Ludhiyana Scrips Pvt. Ltd vs K.C. Land & Finance Ltd

[Arising out of Order dated 11.12.2018 passed by National Company Law Tribunal, Chandigarh Bench, Chandigarh in CP(IB) No.332/Chd/Pb/2018]

IN THE MATTER OF: Before NCLT Before NCLAT

M/s. Ludhiana Scrips Petitioner Appellant Private Limited, B-23, 2581/3B/1, Industrial Area A, Near Zoom Hotel Building Ludhiana - 141004 (PB) Through its Director and Authorized Person Sh. Neeraj Bakshi

Versus

M/s. K.C. Land & Respondent Respondent Finance Ltd. Having its registered office at Chandigarh Road, K.C. Tower, Nawanshahr, SBS Nagar, Nawanshahr - 144514

For Appellant: Dr. Rajansh Thukral, Dr. Surekha Thukral and Shri Rinshikha Thukral, Advocates

For Respondent: Shri Vinod Kumar Mahajan and Shri Ravinder Joshi, Advocates

JUDGEMENT

A.I.S. Cheema, J. :

1. This Appeal has been filed by M/s. Ludhiana Scrips Private

Limited - Financial Creditor as the Section 7 proceedings under

Insolvency and Bankruptcy Code, 2016 (I&B Code) filed against the 2

Respondent - K.C. Land and Finance Limited - Corporate Debtor has

been rejected by the Adjudicating Authority (NCLT) Chandigarh Bench,

Chandigarh.

2. The Appellant filed the proceedings under Section 7 claiming that

there was debt due from the Respondent and there was default.

3. It appears that the Appellant had granted inter corporate loan to

the Respondent. The amounts were disbursed to the Respondent on

various dates and post-dated cheques had been issued by the

Respondent which bounced and criminal complaints were filed under

Section - 138 of the Negotiable Instruments Act. The Appellant had also

filed Petition for winding up before the Hon'ble High Court of Punjab and

Haryana. It appears that thereafter between the parties, there was a

settlement arrived at in writing on 20.05.2017 whereby the Respondent

agreed to pay Rs.6,00,00,000/- which included interest for which again

post-dated cheques were issued. Out of these cheques, only cheques to

the tune of Rs.1.50 Crores got encashed and there was again unpaid

balance of Rs.4.50 Crores.

4. It seems that the Appellant had earlier initiated

CP(IB)122/Chd/Pb/2018 before the Adjudicating Authority at

Chandigarh and the Adjudicating Authority held that the Appellant had

failed to prove to be a Financial Creditor. It appears that CA 250/2018

seeking recall was also rejected on 23.05.2018.

5. After this, the Appellant entered into yet another agreement on

15th June, 2018 with the Respondent and the Respondent again issued Company Appeal (AT) (Ins) No.30/2019 3

post-dated cheques, which were again dishonoured, and the Appellant

issued Notice to the Respondent - Corporate Debtor calling upon the

Respondent to pay Rs.4.50 Crores with interest.

6. The Appellant filed CP(IB)332/Chd/PB/2018.

7. The Adjudicating Authority reasoned that the Appellant had not

shown the books of accounts with entry of debiting interest in the

account of Respondent and that the loan had been disbursed in 2013

and admittedly, there was no entry of debiting interest in any of the

financial years except when dispute between parties arose. The

Impugned Order shows that the Adjudicating Authority was irritated

that in the Application filed under Section 7, the Appellant had not

disclosed the earlier dismissal of the Petition and observed that the

Petitioner could not file another Petition on same cause of action. When

the Appellant pointed out the subsequent agreement dated 15.06.2018

and its contents, which showed agreement with regard to payment of

the principal amount and interest, it was discarded by the Adjudicating

Authority observing that the Appellant could not raise this contention

without having disclosed the filing of Petition earlier in which the same

transaction of 2013 and agreement dated 20.05.2017 was relied on and

had been rejected by the Tribunal. The Adjudicating Authority found

that the attempt to revive old claim based on subsequent agreement

could not be acceded to. The Adjudicating Authority went on to reject

the Application with exemplary costs of Rs.2 Lakhs.

Company Appeal (AT) (Ins) No.30/2019 4

8. We have heard the Counsel for both sides. The learned Counsel

for the Respondent accepted that the Respondent had taken inter

corporate deposit. The Counsel accepted that the Respondent had

entered into yet another agreement dated 15th June, 2018 with the

Appellant after dismissal of the earlier proceedings under Section 7. The

Counsel stated that the second agreement entered into by the

Respondent was to buy peace.

9. Some of the Clauses of the agreement dated 15th June, 2018 read

as under:-

"A Company winding petition was filed before the Hon'ble Punjab & Haryana High Court by Part No.1 against Part No.2 which is pending adjudication.

There after it was agreed between the parties that Part no.2 i.e. K.C. Land & Finance Ltd will pay Rs.4.40 crores as principal amount and Rs.1.60 crores as interest. An agreement was executed between the parties on 20th May 2017 and various post dated cheques were issued.

The Part No.2 i.e. K.C. Land & Finance Ltd. defaulted in making payments and some of the cheques were dishonoured so now Total outstanding as on date is Rs.4,50,00,000/-. There has been meeting between the parties and has been agreed that Part No.2 i.e. M/s K.C. Land and Finance Ltd. has given following post dated cheques 1. Cheque no.024757 dated 20- 06-2018 of Oriental Bank of Commerce Branch Ambedkar Chowk, Nawanshr for Rs.25,00,000/- 2. Cheque no. 024758 dated 25-7-2018 of Oriental Bank of Commerce, Branch Ambedkar Chowk Nawanshr for Rs.25,00,000/- 3. Cheque no. 024759 dated 20.12.2018 of Oriental Bank of Commerce, Branch Ambedkar Chowk, Nawanshr for Rs.1,00,00,000/- 4. Cheque No 024760 dated 31.12.2018 of Oriental bank of Commerce, Branch Ambedkar Chowk, Nawanshr for Rs. 3,00,00,000/-. Part No.2 i.e. M/s. K.C. Land and Finance Ltd.

undertakes and assures that all these cheques will be Company Appeal (AT) (Ins) No.30/2019 5

honoured in the event of default Part No 1 will be at liberty to enforce this agreement by way of initiating legal proceedings against the Part No 1 and the amount recoverable will be with interest @ 18% from the date of default till the realization of the full amount."

10. The earlier Order of the Adjudicating Authority dated 23rd May,

2018 was passed referring to relying on the compromise agreement

dated 20th May, 2017 to conclude that the debt could not be said to be

financial debt.

11. We have seen that earlier compromise agreement dated

20.05.2017 and this subsequent agreement dated 15th June, 2018

clarified the transaction and nature of the agreement between the

parties with regard to the dues and the above clauses in the agreement

dated 15th June, 2018, show that the Appellant is Financial Creditor to

whom the Respondent owes financial debt, and which is in default and

the amount is more than Rs.1 Lakh. In such contingency, we find it to

be totally inappropriate on the part of the Adjudicating Authority to shut

its eyes to the Agreement dated 15.06.2018 and to have thrown out all

the claims of the Appellant on the basis that reference to the earlier

rejection of the Company Petition 122/2018 had not been made. When

the Petition was filed based on the subsequent agreement, such stand

on the part of the Adjudicating Authority cannot be maintained. The

Respondent has even in the Reply (Diary No.10319) accepted entering

into this fresh agreement dated 15th June, 2018.

Company Appeal (AT) (Ins) No.30/2019 6

12. We are thus, unable to uphold the Impugned Order. The

Application under Section 7 of I&B Code could not have been rejected

on such grounds as mentioned by the Adjudicating Authority. Nothing

else is pointed out to question the Form submitted. Form submitted

under Section 7 of I&B Code being complete, the same should have been

admitted.

13. We set aside the Impugned Order. The matter is remitted back to

the Adjudicating Authority - NCLT, Chandigarh. On receipt of this

Order, the Adjudicating Authority is directed to admit the Section 7 -

I&B Code proceeding and pass further necessary orders as required

under the I&B Code. However, it will be open to the Respondent to settle

the matter in the meantime.

The Appeal is allowed with aforesaid observation and direction.

[Justice S.J. Mukhopadhaya] Chairperson

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

[Kanthi Narahari] Member (Technical) New Delhi

2nd May, 2019

/rs/sk

Company Appeal (AT) (Ins) No.30/2019