Utsav Securities Pvt. Ltd vs Sunworld Luxury Suites Pvt. Ltd

Company Appeal (AT) (Ins.) No. 1084 of 2020 & I.A No. 2774 of 2022 IN THE MATTER OF: Utsav Securities Pvt. Ltd. ....Appellant

Vs.

Sunworld Luxury Suites Pvt. Ltd. ....Respondent

Present: For Appellants: Mr. Kartikeya Singh, Adv. For Respondent: Mr. Anshum Jain, Adv.

ORDER

(Per: Justice Rakesh Kumar Jain)

16.08.2022: This appeal is filed by the Financial Creditor whose

application filed under Section 7 of the Insolvency and Bankruptcy Code, 2016

(in short 'Code') against the Corporate Debtor has been dismissed by the

Adjudicating Authority (National Company Law Tribunal, New Delhi, Bench V)

on 27.05.2020.

2. It is alleged that the Appellant is a non-banking financial company,

registered with the Reserve Bank of India, is engaged in the business of loans

and financing whereas the Respondent is in the business of developing

luxurious high-end properties.

3. It is alleged that the Appellant had advanced a loan of Rs. 60,00,000/- to

the Respondent through RTGS dated 25.10.2016 on an oral understanding on

interest @ 10 % per annum.

4. It is alleged that the Respondent had confirmed the outstanding dues

amounting to Rs. 62,57,129/- vide letter dated 01.04.2017 and even deducted

TDS on 20.10.2017 on the interest payable on the unsecured loan advanced by

the Appellant. However, application filed by the Appellant was dismissed by the

impugned order on the ground that the amount in question does not fall within

the definition of financial debt and the Appellant is not the Financial Creditor.

Therefore, application filed under Section 7 was found not maintainable.

5. Counsel for the Appellant, at the outset, has pointed out that I.A. No.

2774 of 2021 has been filed under Order XLI, rule 27 of the CPC, 1908 read

with Rule 11 and 131 of the NCLT, Rules, 2016 to adduce additional evidence.

The Appellant wanted to bring on record the statement dated 31.07.2018 of

Yogender Kumar Gupta, the Director of the Respondent Company which was

recorded under Section 50 of the PMLA, 2002 at the Delhi Zonal Office of the

Enforcement Directorate. It is submitted that on pertinent question as to how

he knows about the Appellant Company, he had answered that this company is

engaged in the business of finance and their company has also availed the

financial assistance. Notice in the application is issued which is accepted by

the Respondent in Court.

6. Counsel for Respondent has submitted that this statement is dated

31.07.2018 whereas the impugned order has been passed on 27.05.2020,

therefore, it was well within their knowledge and cannot be produced as

additional evidence.

7. We have heard counsel for the parties in this regard and are of the

considered opinion that the application bearing I.A. No. 2774 of 2021 deserves

to be allowed because the statement which is sought to be placed on record is

coming from the official record and is not manufactured. The only reason that

the said statement was not produced before the Adjudicating authority is that

the Counsel who had been appearing inadvertently failed to produce the same.

8. The application is allowed and the statement of Yogender Kumar Gupta

dated 31.07.2018 is taken on record.

9. Counsel for the Appellant, while arguing the main appeal has submitted

that the Adjudicating Authority has committed a patent error in dismissing the

application whereas Counsel for Respondent has submitted that the

Adjudicating Authority has made a reference to Section 179 and 186 of the

Companies Act, 2013 to hold that there is no resolution passed by the board of

directors of the Appellant Company to disburse the loan nor the Respondent

Company to apply for the loan. It is further submitted that no timeline has

been provided for the repayment of the said amount and as such he does not

fall within the definition of Section 5(8) of the Code. Counsel for the Appellant

has failed to answer the question of the Court in this regard and hence, the

amount given to the Respondent can be some kind of a debt but not the

financial debt as defined under Section 5(8) of the Code and thus, the

Appellant is also not a financial creditor, therefore, the application filed under

Section 7, at the instance of the Appellant before the Tribunal is found not

maintainable. No other point has been raised.

10. In view of the aforesaid facts and circumstances, there is hardly any

ground in this appeal for taking a view different from one taken by the

Adjudicating Authority and hence, the appeal is hereby dismissed. No costs.

[Justice Rakesh Kumar Jain] Member (Judicial)

[Dr. Alok Srivastava] Member (Technical)

sc/rr