Varsha Jain vs Iseo Chemdis Pvt Ltd

Varsha Jain ....Appellant

Vs.

ISEO Chemdis Pvt. Ltd. ....Respondent

Present: Appellant: Mr. Sanjeev Kataria and Mr. Deepak Garg, Advocates.

Respondent:

ORDER

05.03.2020: This appeal has been preferred against rejection of Appellant's

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

(in short 'I&B Code') on the ground that the Appellant has failed to demonstrate

that the amount claimed to have been invested by her falls within the ambit of

'Financial Debt'.

2. Learned counsel for the Appellant submits that a Draft Agreement dated

18th June, 2018 was signed inter-se the parties in terms whereof Appellant

invested Rs.100 Lakhs in ICPL with Rs.50 Lakhs infused as equity and balance

Rs.50 Lakhs to be treated as loan from a shareholder carrying interest @ 33.33%

per annum. He banks upon this Draft Agreement to demonstrate that the money

was disbursed against consideration of time value of money.

3. However, we find that the Draft Agreement, as taken note of by the learned

Adjudicating Authority, was not followed by executing an enforceable instrument -2-

in form of an Agreement/ Contract. Therefore, no exception can be taken to the

finding recorded by the learned Adjudicating Authority that the Appellant has

failed to demonstrate that the amount claimed to have been invested falls within

the ambit of a 'financial debt'.

4. That apart, we find that even on the basis of stipulation in the Draft

Agreement it was provided that there will be a locking period of 60 months on

such investment. Admittedly, the locking period subsisted on the date of filing

of application under Section 7 of the I&B Code and the position continues to be

so even on date. Viewed from that perspective, even if, the Appellant's claim of

such investment being a 'financial' debt is accepted, there is no "default" as the

Appellant would not be entitled to claim the Principal Amount claimed to have

been infused as loan.

5. There is no merit in this appeal. It is accordingly dismissed. No Costs.

[Justice Bansi Lal Bhat] Member (Judicial)

[Justice Venugopal M.] Member (Judicial)

[V. P. Singh] Member (Technical) am/nn

Company Appeal (AT) (Insolvency) No. 250 of 2020