence Application under Section 7 was filed on 4th January, 2018.

6. On behalf of the Respondent, the case put up before the Adjudicating

Authority as per the reply (Page 234) and which is argued in Appeal also is that

the Appellant suppressed material facts in the Application under Section 7 of

Insolvency and Bankruptcy Code, 2016. Respondent claims that the Appellant

had entered into an Agreement dated 01.10.2016 (Page 263) whereby the

Respondent agreed to transfer the property bearing No. K-708, 7TH Floor in Block

No. K-1, Crossing Republic, Sector 6 in NH 24, Gaziabad for Rs. 50 lakhs. As per

the Agreement, the construction of the Building was to be completed within 12

Company Appeal (AT) (Insolvency) No. 1248 of 2019 -4-

months from the date of signing of the Agreement, subject to Force Majeure

Conditions and timely payment by the Buyer. In case of delay in completion of

the Unit attributable to the promoter, after 180 days of the period of 12 months

the promoter (Respondent) would pay penalty to the Buyer at Rs. 5 Per Square

feet Per Month. The Respondent has claimed that the said Flat was allotted to

the Appellant as repayment of the principal payment paid by cheque Bearing No.

378105 dated 31st May, 2013. It is argued that the Appellant has acknowledged

execution of such Agreement in the letters dated 02nd May 2017 (Page 283) and

05th June 2017 (Page 187) which were sent by the Appellant. The Agreement

however, was suppressed when Application under Section 7 was filed. According

to the Respondent the Parties as per this Agreement, agreed to the arrangement

of sale of the Flat to the Appellant in place of the repayment of the principle

amount of Rs. 50 Lakhs. It is stated Agreement in no way shows or states that

the Flat in question was towards Security. It is stated that the Appellant

suppressed in the application this Genuine Transfer of Property Transaction.

The Flat is ready for possession and Registry of 52 Flats in the concerned

Building have already been completed. The Respondent showed Photographs of

the premises before the Adjudicating Authority. Respondent claims that

Respondent has continuously communicated and offered possession of the said

premises to the Appellant. Letter dated 7th March 2018 (Page 290) is pointed out

by the Respondent as the document by which possession was offered to the

Appellant. Respondent Claims that the Agreement dated 01st October, 2016 is

Company Appeal (AT) (Insolvency) No. 1248 of 2019 -5-

substituted mode of performance of contract and repayment of principle amount

by way of transfer of property which was agreed upon.

7. In a transaction of loan, Parties may agree to convert the relationship into

that of Builder Buyer. Nothing prohibits the Parties. The latest admitted

document between the Parties is the Agreement Dated 01.10.2016 as of Buyer-

Seller. In an Application under Section 7 of Insolvency and Bankruptcy Code,

2016 it is not possible in the summary jurisdiction to enter into detailed analysis

at the instance of a party that real transaction is different. Such exercise may be

possible in a suit when there is dispute regarding the real nature of transaction.

This however, is not possible in summary proceeding under Insolvency and

Bankruptcy Code, 2016, the main object of which is not recovery of money but

to see if Resolution of a Corporate Debtor is necessary.

8. The Appellant in response to the defence of the Respondent is claiming

that even this Agreement dated 01st October, 2016 was only a means of creating

security for the repayment of money of loan. The document does not say so & we

cannot travel beyond.

9. The Adjudicating Authority after hearing the Parties and considering the

documents, observed that there were various 'MoU's entered between the Parties

and security was created in the form of offer of two Flats by way of mortgage but

no charge as such was created. The interest amounts had been paid till June

2016. The Adjudicating Authority then referred to the contents of the Agreement

Company Appeal (AT) (Insolvency) No. 1248 of 2019 -6-

dated 01st October, 2016 to find that the Appellant had chosen to enter into such

Agreement for Flat in "Kumar Golf Vistas (page 47)" and in view such Agreement,

the Appellant became Home Buyer taking into considerations Section 5 (8) (f) of

Insolvency and Bankruptcy Code, 2016 read with explanation. The Adjudicating

Authority then referred to the contents of the Agreement dated 1st October, 2016

and calculated the period of 12 months and grace period of 180 days to find that

the possession had been offered within given time. The Adjudicating Authority,

held that the Application under Section 7 was filed on 4th January, 2018 which

was much before the period of 12 months plus 180 days as stated in the

Agreement dated 01.10.2016 and thus observed that it was premature petition

and dismissed the same.

10. The Appellant claims that during the pendency of proceeding under

Section 7 of Insolvency and Bankruptcy Code, 2016, the Director of the

Respondent had entered into settlement, copy of which has been filed at

Annexure - 4A (Page 91) and offered two Cheques. One Cheque was of Rs. 25

lakhs and another was of Rs. 45 lakhs. The Cheque of Rs. 25 lakhs was offered

for encasement and the Cheque of Rs. 45 lakhs were offered as security in case,

the Respondent fails to complete the Registry of one Flat of the value of Rs. 45

Lakhs.

Learned Counsel for the Appellant argued that the conduct of the

Respondent needs to be seen that after execution of such document, another

Director of the Respondent sent letter dated 03rd April, 2018 (Annexure A1- Diary

Company Appeal (AT) (Insolvency) No. 1248 of 2019 -7-

No. 18124) resiling from such Agreement entered into by the earlier Director Mr.

Narendra Kumar and claiming that he was not well.

Although, these documents are being pointed out to us, fact remains that

these do not appear to have been brought to the notice of the Adjudicating

Authority as impugned order nowhere deals with the same. Even if we are to look

into these documents, it can be stated that there is dispute regarding this

settlement which is admittedly stated to be during the pendency of the

Application under Section 7 of Insolvency and Bankruptcy Code, 2016. The same

cannot be taken note of, in the absence of the same being brought on record of

the Adjudicating Authority to record the settlement, if really such Agreement had

been entered into.

11. The admitted document executed between the Parties, which is latest in

terms of time is the Agreement dated 1st October, 2016 and considering the

contents of the same, we do not find any reason to disagree with the Adjudicating

Authority that after the earlier 'MoU's parties entered in to the execution of an

arrangement as seen in the Builder Buyer Agreement dated 1st October, 2016.

No doubt, in the primary stage, after the 'MoU' dated 30th May, 2013 two

Buyer/Seller Agreements dated 03.06.2013 were executed but then that

arrangement appears to have been given up when Parties entered into further

three fresh 'MoU's dated 01.06.2014, 01.06.2015 and 01.06.2016 referring to

earlier Cheque of loan dated 01.06.2013. In these circumstances, where record

shows the latest arrangement between the Parties of Builder Buyer Agreement

Company Appeal (AT) (Insolvency) No. 1248 of 2019 -8-

dated 01.10.2016 and even possession has been offered on 7th March, 2018 (Page

290), which cannot be said to be beyond the period stipulated in the Agreement,

we do not find any reason to admit the Application under Section 7 as was filed

by the Appellant. We do not find any reason to interfere in the dismissal of such

application.

There is no substance in the Appeal. The Appeal is dismissed. No costs.

[Justice A.I.S. Cheema] Member (Judicial)

[Justice A.B. Singh] Member (Judicial)

[Kanthi Narahari] Member (Technical)

New Delhi

Basant B.

Company Appeal (AT) (Insolvency) No. 1248 of 2019