Ashish Manik vs Sr Marine & Offshore Engineering Pvt. ...

Ashish Manik ...Appellant

Versus

SR Marine & Offshore Engineering Pvt. Ltd. & Anr. ...Respondents

Present:

For Appellant: Shri S. Ramanathan and Shri Darpan B., Advocates

For Respondent: None

ORDER

09.09.2019 The Respondent - SR Marine & Offshore Engineering Pvt.

Ltd. (Financial Creditor) filed Application under Section 7 of Insolvency and

Bankruptcy Code, 2016 (I&B Code - in short) for initiation of corporate

insolvency resolution process against M/s. M.N. Horological Industries Pvt.

Ltd. The Adjudicating Authority (National company Law Tribunal, Single

Bench, Chennai) by Impugned Order dated 23rd July, 2019 admitted the

Application. Present Appeal has been preferred by the Director/shareholder

of the Corporate Debtor.

Learned Counsel appearing on behalf of the Appellant submitted that

promissory notes dated 24th April, 2015, 27th April, 2015 and 5th September,

2015 are void as the same have not been executed by the personnel

authorized by the Corporate Debtor in accordance with law. It is further

submitted that the -2-

funds transferred by the Respondent - Financial Creditor is unauthorized

transaction which could not have been considered as financial debt within

the meaning of Section 5(8) of the I&B Code. Therefore, Respondent No.1

cannot be termed to be a Financial Creditor within the meaning of Section

5(7). Learned Counsel for the Appellant submitted that both the promissory

notes being void, transaction is not binding on the Corporate Debtor and,

therefore, the Application under Section 7 was not maintainable.

It is not in dispute that the first Respondent granted a loan of Rs.25

Lakhs and Rs.5 Lakhs to the Corporate Debtor on 29th July, 2015 and 8th

September, 2015 respectively, totalling a sum of Rs.30 Lakhs. Out of the same

part payment has been made to the extent of Rs.1,50,000/-. It is submitted

that the first Respondent claimed a sum of Rs.41,64,822/- as outstanding

amount as on 31st October, 2018 towards principal amount along with

interest. The fact as to whether the promissory notes dated 27th April, 2015

and 5th September, 2015 are void or not, is not the question. Such question

cannot be determined by the Adjudicating Authority. Promissory notes

whether void or not, the fact remains that the Corporate Debtor borrowed a

sum of Rs.25 Lakhs on 29th July, 2015 and another sum of Rs.5 Lakhs on 8th

September, 2015. Out of the total amount of Rs.30 Lakhs, a sum of

Rs.1,50,000/- has been paid. The rest amount has not been paid.

Company Appeal (AT) (Ins) No. 927 of 2019 -3-

The fact that the Corporate Debtor has borrowed the aforesaid amount

which is more than Rs.1 Lakh, we hold that the amount comes within the

meaning of financial debt, having been borrowed by the Corporate Debtor

and disbursed by the first Respondent for consideration of time value of

money and is covered by the I&B Code. For the said reason, we also hold that

irrespective of the promissory notes aforesaid, as the amount has been

borrowed by the Corporate Debtor, the first Respondent comes within the

meaning of Financial Creditor as defined under Section 5(7) of the I&B Code.

It is also not in dispute that the Corporate Debtor has shown the

amount as loan borrowed from the Financial Creditor (first Respondent). For

the said reason, while we leave it open as to whether promissory notes are

void or not, as the fact remains that the Corporate Debtor has borrowed the

loan amount and defaulted to pay the amount, we hold that the Application

under Section 7 was maintainable and rightly admitted by the Adjudicating

Authority. In absence of any merit, the Appeal is dismissed.

[Justice S.J. Mukhopadhaya] Chairperson

[Justice Bansi Lal Bhat] Member (Judicial) /rs/sk

Company Appeal (AT) (Ins) No. 927 of 2019