Promod Sharma vs M/S Karanaya Heartcare Private Limited

Pramod Sharma ....Appellant

Vs. Karanaya HeartCare Pvt. Ltd. ...Respondent

For Appellant: Mr. Sunil Singh Parihar, Advocate.

For Respondent:

ORDER

(Through Virtual Mode)

21.04.2022: Heard Learned Counsel for the Appellant.

2. This Appeal has been filed against the order dated 02.03.2020 by which

Application under Section 7 of the Insolvency and Bankruptcy Code, 2016

("Code") filed by the Appellant has been dismissed.

3. The Appellant's case is that he has given an amount of Rs.1,03,00,000/-

in the share capital of Respondent and same was shown as Share Application

Money but no share was allotted in lieu of such money. It is submitted that

subsequently principal amount was paid of Rs. 1,03,00,000/- but no amount

was paid towards interest. It is submitted that neither any share was allotted

nor amount was returned, it became deposit. Hence, Application under

Section 7 was maintainable.

2

4. We have considered the submissions of the Counsel for the Appellant

and perused the record. The Adjudicating Authority in para 7 of the impugned

order has made following observations:

"7. The matter between both the parties was

amicably settled as recorded in order dated 11th

October, 2017 of the Hon'ble National Company Law

Tribunal passed in C.P. No. 205(ND)/2017, between

the parties along with that the Respondent failed to

show any agreement to substantiate the fact that

money was paid as a financial debt or that the money

was paid against the payment of interest. Therefore,

we find that the share application money does not fall

under any of the clauses of Section 5(8) of the Code

and it cannot be said to fall under the definition "a debt

alongwith interest, if any, which is disbursed against

the consideration for the time value of money" since no

debt was disbursed by the Applicant to the

Respondent and no time value has been attached with

the share application money. Thus, since the claim is

not a financial debt the present application under

Section 7 of the Code is not maintainable and is

dismissed with no costs."

5. Admittedly, the amount was given, as per the case of the Appellant, as

a Share Application Money on which no share was allotted. Under some

Comp. App. (AT) (Ins.) No. 426 of 2022 3

settlement, the principal amount was refunded and thereafter, the Application

under Section 7 was filed by the Appellant. We are of the view that the

Adjudicating Authority rightly took the view that the amount which was given

by the Appellant as Share Application Money cannot be treated to be a

financial debt so as to enable the Appellant to trigger the Insolvency Process

under Section 7 of the Code.

6. Learned Counsel for the Appellant submitted that a cheque was also

issued which was dishonored. It is for the Appellant to take appropriate

proceeding, if any, in accordance with the law.

7. We, however, are of the view that the Adjudicating Authority did not

commit any error in rejecting the Application under Section 7. There is no

merit in the Appeal. The Appeal is dismissed.

[Justice Ashok Bhushan] Chairperson

[Dr. Alok Srivastava] Member (Technical)

[Shreesha Merla] Member (Technical)

Anjali/nn

Comp. App. (AT) (Ins.) No. 426 of 2022