Dhani Loans And Service Limited ... vs Champa Impex Pvt. Ltd

IN THE MATTER OF: Dhani Loans & Services Ltd. ...Appellant

Versus

Champa Impex Pvt. Ltd. ...Respondent Present: For Appellant : Mr. Rudreshwar Singh and Mr. Gautam Singh, Advocates. For Respondent : Mr. Aditya Shankar Prasad, Mr. Durga Dutt, Mr. Priyanshu Upadhyay, Mr. Utkarsh Singh, Mr. Rohit Priyadarshi and Mr. Gangesh Kumar Jha, Advocates.

ORDER

24.05.2023: Heard learned Counsel for the parties.

2. This appeal has been filed against the order dated 25.05.2022 passed by

Adjudicating Authority (NCLT Kolkata) by which order Section 7 Application

filed by the Appellant has been rejected. Appellant filed Section 7 Application

claiming to be Financial Creditor and the case of the Appellant is that

Appellant entered into a loan agreement dated 05.02.2018 for a loan of Rs. 30

lakhs. The loan was repayable by 24 equal instalments. Most important

documents were exchanged between the parties and EMIs of Rs. 1,55,226/-

was fixed with monthly instalment having interest. Loan was disbursed on

06.02.2018. Corporate Debtor also paid certain interest and EMIs. On default,

Section 7 Application was filed.

3. Corporate Debtor appearing before the Adjudicating Authority contested

the Application. Adjudicating Authority, after hearing both the parties, by Company Appeal (AT)(Insolvency) No. 988 of 2022 Page 1 of 4 impugned order has rejected Section 7 Application. The entire reasoning and

allegation of the Adjudicating Authority are at paragraphs 33 to 38 which are

extracted for ready reference.

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"33. The Corporate Debtor has claimed that the signatures on the loan agreement are forged, and that no loan application was made by it Accordingly, a civil suit being TS No. 1151/2019 has been filed by the Corporate Debtor against the Financial Creditor before the City Civil Court at Calcutta

34. On perusal of record, it is apparent that a loan agreement dated 05 February 2018 was executed between the parties and that subsequently. a loan was sanctioned by the Financial Creditor. However, the fact that no security has been furnished by the Corporate Debtor regarding the same further adds to doubtfulness regarding the genuineness of the loan agreement.

35. In a section 7 petition, it is of utmost importance that the Adjudicating Authority is fully satisfied before admission of a petition. Therefore, we called for the financial statements of the Corporate Debtor for the financial years 2017-18 and 2018-19 from the office of the Registrar of Companies, West Bengal, Kolkata.

36. The balance sheets revealed several interesting facets. The financial statements in question reveal that the Corporate Debtor was perfectly able to raise the requisite funds internally. The Corporate Debtor has generated significant revenues in both financial years. As such, the Corporate

Company Appeal (AT)(Insolvency) No. 988 of 2022 Page 2 of 4 Debtor is very much solvent and capable of re-paying the alleged debt if it becomes due. Admitting the Corporate Debtor into CIRP will defeat the purpose of the Code which is resolution of the insolvency of the Corporate Debtor and not recovery of the debt due to the Financial Creditor.

37. Further, a perusal of the master data of the Corporate Debtor reveals that there are several charges open against the Corporate Debtor. Considering these circumstances, a possibility of collusion between the parties cannot be ruled out.

38. The reliability of the document establishing the jural relationship between the parties itself is in question and as such the onus to prove the bona fides of the same lies with the party claiming it to be genuine. However, this is not a matter that can be adjudicated in summary proceedings and should be decided by a civil court by leading evidence."

..

4. Adjudicating Authority while rejecting Section 7 Application has given

certain contradictory reasoning as can be noted in paragraphs 33 & 34. The

claim of the Corporate Debtor that signature on the loan agreement are forged

has been repelled holding that document of the agreement dated 05.02.2018

were executed. When the finding is recorded in paragraph-34, the document

was executed again in paragraph -38 it has been observed that reliability of the

document jural relationship between the parties itself is in question and onus

to prove the bonafides of the same lies with the party claiming it to be genuine.

Thus, paragraphs 33,34 and 38 are clearly contradictory to each other. When a Company Appeal (AT)(Insolvency) No. 988 of 2022 Page 3 of 4 finding is recorded by the Adjudicating Authority that agreement was entered,

there was no question of doubting its genuineness. Further in paragraph 37,

the Adjudicating Authority has observed that possibility of collusion between

the parties cannot be ruled out. The Application cannot be rejected on mere

conjectures and surmises. There has to be categorical finding and clear

reasoning for rejecting the Application.

5. We are thus of the view that in the facts and circumstances of the case

ends of justice will be served in setting aside the impugned order rejecting

Section 7 Application and reviving Section 7 Application before the

Adjudicating Authority to be heard afresh in accordance with law. We are

making it clear that we are not expressing any opinion regarding the merits of

the case of either of the parties.

Impugned order is set aside and appeal is disposed of accordingly.

[Justice Ashok Bhushan] Chairperson

[Mr. Barun Mitra] Member (Technical) akc/nn

Company Appeal (AT)(Insolvency) No. 988 of 2022 Page 4 of 4