Avneesh Kumar Singh vs Indian Delco Private Limited

[Arising out of order dated 07.01.2021 in (IB) 3434 (ND)/2019 IA/5412/2020 passed by the Adjudicating Authority (National Company Law Tribunal), New Delhi Bench-V.]

IN THE MATTER OF:

Avneesh Kumar Singh (Suspended Director of S N Jee Build Well Private Limited) 112, Indraprakash, 21 Barakhamba Road, New Delhi - 110001 .... Appellant. (Corporate Debtor) Versus

Indian Delco Private Limited B-II/45, Mohan Cooperative Industrial Estate Mathura Road, Badarpur, New Delhi - 110004. ....... Respondent. (Financial Creditor) Present: For Appellant: Mr. Prateek Gupta, Mr. Abhijeet Sinha and Mr. Saikat Sarkar, Advocates. For Respondent: Mr. P. Nagesh, Sr. Advocate with Mr. Anish Gupta and Mr. Akshay Sharma, Advocates.

JUDGMENT

(1st December, 2021)

Justice Anant Bijay Singh;

This Appeal has been preferred by Mr. Avneesh Kumar Singh - Appellant

(Suspended Director of S N Jee Build Well Private Limited) aggrieved and

dissatisfied by the order dated 07.01.2021 passed by the Ld. Adjudicating

Authority (National Company Law Tribunal), New Delhi Bench-V in (IB) 3434 2

(ND)/2019 - IA/5412/2020 whereby and where under the Application filed by

the Financial Creditor (Respondent herein) under Section 7 of the Insolvency

and Bankruptcy Code, 2016 (for short IBC) was admitted and initiated

Corporate Insolvency Resolution Process (for short CIRP) against the

Appellant Company and appointed Interim Resolution Professional (for short

IRP) - Mr. Rakesh Kumar Jain having registration number IBBI IPA-

001/IPP01297/2018-19/12068.

2. The facts giving rise in the instant Appeal are as under:

i) The Respondent herein and the Appellant company entered into loan

agreement and as per the loan agreement, the said loan facility was extended

by the Respondent herein to the Appellant company for a period of six years.

ii) Further case of the Appellant is that as per clause 1 of the loan

agreement, the company was liable to pay interest at the rate of 12% per

annum to the Respondent herein and the amount of INR 3,59,24,490/- was

disbursed by the Respondent to the Appellant company till 28.05.2014.

iii) Further case of the Appellant is that out of the total principal amount

disbursed to the Appellant company on 17.12.2014, the company made a

payment to the Respondent herein towards the principal amount of INR

15,75,510/- and thereafter stopped making further payments towards the

principal amount.

iv) Further case of the Appellant is that the Appellant company also made

some payments amounting to Rs. 61,24,769/- to the Respondent herein

towards the interest till 19.01.2016 and thereafter stopped making further

payments towards the interest.

Company Appeal (AT) (Insolvency) No. 130 of 2021 3

v) Further case of the Appellant is that since the loan was for a period of

six years from the date of agreement, the said period has already expired on

03.08.2019, the entire outstanding amount (principal as well as the interest)

has become due and payable by the Appellant company.

vi) Further case is that confirmation of outstanding balance/balance

conformation was given by the Appellant company to the Respondent herein,

confirming that an amount of Rs. 5,42,67,796/- outstanding as on

01.04.2019.

vii) Further case is that the Respondent herein through its Advocate issued

a Demand Notice to the company demanding the unpaid amount. Despite

several reminders as well as the legal notice, the company failed to clear the

outstanding payments of the Respondent.

viii) Further case is that the Respondent herein filed the Application under

Section 7 of the IBC against the Appellant company on 07.12.2019 and the

Ld. Adjudicating Authority after hearing the parties passed the impugned

order. Hence the Appeal.

Submissions on behalf of the Appellant

3. The Learned Counsel for the Appellant during the course of argument

and his memo of Appeal along with Written Submissions submitted that as

per Section 7(4) of the IBC, the Ld. Adjudicating Authority has to ascertain

the existence of default from the records of the Information Utility or on the

basis of other evidence furnished by the Financial Creditor. In the present

Company Appeal (AT) (Insolvency) No. 130 of 2021 4

case, there is neither any record of default recorded with Information Utility

nor evidence of any other default furnished by the Financial Creditor.

4. It is further submitted that the alleged default of debt on the basis of

the alleged Loan Agreement dated 02.08.2013 is not a default in the eyes of

law as the same is unauthorized and a disputed document.

5. It is further submitted that the alleged loan agreement dated

02.08.2013 is signed by Mr. Nimish Arora, on behalf of the Corporate Debtor.

Mr. Nimish Arora was never authorized in any Board Meeting or in Share-

holders meeting to sign the loan agreement and borrow money on behalf of

the Corporate Debtor.

6. It is further submitted that the alleged borrowing taken by Mr. Nimish

Arora from the Respondent is in excess of the aggregate paid-up share capital

and free reserves of the Corporate Debtor, the Board of Director has to obtain

consent of the company by special resolution as per Section 180(1)(c) of the

Companies Act, 2013.

7. It is further submitted that as per Section 180(5) of the Companies Act,

2013, no debt incurred by the company in excess of the limit imposed under

Section 180(1)(c) of the Companies Act, 2013 shall be valid or effective.

8. It is further submitted that the loan agreement is antedated, sham and

an unstamped document. Mr. Nimish Arora in collusion with the Respondent

herein had played fraud on the Corporate Debtor by taking unauthorized,

illegal and collusive loan from the Respondent and third parties and later

diverted the funds to its group of companies.

Company Appeal (AT) (Insolvency) No. 130 of 2021 5

9. The Learned Counsel for the Appellant further submitted that these

facts are not considered by the Ld. Adjudicating Authority while passing the

impugned order. So, based on these submissions the impugned order is fit to

be set aside and the Appeal be allowed.

Submissions on behalf of the Respondent

10. The Learned Counsel for the Respondent during the course of argument

and his Reply Affidavit along with Written Submissions submitted that in the

year 2013, the Respondent extended a loan facility for an amount of INR

5,50,00,000/- to SN Jee Build Well Pvt. Ltd. (Corporate Debtor) by entering

into a Loan Agreement dated 02.08.2013 (at page 129 to 131 of the Appeal

Paper Book).

11. It is further submitted that the amount of INR 3,59,24,490/- was

disbursed by the Respondent to the Corporate Debtor. As per clause 1 of the

Loan Agreement, the Corporate debtor was liable to pay interest at the rate of

12% per annum.

12. It is further submitted that out of the total principal amount disbursed,

the Corporate Debtor made a repayment towards the principal amount of INR

15,75,510/- on 17.12.2014. An amount of Rs. 61,24,769/- was paid towards

interest on 17.12.2014 and 19.01.2016 thereafter, the Corporate Debtor

stopped making further payments.

13. It is further submitted that on 01.04.2019, the Corporate Debtor issued

confirmation of outstanding balance/balance to the Respondent, confirming

Company Appeal (AT) (Insolvency) No. 130 of 2021 6

that an amount of Rs. 5,42,67,796/- is outstanding on the date (at page 137

of the Appeal Paper Book).

14. It is further submitted that the Respondent through its advocate issued

a legal notice to the Corporate Debtor on 25.10.2019 (at page 138 to 142 of

the Appeal Paper Book) demanding the unpaid amount. Admittedly, neither

any reply to the said notice nor any payment has been received by the

Respondent.

15. It is further submitted that the Appellant herein has not come with

clean hands and is guilty of suppression veri and suggestio falsi inasmuch as

the Appellant has duly acknowledged the debt of the Respondent by counter

signing the audited balance sheet of the financial year 2015-16 of the

Corporate Debtor (Annexure R-2 at page 18 to 26 of the Reply Affidavit).

16. It is further submitted that the Appellant time and again in the year

2016 has been signing and issuing cheques to the Corporate Debtor on

account of payment of interest of the unsecured loan amount clearly

acknowledging and admitting the financial debt of the Respondent. The said

action of the Appellant clearly shows that the Appellant was in complete

knowledge of debt of the Respondent. In such a situation the Appellant is

further estopped from alleging to the contrary. Copies of the ICICI Bank

cheque bearing no. 044029 dated 19.01.2016 for an amount of Rs.

10,00,000/- and ICICI Bank cheque bearing no. 039986 dated 19.01.2016 for

an amount of Rs. 48,965/- issued under the signatures of the Appellant to

the Respondent (Annexure-R-3 at page 27 to 28 of the Reply Affidavit).

Company Appeal (AT) (Insolvency) No. 130 of 2021 7

17. It is further submitted that in the year 2019 itself, the Corporate Debtor

sent a confirmation of accounts dated 01.04.2019 (at page 137 of the Appeal

Paper Book) acknowledging the amount of loan due to the Respondent which

was duly acknowledged by the Respondent.

18. it is further submitted that in response to the forensic report which is

being heavily as relied upon by the Appellant, the Respondent respectfully

submitted that from the plain reading of internal page 4 of the forensic report

(at page 209 Vol.-II of the Appeal Paper Book) it can be clearly seen that the

said forensic audit has been conducted on the request of the Appellant and

not the Corporate Debtor.

19. It is further submitted that the some of the relevant portions of the

forensic audit report which clearly say that the money lent to the Corporate

Debtor was used for the affairs of the Company and the Ld. Adjudicating

Authority in para 24 of the impugned order has taken note of the fact and also

the fact that the Forensic Audit Report, the Auditor has admitted this fact that

the fund of Rs. 375 lakhs were received from the 'Indian Delco Private Limited'

and it is also admitted that out of that amount Rs. 150 lakhs were properly

utilized in the Company. So based on these submissions there is no merit in

the instant Appeal, the Appeal is fit to be dismissed.

FINDINGS

20. After hearing the parties and having gone through the pleadings made

on behalf of the parties, we are of the considered view that the following facts

are admitted in the instant Appeal.

Company Appeal (AT) (Insolvency) No. 130 of 2021 8

 That in the year 2013, the Respondent extended a loan facility for an

amount of INR 5,50,00,000/- to SN Jee Build Well Pvt. Ltd. (Corporate

Debtor) by entering into a Loan Agreement dated 02.08.2013 (at page 129

to 131 of the Appeal Paper Book).

 It is also admitted fact that the amount of INR 3,59,24,490/- was

disbursed by the Respondent to the Corporate Debtor. As per clause 1 of

the Loan Agreement, the Corporate debtor was liable to pay interest at the

rate of 12% per annum.

 It is also admitted fact that the total principal amount disbursed, the

Corporate Debtor made a repayment towards the principal amount of INR

15,75,510/- on 17.12.2014. An amount of Rs. 61,24,769/- was paid

towards interest on 17.12.2014 and 19.01.2016 thereafter, the Corporate

Debtor stopped making further payments.

 It is also admitted fact that on 01.04.2019 (at page 137 of the Appeal

Paper Book), the Corporate Debtor issued confirmation of outstanding

balance/balance to the Respondent, confirming that an amount of Rs.

5,42,67,796/- is outstanding on the date.

 It is also admitted fact that the Respondent through its advocate issued a

legal notice to the Corporate Debtor on 25.10.2019 (at page 138 to 142 of

the Appeal Paper Book) demanding the unpaid amount. Admittedly,

neither any reply to the said notice nor any payment has been received by

the Respondent.

 It is also admitted fact that the Appellant has duly acknowledged the debt

of the Respondent by counter signing the audited balance sheet of the

Company Appeal (AT) (Insolvency) No. 130 of 2021 9

financial year 2015-16 of the Corporate Debtor (Annexure R-2 at page 18

to 26 of the Reply Affidavit).

 The Ld. Adjudicating Authority in para 24 of the impugned order rightly

taken note of the fact and also the fact that the Forensic Audit Report, the

Auditor has admitted this fact that the fund of Rs. 375 lakhs were received

from the 'Indian Delco Private Limited' and it is also admitted that out of

that amount Rs. 150 lakhs were properly utilized in the Company.

ORDER

21. In view of the above, we are of the considered view that there is no

illegality committed by the Ld. Adjudicating Authority while passing the

impugned order therefore, we do not need to interfere in the impugned order.

The impugned order dated 07.01.2021 passed by the Ld. Adjudicating

Authority (National Company Law Tribunal), New Delhi Bench-V in (IB) 3434

(ND)/2019 - IA/5412/2020 is hereby affirmed. There is no merit in the Appeal.

The Appeal is hereby dismissed.

22. Registry to upload the Judgment on the website of this Appellate

Tribunal and send the copy of this Judgment to the Ld. Adjudicating Authority

(National Company Law Tribunal), New Delhi Bench-V forthwith.

[Justice Anant Bijay Singh] Member (Judicial)

[Ms. Shreesha Merla] Member (Technical) New Delhi 1st December, 2021 R. Nath.

Company Appeal (AT) (Insolvency) No. 130 of 2021