Mrs. Bela Juneja vs India Bulls Housing Finance Ltd. & Anr

Company Appeal (AT) (Insolvency) No. 640 of 2019

IN THE MATTER OF:

Mrs. Bela Juneja ...Appellant

Versus

India Bulls Housing Finance Ltd. & Anr. ...Respondents

Present: For Appellant : Mr. Vaibhav Tyagi, Advocate

For Respondents : Mr. Sumesh Dhawan, Ms. Vatsala Kak and Ms. Geetika Sharma, Advocates

ORDER

01.07.2019 'Indiabulls Housing Finance Ltd.' filed an application u/s 7 of

the 'Insolvency and Bankruptcy Code, 2016' (for short, 'the I&B Code') against

'BHA Associates Private Limited' (Corporate Debtor). The Adjudicating Authority

(National Company Law Tribunal), Principal Bench, New Delhi having admitted

the application against 'Mrs. Bela Juneja', who was Director of 'BHA Associates

Private Limited' (Corporate Debtor). Learned counsel appearing on behalf of the

Appellant submits that the Adjudicating Authority declared the 'Corporate

Debtor' as 'Non-performing Asset' (NPA) is under challenge in view of the

agreement. However, such submission cannot be accepted under 'Insolvency

and Bankruptcy Code, 2016' (for short, 'the I&B Code'). It is not necessary to

see whether 'debt' of 'Corporate Debtor' has become NPA in view of decision of

the Hon'ble Supreme Court in 'M/s. Innoventive Industries Ltd. Vs. ICICI Bank 2

Ltd. - (2018) 1 SCC 407', wherein Hon'ble Supreme Court observed and held

as follows:

"27. The scheme of the Code is to ensure that when a

default takes place, in the sense that a debt

becomes due and is not paid, the insolvency

resolution process begins. Default is defined in

Section 3(12) in very wide terms as meaning non-

payment of a debt once it becomes due and

payable, which includes non-payment of even

part thereof or an instalment amount. For the

meaning of "debt", we have to go to Section 3(11),

which in turn tells us that a debt means a liability

of obligation in respect of a "claim" and for the

meaning of "claim", we have to go back to Section

3(6) which defines "claim" to mean a right to

payment even if it is disputed. The Code gets

triggered the moment default is of rupees one lakh

or more (Section 4). The corporate insolvency

resolution process may be triggered by the

corporate debtor itself or a financial creditor or

operational creditor. A distinction is made by the

Code between debts owed to financial creditors

and operational creditors. A financial creditor has

been defined under Section 5(7) as a person to

whom a financial debt is owed and a financial

Company Appeal (AT) (Insolvency) No. 640 of 2019 3

debt is defined in Section 5(8) to mean a debt

which is disbursed against consideration for the

time value of money. As opposed to this, an

operational creditor means a person to whom an

operational debt is owed and an operational debt

under Section 5(21) means a claim in respect of

provision of goods or services.

28. When it comes to a financial creditor triggering the

process, Section 7 becomes relevant. Under the

explanation to Section 7(1), a default is in respect

of a financial debt owed to any financial creditor

of the corporate debtor - it need not be a debt

owed to the applicant financial creditor. Under

Section 7(2), an application is to be made under

sub-section (1) in such form and manner as is

prescribed, which takes us to the Insolvency and

Bankruptcy (Application to Adjudicating

Authority) Rules, 2016. Under Rule 4, the

application is made by a financial creditor in

Form 1 accompanied by documents and records

required therein. Form 1 is a detailed form in 5

parts, which requires particulars of the applicant

in Part I, particulars of the corporate debtor in Part

II, particulars of the proposed interim resolution

professional in part III, particulars of the financial

Company Appeal (AT) (Insolvency) No. 640 of 2019 4

debt in part IV and documents, records and

evidence of default in part V. Under Rule 4(3), the

applicant is to dispatch a copy of the application

filed with the adjudicating authority by registered

post or speed post to the registered office of the

corporate debtor. The speed, within which the

adjudicating authority is to ascertain the

existence of a default from the records of the

information utility or on the basis of evidence

furnished by the financial creditor, is important.

This it must do within 14 days of the receipt of the

application. It is at the stage of Section 7(5),

where the adjudicating authority is to be satisfied

that a default has occurred, that the corporate

debtor is entitled to point out that a default has

not occurred in the sense that the "debt", which

may also include a disputed claim, is not due. A

debt may not be due if it is not payable in law or

in fact. The moment the adjudicating authority is

satisfied that a default has occurred, the

application must be admitted unless it is

incomplete, in which case it may give notice to the

applicant to rectify the defect within 7 days of

receipt of a notice from the adjudicating authority.

Under subsection (7), the adjudicating authority

Company Appeal (AT) (Insolvency) No. 640 of 2019 5

shall then communicate the order passed to the

financial creditor and corporate debtor within 7

days of admission or rejection of such application,

as the case may be."

In view of the aforesaid decision, if there is a 'debt' payable by the

'Corporate Debtor' and 'default is committed and default is of more than

Rupees One Lakh, it is open to the Adjudicating Authority to admit the

application u/s 7 based on the records.

Learned counsel for the Appellant submitted that the matter should

be remanded to the Adjudicating Authority to find out whether the 'debt' is

payable or not. However, such prayer cannot be accepted as no plea was

taken up by the 'Corporate Debtor' that no 'debt' is payable in the eyes of law

or in fact. On the other hand, we find that the 'debt' is payable to the

'Corporate Debtor' and the 'default' has been committed.

For the reason aforesaid, while condone the delay of 6 (six) days in

preferring the appeal, we dismiss the appeal on merit.

[Justice S.J. Mukhopadhaya] Chairperson

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

[ Kanthi Narahari ] Member (Technical) /ns/gc

Company Appeal (AT) (Insolvency) No. 640 of 2019