Hardeep Singh Sawhney vs Sawhney Builders Pvt. Ltd

[Arising out of Order dated 17th September, 2019 passed by the Adjudicating Authority (National Company Law Tribunal) Principal Bench, New Delhi in Company Petition No. (IB)-1620(PB)/2018].

IN THE MATTER OF: Hardeep Singh Sawhney .....Appellant Vs. Sawhney Builders Pvt. Ltd. ......Respondent

Present :

For Appellant: Mr. Dhruv Madan, Mr. Vivek S.Bishnoi, Advocates For Respondents: Mr. Rajan Sabharwal, Ms. Bhvya, Ms. Dipti Jain, Advocates

J U D G M E N T

VENUGOPAL M. J.

The Appellant/'Financial Creditor' had projected the Application

Under Section 7 of the Insolvency & Bankruptcy Code, 2016 ('I&B' Code, for

short) read with Rule 4 of the 'I&B' Code Rules, 2016 before the Adjudicating

Authority praying to initiate 'Corporate Insolvency Resolution Process' in

respect of Respondent / 'Corporate Debtor'.

Company Appeal (AT) (Insolvency)No. 1147 of 2019 1

2. The 'Appellant' / 'Financial Creditor' as an 'Aggrieved' person has

focused the instant Company Appeal before this Tribunal being dissatisfied

the Impugned Order of dismissal of the Application Under Section 7 of the

'I&B' Code dated 17th September, 2019, passed by the Adjudicating

Authority.

3. The Learned Counsel for the Appellant submits that the mother of the

'Appellant' / 'Financial Creditor' booked one Villa on 21st April, 2014, in the

plot area of 2000 Sq.Yd. and having a built up area of 8245 Sq. Ft. In this

connection, the Learned Counsel for the Appellant / 'Financial Creditor'

points out that the 'Respondent' / 'Corporate Debtor' was to handover the

possession of the said flat within 3 years from the date of 90% of the total

payment of the said flat.

4. It is represented on behalf of the Appellant that his mother, believing

the assurances made by the Representatives of the 'Respondent' /

'Corporate Debtor' finalised the purchase of one Villa for a total

consideration of Rs. 7,10,00,000/- (vide Registration form dated 21st April,

2014) and was allotted Villa No. 5 in Khasra No. 583 also that the mother of

the 'Appellant' / 'Financial Creditor' paid which is also the case of the

'Appellant' that his mother paid a sum of Rs. 7 crore (being the 90% of the

value of the said Villa) only after transferring the amount in her own Account

which was acknowledged by the 'Respondent' / 'Corporate Debtor'.

Company Appeal (AT) (Insolvency)No. 1147 of 2019 2

5. It appears that the Appellant's mother died on 13th June, 2014 and

according to the 'Appellant' his name was recorded in the Books of the

'Respondent' / 'Corporate Debtor', as 'Legal Heir' of Smt. Paramjit Kaur

Sawhney.

6. The clear cut stand of the 'Appellant' is that no construction had

commenced till date and this fact was ascertained on 28th November, 2016

from the Respondent, as regards the status of Villa etc. Therefore, he was

perforced to prefer an Application Under Section 7 of the 'I&B' Code read

with Rule 4 of the 'I&B' Rules, 2016 seeking to initiate 'Corporate Insolvency

Resolution Process' against the 'Respondent' / 'Corporate Debtor'.

7. The Learned Counsel for the 'Appellant' comes out with a plea that the

'Respondent' / 'Corporate Debtor' before the Adjudicating Authority filed a

detailed Reply on 25th January, 2019 (to the Section 7 Application filed by

the 'Appellant') repudiating the claim.

8. The Learned Counsel for the Appellant vehemently contends that the

Impugned Order of the Adjudicating Authority ('National Company Law

Tribunal') 'Principal Bench, New Delhi dated 17th September, 2019 is a

perverse one, besides the same being passed in a mechanical manner.

9. Yet another submission of the Learned Counsel for the Appellant is

that the Adjudicating Authority ('National Company Law Tribunal'),

'Principal Bench, New Delhi had failed to consider that after the demise of

the Appellant's mother, Appellant's claim was entered in the records of the Company Appeal (AT) (Insolvency)No. 1147 of 2019 3 Respondent / Company and further that no document was required from

other 'Legal Heirs' pertaining to the claim in issue.

10. The Learned Counsel for the Appellant submits that the Adjudicating

Authority had wrongly rejected the Application Under Section 7 of the 'I&B'

Code when there existed no 'Dispute' between the parties.

11. The Learned Counsel for the Appellant proceeds to point out that the

Adjudicating Authority had failed to appreciate that admittedly Rs. 7 crore

was lying to the credit of 'Sawhney Builders Pvt. Ltd.' and the same was

transferred in Appellant's mother's Account (Mrs. Paramjit Kaur Sawhney)

against the purchase of Villa and received by Respondent and in fact a

receipt was issued by the Respondent / Corporate Debtor.

12. The Learned Counsel for the Appellant contends that the Adjudicating

Authority had failed to appreciate in a proper prospective that the

Respondent / Corporate Debtor on the one hand had taken a stand that the

Subject Project got cancelled in the year 2011 but on the other hand the

Respondent / 'Corporate Debtor' had issued the acknowledgement or receipt

of the amount from the mother of the Appellant / 'Financial Creditor' on 21st

April, 2014. Besides this, the Respondent / 'Corporate Debtor' had also

issued a letter transferring the allotment of Villa in favour of the Appellant

/ 'Financial Creditor' stating that the construction of the Villa through letter

dated 28th November, 2016 which indicates that the allotment of Villa was

Company Appeal (AT) (Insolvency)No. 1147 of 2019 4 never cancelled and the counter-averments made by the Respondent /

'Corporate Debtor' are false.

13. The Pivotal contention advanced by the Learned Counsel for the

Appellant is that the Adjudicating Authority had failed to take into account

that if a 'Corporate Debtor' commits a default of a 'Financial Debt' then, the

Adjudicating Authority is to see that the records of the 'Information Utility'

or other evidence produced by the 'Financial Creditor' to satisfy that the

'Default' had occurred.

14. The Learned Counsel for the Appellant submits that the Adjudicating

Authority had failed to consider that the acts of the Respondent / 'Corporate

Debtor' had caused 'wrongful Gain' to the Respondent Company.

15. Before the Adjudicating Authority, the Respondent / 'Corporate

Debtor' had taken a stand that the Villa in question was booked provisionally

in the name of Ms. Paramjeet Kaur Sawhney (since Deceased) in the project

'Amara Towne' launched in the year 2006 and that the Respondent

Company was issued with the licence on 25th November, 2006, for

development of a Housing Scheme - at Village 'Morta Tehsil' and 'District

Ghaziabad'.

16. Furthermore, that the detailed Project Report was to be approved from

the 'Ghaziabad Development Authority' ('GDA') within a period of two years

and that the detailed Project Report which was submitted with the

Company Appeal (AT) (Insolvency)No. 1147 of 2019 5 'Ghaziabad Development Authority' ('GDA') through covering letter dated

15th September, 2008 was never approved. Therefore, the Licence granted

through the letter dated 25th November, 2006 for a period of two years upto

17th November, 2008 was not renewed.

17. On a cursory perusal of the Reply of the Respondent / 'Corporate

Debtor' shows that Ms. Paramjeet Kaur Sawhney (since Deceased) left

behind three 'Legal Heirs' namely Shri N.P.S. Sawhney (Husband), Shri

Hardeep Singh Sawhney (Son / Appellant / Petitioner) and Ms. Laveena

Kharbanda (Daughter).

18. Added further, it is the plea of the Respondent / 'Corporate Debtor'

that Appellant / Petitioner had approached the Respondent / Company to

transfer the booking of Villa in the name of Ms. Paramjeet Kaur Sawhney

(since Deceased) which has not submitted any will of Ms. Paramjeet Kaur

Sawhney (since Deceased) or any (Registered Relinquishment Deed from his

sister) in his favour to the Company. In fact, the father of the Appellant /

Petitioner, as well as the Director of the Respondent / Company put

pressure to transfer the said booking of Villa in the name of the Appellant.

19. The Respondent / Corporate Debtor in its Reply before the

Adjudicating Authority ('National Company Law Tribunal') Principal Bench,

New Delhi had averred that all the Shareholders and Directors of the

Respondent / Company or one family members is known as 'Sawhney

family' and are close relative to one another.

Company Appeal (AT) (Insolvency)No. 1147 of 2019 6

20. The Appellant / 'Financial Creditor' is the son of one of the Directors

of the Company viz. Mr. Narender Pal Singh Sawhney and other two

Directors or brothers of Mr. Narender Pal Singh Sawhney. Besides this, it

is alleged that wives of all three brothers were petitioner in another

commercial venture of the Respondent / 'Corporate Debtor' that father of

the Appellant / Petitioner Mr. N.P. Singh Sawhney was giving 'Power of

Attorney' by all the partners of 'Sawhney Export House', to run the said firm.

21. It is the further case of the Respondent that the sum given as an

advance by 'Sawhney Export House' to the Respondent / Company was

transferred in the name of wife of Mr. N.P. Singh Sawhney (one of the

partners) without securing the consent from other partners. Also that the

notice dated 20th January, 2019 was allegedly issued in respect of such

transfer and for its appropriation in the partnership 'Firm's Account'.

22. The Respondent / 'Corporate Debtor' had averred in its Reply (before

the Adjudicating Authority) that Mr. N.P. Singh Sawhney, one of the

Directors, who faced criminal proceedings availed bail (for the bouncing of

Cheques by his Company). Viewed in that perspective, it is the stand of

the Respondent / Company that Ms. Paramjeet Kaur Sawhney (since

Deceased) had not invested in 'Sawhney Builders (P) Ltd.' for the Villa.

23. Per contra, the said sum was shown as 'Investment Made' with a view

to avoid 'Capital Gain Tax'. The Respondent / 'Corporate Debtor' in its

Reply before the Adjudicating Authority had averred that no assurance was

Company Appeal (AT) (Insolvency)No. 1147 of 2019 7 given from the delivery of the Villa in favour of either Ms. Paramjeet Kaur

Sawhney (since Deceased) or to and in favour of Appellant / Petitioner by

the Respondent / Company, because of the simple reason that no allotment

was ever made by the Respondent Company. As such, the Appellant /

Petitioner is not a 'Financial Creditor'.

24. The Pith and substance of the stand of the Respondent / 'Corporate

Debtor' is that, in reality there is no debt much less sum of Rs. seven crores

as claimed by the Appellant. That apart, the partnership firm (run by the

Appellant's father) from the 'Financial Year' 2007 was crediting advance to

'Sawhney Builders Pvt. Ltd.' and the said advances were regularly made

between the two as per Ledger Account of 'Sawhney Export House' with

'Sawhney Builders Pvt. Ltd.'

25. It is also the case of the Respondent that in view of the fact that the

husband of Ms. Paramjeet Kaur Sawhney (since Deceased) i.e. Mr. N.P.

Singh Sawhney was one of the Directors of the Respondent / Company, he

had obtained the receipt dated 21st April, 2014.

26. It must be borne in mind that the Adjudicating Authority while dealing

with an application Under Section 7 of the Insolvency & Bankruptcy Code,

2016 ('I&B' Code, for short) is not required to look into any other aspect for

'Admission' of the Application except that he is satisfied with an act of

default and had enquired that the 'Application' was complete and any

Company Appeal (AT) (Insolvency)No. 1147 of 2019 8 disciplinary proceedings were pending against the prospective 'Resolution

Professional', which even he shall admit the Application.

27. To put it succinctly, if the 'Financial Debtor' is able to establish the

existence of 'Debt' and the 'Corporate Debtor' default, an Application was

complete in all aspects, then the Application would be admitted. To sustain

an Application Under Section 7 of the 'I&B' Code, the Applicant is to

establish the existence of a 'Debt', which is due from the 'Corporate Debtor'.

Put it in precise term, his existence of undisputed 'Debt' is 'Sine Qua Non'

for triggering the 'Corporate Insolvency Resolution Process'. Always, it is

open to the 'Corporate Debtor' or its Directors to point out that the 'Debt' is

not payable by the 'Corporate Debtor' in 'Law' and in fact.

28. In the case on hand, not even an Agreement or allotment letter was

produced on the side of the Appellant because of the obvious reason that

the Project was cancelled as early as in the year 2011.

29. The Appellant had not come out clean in his Application Under Section

7 of the 'I&B' Code because he had not mentioned about the fact that his

father is Director and Shareholder of the Respondent Company.

30. As far as the present case is concerned, there exist serious dispute as

to whether the Respondent / 'Corporate Debtor' owes any sum to the

Petitioner / 'Financial Creditor' and the said dispute cannot be determined

in a summary proceedings under the 'Insolvency & Bankruptcy Code' in the

considered information of this Court.

Company Appeal (AT) (Insolvency)No. 1147 of 2019 9

31. Suffice it for this Tribunal to make a pertinent mention that the

dispute between the parties requires to be thrashed out by adducing

necessary documentary and oral evidence before the 'Competent Forum'.

Admittedly, the Adjudicating Authority under the 'I&B' Code is not a 'Court

of Law' and it does not decide money claim or 'Suit'. In any extent, the

Appellant has failed to establish when there is any 'Debt' recoverable from

the Respondent Company and the occurrence of default.

32. Be that as it may, in the light of detailed qualitative and quantitative

discussions and also taking note of attendant facts and circumstances of

the instant case in an encircling manner this Tribunal comes to an inevitable

and irresistible conclusion that the Impugned Order dated 17th September,

2019 in dismissing the Section 7 Application is free from any legal

infirmities. Resultantly the present Appeal Sans merits and the same is

accordingly dismissed but without Costs.

[Justice S. J. Mukhopadhaya] Chairperson

[Justice Venugopal M.] Member (Judicial)

New Delhi

18th November, 2019

ss

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