Satish Chand Gupta vs Servel India Pvt Ltd

NATIONAL COMPANY LAW APPELLATE TRIBUNAL, NEW DELHI Company Appeal (AT) (Insolvency) No. 502 of 2020 [Arising out of Order dated 13.02.2020 passed by the National Company Law Tribunal, New Delhi Bench-V in (IB) 1886(ND)/2019].

IN THE MATTER OF: Sh. Satish Chand Gupta S/o Late Gian Chand Gupta R/o 68A, Saraswati Vihar, Delhi - 110034. ...Appellant

Versus Servel India Private Limited Having its Registered Office at: S-15, Okhla Phase-II New Delhi - 110020. ...Respondent

Present: For Appellant: Mr. Siddhant Buxy, Advocate

For Respondent: Ms. Anju Bhushan for IRP

Venugopal M. J Preamble

The Appellant has preferred the instant Appeal being dissatisfied with the

order dated 13.02.2020 passed by the 'National Company Law Tribunal', New

Delhi, Bench-V in (IB) 1886 (ND)/2019.

Company Appeal (AT) (Insolvency) No. 502 of 2020

1

2. The 'National Company Law Tribunal' while passing the impugned order

dated 13.02.2020 had interalia at paragraph 10 to 12 had observed the

following:-

"10. At this juncture, I

would like to refer Companies

(Acceptance of Deposits) Rule,

2014, which has come into force

on 1st April, 2014, along with

Section 73 and 74 of the

Companies Act, 2013 and the

same is quoted below:-

"73. Prohibition on acceptance of deposits from public.__

(1) On and

after the commencement of this

Act, no company shall invite,

accept or renew deposits under

this Act from the public except in

a manner provided under this

Chapter:

Provided that nothing in this

sub-section shall apply to a

banking company and Company Appeal (AT) (Insolvency) No. 502 of 2020

2 nonbanking financial company

as defined in the Reserve Bank

of India Act, 1934(2 of 1934)

and to such other company as

the Central Government may,

after consultation with the

Reserve Bank of India, specify

in this behalf.

(2) A

company may, subject to the

passing of a resolution in general

meeting and subject to such rules

as may be prescribed in

consultation with the Reserve

Bank of India, accept deposits

from its members on such terms

and conditions, including the

provision of security, if any, or for

the repayment of such deposits

with interest, as may be agreed

upon between the company and

its members, subject to the

Company Appeal (AT) (Insolvency) No. 502 of 2020

3 fulfilment of the following

conditions, namely: -

(a) Issuance

of a circular to its members

including therein a statement

showing the financial position of

the company, the credit rating

obtained, the total number of

depositors and the amount due

towards deposits in respect of

any previous deposits accepted

by the company and such other

particulars in such form and in

such manner as may be

prescribed;

(b) filing a copy of

the circular along with such

statement with the Registrar

within thirty days before the date

of issue of the circular;

(c) depositing such

sum which shall not be less than

fifteen per cent of the amount of Company Appeal (AT) (Insolvency) No. 502 of 2020

4 its deposits maturing during a

financial year and the financial

year next following, and kept in

a scheduled bank in a separate

bank account to be called as

deposit repayment reserve

account;

(d) providing such

deposit insurance in such manner

and to such extent as may be

prescribed;

(e)certifying that

the company has not committed

any default in the repayment of

deposits accepted either before or

after the commencement of this

Act or payment of interest on such

deposits; and

(f) providing

security, if any for the due

repayment of the amount of

deposits or the interest thereon

including the creation of such Company Appeal (AT) (Insolvency) No. 502 of 2020

5 charge on the property or assets of

the company.

Provided that in case where a

company does not secure the

deposits or secures such deposits

partially, then, the deposits shall be

termed as unsecured deposits" and

shall be so quoted in every circular,

form, advertisement or in any

document related to invitation or

acceptance of deposits.

(3) Every deposit

accepted by a company under sub-

section (2) shall be repaid with

interest in accordance with the terms

and conditions of the agreement

referred to in that sub-section.

(4) Where a

company fails to repay the deposit or

part thereof of any interest thereon

under subsection (3), the depositor

concerned may apply to the Tribunal

Company Appeal (AT) (Insolvency) No. 502 of 2020

6 for an order directing the company to

pay the sum due or for any loss or

damage incurred by him as a result of

such non-payment and for such other

orders as the Tribunal may deem fit.

(5) The deposit

repayment reserve account referred to

in clause (c) of sub-section (2) shall not

be used by the company for any

purpose other than repayment of

deposits."

"74. Repayment of deposits,

etc., accepted before

commencement of this Act. ___

(1) Where in

respect of any deposit accepted by a

company before the commencement of

this Act, the amount of such deposit or

part thereof or any interest due

thereon remains unpaid on such

commencement or becomes due at

any time thereafter, the company

shall____ Company Appeal (AT) (Insolvency) No. 502 of 2020

7

(a) file, within a

period of three months from such

commencement or from the date on

which such payments, are due, with

the Registrar a statement of all the

deposits accepted by the company

and sums remaining unpaid on such

amount with the interest payable

thereon along with the arrangements

made for such repayment,

notwithstanding anything contained

in any other law for the time being in

force or under the terms and

conditions subject to which the

deposit was accepted or any scheme

framed under any law; and

(b) repay within

one year from such commencement

or from the date on which such

payments are due, whichever is

earlier.

(2) The Tribunal may on an

application made by the company, Company Appeal (AT) (Insolvency) No. 502 of 2020

8 after considering the financial

condition of the company, the amount

of deposit or part thereof and the

interest payable thereon and such

other matters, allow further time as

considered reasonable to the

company to repay the deposit.

(3) If a company fails to repay the

deposit or part thereof or any interest

thereon within the time specified in

sub-section (1) or such further time as

may be allowed by the Tribunal under

sub-section (2), the company shall, in

addition to the payment of the amount

of deposit or part thereof and the

interest due, be punishable with fine

which shall not be less than one crore

rupees but which may extend to ten

crore rupees and every officer of the

company who is in default shall be

punishable with imprisonment which

may extend to seven years or with

fine which shall not be less than Company Appeal (AT) (Insolvency) No. 502 of 2020

9 twenty-five lakh rupees but which

may extend to two crore rupees, or

with both."

This provision came into force

with effect from 01st April, 2014. If I

shall read the provisions contained

under Section 73 and 74 of the

Companies Act along with

(Acceptance of Deposits) Rule, 2014,

then it can be said that both have

come into force with effect from 01st

April, 2014 and in view of the

aforesaid provisions after

commencement of this Act, no

company can invite, accept or renew

deposit in this Act from the public

except in the manner provided in this

Chapter and a special provision is

made regarding the repayment of the

deposited amount which was

deposited prior to the enforcement of

this Section and as per Section

74(1)(b), the company is liable to Company Appeal (AT) (Insolvency) No. 502 of 2020

10 repay the amount within 3 years from

such commencement on or before

expiry of the period from which the

deposit is accepted, whichever is

earlier and if the company fails to

repay the amount then there is a

penal provision u/s 74(3) of the

Companies Act, 2013. Here, in the

case as I have already held that the

Petitioner everywhere mentioned the

word 'deposit', thereafter, the amount

which he has deposited with the

Corporate Debtor does not come

within the purview of the definition of

Financial Debt rather the Petitioner,

admittedly, deposited the amount

with the Corporate Debtor and in lieu

of that he was getting interest from

the Corporate Debtor, therefore, he

can claim the refund under Chapter V

of the Companies Act, read with

Company(Acceptance of Deposits)

Rule, 2014.

Company Appeal (AT) (Insolvency) No. 502 of 2020

11

11. So far, the initiation of

proceeding under Section 7 of the

Code is concerned, in my view, is not

liable to be accepted. At this

juncture, I would also like to refer the

arguments of the Petitioner that there

is a default in payment of debt,

therefore, Section 7 application is

maintainable. At this juncture, I

would like to refer the definition of

default as defined in Section 3(12) of

the Code:-

"Section 3(12)

(12) "default" means non-payment

of debt when whole or any part or

instalment of the amount of debt

has become due and payable an is

not 1(paid) by the debtor or the

corporate debtor, as the case may

be."

12. Mere plain reading of the provisions shows that default means non-

payment of debt, whereas in the aforementioned para, I held that the amount

which the Petitioner deposited does not come under the definition of the debt.

Company Appeal (AT) (Insolvency) No. 502 of 2020

12 Therefore, I am unable to accept the contention of the Petitioner that there is a

default in payment of debt."

and was of the considered view that though the petitioner had some other remedy

under the law to recover the amount which he had deposited with the 'Corporate

Debtor' but in regard to the initiation of Section 7 of the 'I&B' Code held that the

present application was not maintainable and rejected the prayer of the

Appellant / Petitioner to initiate the proceedings u/s 7 of the Code and dismiss

the application. However, the 'Adjudicating Authority' had granted liberty to the

Appellant/Petitioner to file an appropriate application under Chapter V of the

Companies Act, 2013.

Appellant's Submissions

13. According to the Learned Counsel for the Appellant the impugned order is

an erroneous one both on facts as well as in law for the reason that the amounts

disbursed by the Appellant to the Respondent / Corporate Debtor were in lieu of

gaining interest on it, which the Respondent had consistently credited till

31.3.2018. Therefore, it is the plea of the Appellant that it was a 'Financial Debt'

under section 5(8)(a) and Section 5(8)(f) of the 'I&B' Code.

14. The stand of the Appellant is that his claim is that of a 'Deposit' and not

of a 'Financial Debt' was never brought out by either the Respondent or the

Adjudicating Authority as such, the Appellant never got an opportunity to

respond to the said issue and was shocked by the impugned order.

Company Appeal (AT) (Insolvency) No. 502 of 2020

13

15. The version of the Appellant is that merely because an amount is described

as 'Deposit', it will not be excluded from the definition of 'Financial Debt' per se.

16. The Learned Counsel for the Appellant brings to the notice of this Tribunal

that the Respondent had accepted certain amounts from the Appellant and

consistently credited interest against such amounts for a continuous period of

five years in favour of the Appellant to account for the time value of money. As

a matter of fact, the Respondent's ledger accounts supported by the Appellant's

Bank Account Statements and TDS forms confirm these transactions, as seen

from the chart below mentioned in the Appeal:-

Financial Appellant's Bank Ledger Statement Form 16A Year Statement/Payment made to Respondent 2013-14 Rs. 7,00,000- @ p.42 p.43 p.44-45

2014-15 Rs. 1,00,000/- @ p.46 p.47 p.48-49

2015-16 No payment p.50 p.51-54

2016-17 No payment p.55 p.56-57

2017-18 Rs. 2,00,000/- @ p.59 p.62 p.63-65

17. The Learned Counsel for the Appellant comes out with a plea that payment

of interest on the amounts borrowed by the Respondent / Company is nothing

but the consideration for the time value of money, as it increases the value of

investment/debt with time. Moreover, interest is the compensation paid by the

borrower to the lender for using the lenders money over a period of time and in

this regard, the Appellant refers to the decision of this Tribunal in the matter of

'Nikhil Mehta and Sons' v. AMR Infrastructure Limited reported in 2017

Company Appeal (AT) (Insolvency) No. 502 of 2020

14 SCC online, NCLAT 859(vide para 17) and the decision of the Hon'ble

Supreme Court in the matter of 'Pioneer Urban Land and Infrastructure Ltd.

& Anr.' V. 'Union of India & Ors.' reported in 2019 (8 SCC 416 (vide para

71).

18. The Learned Counsel for the Appellant points out that while a debt may

be a financial debt without bearing interest, money borrowed against payment

of interest by itself is a financial debt. In fact, the definition of financial debt as

per section 5(8) of the code money borrowed against payment of interest, even if

'time value of money' is not separately and additionally established.

19. The Learned Counsel for the Appellant proceeds to takes a legal plea that

the Depositors / fixed deposit holders are financial creditors and in this regard

relies on the judgement of the Hon'ble Supreme Court in the matter of

'Pioneer Urban Land and Infrastructure Ltd.' & Anr. V. 'Union of India &

Ors.' reported in (2019) 8 SCC p.416 vide para (43).

20. The other contention advanced on behalf of the Appellant is that the

agreement between the Appellant and the Respondent as evident from the

documents placed on record exhibit that the receipt of money by the Respondent

/ Corporate Debtor and credit of interest by the 'Corporate Debtor' to the

Appellant. Moreover, the e.mail communications between the representatives of

the Respondent and the Appellant that are on record disclose the admissions

and acknowledgements made by the 'Corporate Debtor' of its liability to repay

the Appellant's debt alongwith interest.

Company Appeal (AT) (Insolvency) No. 502 of 2020

15

21. The Learned Counsel for the Appellant cites the decision of this Tribunal

in the matter of 'Shailesh Sangani' v. 'Joel Gardoso & Anr.' reported in 2019

SCC online NCLAT p. 52 (2) whereby and whereunder this Tribunal, had

allowed an application under Section 7 of the Code by a shareholder who gave

an unsecured loan with no fixed time period and repayable on demand from time

to time by the 'Corporate Debtor'.

22. The Learned Counsel for the Appellant refers to the privy Council decision

'Dilworth' V. 'Commissioner of Stamps', reported in 1899 AC p. 99 wherein

it is held that a gift by will, for the maintenance and education of boys who are

orphans, or the sons of parents in straitened cirumstances, is "charitable",

within the meaning of the New Zealand Exemption Act, 1883 etc. Also it is held

that the institute, being an educational endowment in perpetuity vested in

trustees without personal interest therein, the whole beneficial interest

belonging exclusively and inalienably to the public, is a public institution within

the meaning of s.2.

23. The Learned Counsel for the Appellant refers to the decision in the matter

of 'Mahalakshmi Oil Mills' V. 'State of Andhra Pradesh' reported in 1989 1

SCC at p. 164 at 170 wherein at paragraph 11 it is held that the expression

'means and includes' in the definition clause indicates exhaustive nature of the

definition.

24. The Learned Counsel for the Appellant relies on the judgement of this

Tribunal in Co. Appl.(AT)(Ins.) No. 452 of 2020 in the matter of 'Sh. Sushil Company Appeal (AT) (Insolvency) No. 502 of 2020

16 Ansal' V. 'Ashok Tripathi and two Ors.' dated 14.08.2020 wherein at

paragraph 20 it is observed as under:-

".......The answer to the question

as to whether a decree holder would

fall within the definition of 'financial

creditor' has to be an emphatic 'No'

as the amount claimed under the

decree is an adjudicated amount

and not at debt disbursed against

the consideration for the time value

of money and does not fall within

the ambit of any of the clauses

enumerated u/s 5(8) of the 'I&B'

Code".

25. The Learned Counsel for the Appellant refers to the order of the

Adjudicating Authority ('NCLT') Mumbai Bench in CP No.

66/IBC/NCLT/MB/MAH/2018 dated 25.02.2019 wherein at paragraph 22 it is

observed as under:-

".....All the more, the

acknowledgements of the

Corporate Debtor to the debt, be

it statement of accounts, the Company Appeal (AT) (Insolvency) No. 502 of 2020

17 statement of confirmation of

accounts duly signed by the

Corporate Debtor, or the reply

to this petition, the Corporate

debtor has time and again

acknowledged the outstanding

dues payable to the Financial

creditor. It is a well-known

principle of law that, quote

'Admissions' are the best proof

of the facts admitted.

Admissions in pleadings or

judicial admissions, made by

the parties during the hearing

of the case are fully binding on

the party that makes them and

constitute a waiver of proof'

unquote. Hence, in the present

case, by admitting the liability

in affidavit in reply to this

petition, the Corporate Debtor is

estopped to prove the non-

existence of debt by raising any Company Appeal (AT) (Insolvency) No. 502 of 2020

18 kind of 'dispute' or defence as

the same is all cliché' for

deciding the fate of present

proceedings. The petitioner's

claim of existence of debt and

default has been corroborated

with ample evidence and is

enough to hold a view in its

favour."

and ultimately came to the conclusion that the 'Financial Creditor' had

established that the loan was duly sanctioned and duly disbursed to the

'Corporate Debtor' but there was default in payment of debt on the part of the

'Corporate Debtor'. Besides this, it was held that admittedly, it was established

that there was a 'default' as defined u/s 3(12) of the Code on the part of the

'Corporate Debtor'.

Respondent's Submissions

26. On behalf of the Respondent, it is submitted that the Learned Adjudicating

Authority came to the right conclusion that the alleged deposit made by the

Appellant does not fall within the definition of a 'financial debt' as per Section

5(8) of the Code.

27. It is brought to the notice of this Tribunal on behalf of the Respondent

that the Appellant neither in its application filed u/s 7 of the Code before the Company Appeal (AT) (Insolvency) No. 502 of 2020

19 Adjudicating Authority nor in the legal notice addressed to the Respondent had

mentioned that the 'sum' was given as loan to the Respondent and rather it

clearly stated that the alleged amount was deposited with the Respondent. But

in the Appeal, the Appellant had referred to the alleged amount as an 'unsecured

loan'. Moreover, the Appellant is a shareholder in the 'Corporate Debtor' as per

list of shareholders as on 31.03.2018.

28. The Learned Counsel for the Respondent submits that the Appellant in

the present Appeal states that the alleged amounts disbursed by him to the

Respondent were not for any fixed time period and were disbursed at random

intervals and the alleged interest on such amount was also credited on a pro-

rata basis. Further, it is represented that there was no written or oral agreement

between the Appellant and the Respondent in regard to the alleged unsecured

loan.

29. The plea of the Respondent is that even assuming that the alleged amounts

were not 'Deposits' but 'Unsecured Loans', the same still would not come within

the definition of 'financial debt' u/s 5(8) of the code as held by this Tribunal in

the decision 'Sanjay Kewalramani' V. 'Sunil Paramanand Kewalramani &

Ors., Co. Appl. (AT)(Ins.) 57/2018 wherein at paragraph 12 and 13 it is

observed as under:-

"...

12. There is nothing on the

record to suggest that 2nd and 3rd

Respondents had given the loan in Company Appeal (AT) (Insolvency) No. 502 of 2020

20 favour of the 'Corporate Debtor'

which can be termed to be

disbursement of an amount for

consideration for the time value of

money as required u/s 5(8). Merely

grant of loan and admission of

taking loan will ipso facto not treat

the second and third respondents as

'financial creditors' till they show

that it complies with the substantive

definition or anyone or other clause

of section 5(8).

13. Mere fact that the company

paid interest @ 12% per annum,

during certain period cannot be the

ground to hold that the 'debt' comes

within the meaning of 'Financial Debt

to treat the 2nd and 3rd Respondents

as 'Financial Creditors'......."

Discussions

30. At the outset, this Tribunal points out that in the application filed by the

Appellant / 'Financial Creditor' to initiate 'Corporate Insolvency Resolution

Process' (under Rule 6 of the Insolvency and Bankruptcy (Application to Company Appeal (AT) (Insolvency) No. 502 of 2020

21 Adjudicating Authority) Rules, 2016) dated 16.07.2019 under part IV at S. No. 2

the amount to be claimed in default was mentioned as INR 21,94,771/-

(including principal amount of INR 18,63,108 along with unpaid accumulated

interests at 13.5% p.a. amounting to INR 3,31,663, as on 01.07.2019.

31. Further, at S.No. 8 of the application it was mentioned that a copy of the

Demand Notice dated 21.06.2019 issued to the 'Corporate Debtor' was also

enclosed. It appears that an e.mail was sent on 24.06.2019 to the registered

e.mail address of the 'Corporate Debtor' and the same was also enclosed with

the application.

32. The Learned Counsel for the Appellant had issued a Demand Notice to

the Respondent on 21.06.2019 in regard to the unpaid 'financial debt' due from

the Respondent whereby and whereunder it was mentioned that the Respondent

had committed default as on 31.03.2019 in not providing the statement of

account by crediting interest and depositing TDS. Added further, it was

mentioned that the Appellant comes within the definition of 'Financial Creditor'

and that the Respondent comes as 'Corporate Debtor' and the deposit is a

financial debt defined under the 'I&B' Code. Moreover, in the said Demand

Notice dated 21.06.2019 of the Appellant side it was clearly mentioned that the

'Deposit' of TDS was reflected in Form 16A of the Income Tax, 1961.

33. It must be borne in mind that a 'Financial Creditor' is a person to whom

the financial debt is owed. A 'Financial Creditor' is a person who has a right to

financial debt. A 'Financial Creditor' can be either a secured creditor or an

unsecured creditor.

Company Appeal (AT) (Insolvency) No. 502 of 2020

22

34. A 'Corporate Debtor' is a person who owes a debt to any person. The term

'debt' means a liability or an obligation in respect of a claim due from any person

and includes (i) a Financial Debt (ii) An Operational Debt. As a matter of fact,

Section 3(6) of the Code speaks of 'Definition of Claim' meaning (a) a right to

payment, whether or not such right is reduced to judgement, fixed, disputed,

undisputed, legal, equitable, secured or unsecured.

35. Any person who has the right to claim payment, as defined u/s 3(6) of the

Code is supposed to file the claim whether matured or unmatured. The question

is as to whether there is a default or not. Section 3(11) of the Code defines debt

meaning a liability or obligation in respect of a claim which is due from any

person and includes a financial debt and operational debt.

36. In this connection, it is not out of place for this Tribunal to make a

pertinent mention that the maturity of claim, default of claim or invocation of

guarantee has no nexus with the filing of claim before the 'Interim Resolution

Professional' u/s 18(1)(b) and the 'Resolution Professional' u/s 25(2)(e) of the

Code.

37. It cannot be gainsaid that the term 'deposit' includes any receipt of money

by a company either as deposit or loan or in any other form by it. Under the

Companies (acceptance of deposits) Rules, 2014 the term 'Deposit' is defined

under Rule 2(1)(c) in an inclusive manner. The meaning of 'Deposit' is enlarged

by covering receipts of money in any other form. After all, a deposit is something

more than a mere loan of money.

Company Appeal (AT) (Insolvency) No. 502 of 2020

23

38. For invoking the jurisdiction of the Tribunal as per Section 74(2) under

the Companies Act, 2013, even a partial failure by the Company to repay the

deposit was sufficient. In fact, Section 2(31) of the Companies Act speaks of the

meaning of deposit. Also, that the Tribunal has vide discretionary powers

regarding the repayment of 'Deposit'(s) but it must exercise its discretion

objectively taking into consideration all the relevant aspects in a conspectus

judicial manner. In reality, the distinction between deposit and loan may not be

a relevant factor for interpreting the term 'Deposit'. To put it succinctly, under

the new Companies Act, 2013, the definition of the term 'Deposit' is of wider

amplitude, as opined by this Tribunal.

39. The Learned Counsel for the Appellant refers to the judgement of this

Tribunal dated 18.12.2020 in Co. Appl. (AT)(Ins.) 519 of 2020 in the matter of

Mr. Rajnish Jain, the promoter, stakeholder and Managing Director of

suspended Board of Directors V. 'Anupam Tiwari' (Resolution Professional for

M/s Jain Mfg. (India) Pvt. Ltd. & Anr. wherein it is held that the 3rd Respondent

therein 'BVN Traders' is a 'Financial Creditor' within the meaning of Section 5(7)

of the Code and the debt in question is a 'financial debt' within the meaning of

Section 5(8) of the Code.

40. It is the plea of the Appellant that the 'I&B' Code statutorily acknowledges

a deposit as a form of financial debt and further that there was no denial of the

fact that the amounts being with the 'Corporate Debtor' as well as of the request

to arrange funds for withdrawal. In this connection, it is the stand of the

Appellant that Appellant's son Vijesh Gupta sent an e.mail to Rahul Chowdhary Company Appeal (AT) (Insolvency) No. 502 of 2020

24 requesting the 'Corporate Debtor' to arrange withdrawal of Rs. 20 lacs as four

persons in his family (including the Appellant) had total deposits of around Rs.

70 lacs and they had a requirement of Rs. 20 lacs and thereafter he sent

reminder, e.mails on 11.12.2013, 17.12.2018, 20.12.2018 and 24.12.2018 and

that on 27.12.2018, Rahul Chaudhary replied that by stating that it was not

possible at that moment and that they were trying their best.

41. It comes to be known that on 05.03.2019, Rahul Choudhry, the CEO of

the Respondent / 'Corporate Debtor' stated on e.mail to the Appellant's son to

the effect that 'as soon as some availability is there, your requirement is on my

table, and will be done as much possible. There are times in life when things get

stuck. We are sitting here to find early resolutions and this confirms the

Respondent / 'Corporate Debtors' admission of debt and acknowledgement of

their liability of repayment.

42. On a careful consideration of respective contentions and in view of the

fact that the Respondent / Corporate Debtor had accepted certain amounts from

the Appellant and credited the interest in a consistent manner against such

amounts for a continuous period of five years, as pleaded by the Appellant and

also that the 'Corporate Debtor' had accepted money from the Appellant against

the payment of interest and bearing in mind the payment of interest on the

amounts borrowed by the Respondent Company is nothing but a consideration

for the time value of money and in as much as the 'interest' is the compensation

paid by the borrower to the lender for using the lender's money over a period of

time, this Tribunal comes to an inevitable and inescapable conclusion that the Company Appeal (AT) (Insolvency) No. 502 of 2020

25 Appellant's status is that of a 'Financial Creditor' as per Section 5(7) read with

Section 5(8) of the Code and that there is a default in payment of the accepted

amounts by the Respondent/CD and in short, the Respondent / Corporate

Debtor comes within the purview of the definition of 'Financial Debt'. Viewed in

that perspective, the contra view taken by the Adjudicating Authority in coming

to the conclusion that the application filed by the Appellant / Financial Creditor

is not maintainable for initiation of Section 7 of the Code is clearly unsustainable

in the eye of law, as held by this Tribunal, to prevent an aberration of justice.

Consequently, the Appeal succeeds.

43. In fine, the instant Appeal is allowed. The impugned order of the

Adjudicating Authority dated 13.02.2020 passed in (IB) 1886(ND)/2019 dated

13.02.2020 is set aside for the reasons assigned by this Tribunal, of course in

this Appeal. The Adjudicating Authority is directed to restore the application

filed by the Appellant / Financial Creditor / Petitioner (u/s 7 of the Code), to

admit the same and to proceed further in the manner known to law and in

accordance with law.

[Justice Venugopal. M] Member (Judicial)

[V.P. Singh] Member (Technical)

NEW DELHI, 29th January, 2021 ss

Company Appeal (AT) (Insolvency) No. 502 of 2020

26