Vidya Educare Pvt. Ltd vs Agroha Colourtech Pvt. Ltd

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NATIONAL COMPANY LAW APPELLATE TRIBUNAL PRINCIPAL BENCH, NEW DELHI Company Appeal (AT) (Ins.) No. 1143 of 2019 IN THE MATTER OF: VIDYA EDUCARE PVT. LTD. (Formerly Known as Prosperity Mercantiles Pvt. Ltd.) Having its Registered Office At: B.J. Associates, 90/6. M.G. Road, Kolkata, West Bengal - 700007 Through Naveen Kumar Jain, S/o Shri Taraspal Jain, Resident of C-72, Ansal Sushant City, Meerut (U.P.) ...Appellant

Versus

AGROHA COLOURTEC PVT. LTD. (A private limited company) Incorporated under the Companies Act, 1956 And having its Registered Office At: 1106, Vikram Tower, 16, Rajendra Place, Delhi Central Delhi - 110008 ...Respondent

Present: For Appellant: Mr. Sanchit Garg, Mr. Madhav Anand, Advocates For Respondent: Mr. Prakhar Mithal, Adv.

JUDGMENT

Per: Justice Rakesh Kumar Jain:

This appeal is directed against the order dated 18.09.2019 passed by

the Adjudicating Authority (National Company Law Tribunal, New Delhi,

Bench - III) by which an application filed by the Appellant under Section 7 of

the Insolvency and Bankruptcy Code, 2016 (in short 'Code') against the

Respondent /Corporate Debtor for allegedly not repaying the loan amount of

Rs. 86,36,250/- including the interest has been dismissed.

2. In brief, the case set up by the Appellant is that it had advanced a loan

of Rs. 75.00 lacs with 12% simple interest per annum to Respondent vide

Company Appeal (AT) (Ins.) No. 1143 of 2019 2

cheque number 22333 which was encashed on 15.10.2015. As per the

Appellant, it was a simple loan transaction repayable on demand and the

financial assistance was given while mutually deciding that it would carry

interest @ 12 % per annum which shall be payable quarterly. According to the

Appellant the monthly interest payable by Respondent to the Appellant was

of Rs. 2,25,000/- and after deducting TDS @ 10 % the net payable amount

was Rs. 2,02,500/-. It is alleged that Respondent initially paid interest on the

aforesaid amount. However, a sum of Rs. 86,36,250/- was due as on

01.01.2019 towards the principal amount with interest occurred on it. It is

also case of the Appellant that balance sheet of Respondent for the financial

year ending on 31.03.2017 has shown unsecured loans of Rs. 1193.01 Lacs

under the heading 'From Others' in long term borrowings and the amount of

Rs. 75.00 Lacs borrowed by Respondent from the Appellant is reflected under

the said head. It is alleged that when Respondent failed to make the payment,

the director of the Appellant demanded the entire loan from Respondent who

had issued a cheque bearing no. 647323 dated 02.08.2018 of a sum of Rs. 75

Lacs towards principal outstanding but the said cheque was dishonoured for

the reason 'Stop Payment'. Pursuant thereto, the Appellant issued notice

dated 06.10.2018 under Section 138 of Negotiable Instruments Act, 1881

which was duly received by the Respondent on 10.10.2018 but despite the

said notice, Respondent failed to make the payment within the statutory

period of 15 days and therefore, the Appellant was constrained to file criminal

complaint under Section 138 of Negotiable Instruments Act, 1881 before the

Meerut Court.

Company Appeal (AT) (Ins.) No. 1143 of 2019 3

3. On the other hand, the case of the Respondent is that there were no

terms of the repayment of amount of loan as alleged. The Appellant had never

raised any demand, therefore, there is no default on their part which would

attract the provisions of Section 7 of the Code. It is also alleged that the

Appellant has failed to establish that the amount claimed was in the nature

of financial debt. It is further alleged that even if it is assumed for the sake of

arguments that the amount in question is repayable by the Respondent but

there was no demand, therefore, it does not fall within the ambit of default.

On the aforesaid pleadings, the Adjudicating Authority has recorded a finding

that there was a transfer of Rs. 75.00 Lacs to Respondent but the amount

disbursed does not qualify as financial debt and the action/conduct of the

Respondent does not fall within the definition of default and hence the

application filed under Section 7 of the Code by the Appellant was dismissed.

4. Counsel for the Appellant has vehemently argued that once the amount

of Rs. 75.00 Lacs has been admitted, advanced by the Appellant to

Respondent and the interest was paid, it would fall within the parameters of

definition of financial debt and the said amount has not been repaid because

of cheque issued by the Respondent was dishonoured, there was a default on

the part of the Respondent and notice issued by the Appellant in terms of

section 138 of the Negotiable Instruments Act, 1881 is a demand. Therefore,

it is argued that the Appellant has fulfilled all the ingredients, requirement for

pursuing the application filed under Section 7 of the Code which has illegally

been dismissed by the Adjudicating Authority.

5. On the other hand, Counsel for Respondent has argued that there is no

document on record to prove that the amount of Rs. 75.00 Lacs was advanced

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as a loan and thus it does not fall within the definition of financial debt and

since no time is mentioned for the purpose of repayment, therefore, it would

not come within the purview of Section 3(12) of the Code which deals with the

definition of default. He has also drawn our attention towards application filed

by the Appellant under Section 7 of the Code which is a printed performa

(Form-1) to contend that the Appellant has not mentioned even the date of

default in column 2 of Part-IV which is required to initiate the proceedings

under Section 7 of the Code.

6. We have heard Counsel for the parties and perused the record with their

able assistance.

7. The Appellant has filed the application under Section 7 of the Code to

initiate the CIRP against the Respondent by admission of the application.

However, Section 7(1) provides that the application under Section 7 can be

filed before the Adjudicating Authority to initiate the Corporate Insolvency

Resolution Process (CIRP) against the Corporate Debtor when a default has

occurred. Similarly, Section 7(2) provides that the application provide under

Section 7(1) has to be filed in the form and manner as prescribed. Thus, in

order to initiate the proceedings under section 7 of the Code the date when

the default has occurred is essential. The application is provided to be filed

on a printed performa which is provided in Rule 4 of the Insolvency and

Bankruptcy (Application to Adjudicating Authority) Rules, 2016.

8. Form -1 is a printed performa of the application which has five parts.

Part-1- deals with the particulars of the Applicant. Part-2- deals with the

particulars of the Corporate Debtor. Part-3- deals with the particulars of

Company Appeal (AT) (Ins.) No. 1143 of 2019 5

proposed IRP. Part-4- deals with the particulars of financial debt. Part-5-

deals with the particulars of financial debt (documents, records and evidence

of default).

9. Part-4 has further two parts, namely, the first part deals with the total

amount of debt granted dates(s) of disbursement and second part deals with

the amount claimed to be in default and the date on which the default

occurred (attach the workings for computation of amount and days of default

in tabular form).

10. The printed performa, in Rules, lays down the necessary ingredients to

be provided in the application by the Applicant. The Respondent has raised

the issue that there was no date of repayment of the amount claimed by the

Appellant, therefore, there was no default on their part and as such the case

of the Appellant does not fall within the definition of default which is provided

in Section 3(12) which means non-payment of debt when whole or any part

or instalment of the amount of debt has become due and payable and is

not paid by the debtor or the corporate debtor, as the case may be. Thus, it is

necessary for the Applicant/Appellant to have mentioned the date of default

in the application but no such date has been mentioned and in this regard

reference could be had to the averments made in column 2 of part - IV of

Form-1 filed by the Appellant/Applicant which read thus:

2. Amount claimed to be in That as of 01.01.2019 a sum of Rs.

default and the date on 86,36,250.00 is pending towards the

which the default occurred Principal amount and interest

(attach the workings for accumulated thereon.

Company Appeal (AT) (Ins.) No. 1143 of 2019 6

computation of amount and The statement of account is filed

days of default in tabular herewith as Annexure-A/8.

form)

11. If the application under Section 7 of the Code could be filed only when

the default occurs and the date of default is conspicuous by its absence in the

pleadings of the Appellant, dishonour of the cheque, as alleged by the

Appellant, could not be taken as the date of default. There was no effort on

the part of the Appellant to get the pleadings amended before the Adjudicating

Authority. Therefore, in the absence of necessary ingredients, pleaded in the

application filed under Section 7 of the Code, on the basis of which the

application could have been maintained, we do not find any reason to interfere

in the impugned order.

12. In view of the aforesaid discussion, the present appeal is thus found to

be devoid any merit and the same is hereby dismissed.

[Justice Rakesh Kumar Jain] Member (Judicial)

[Dr. Alok Srivastava] Member (Technical)

New Delhi 04th November, 2022 Sheetal

Company Appeal (AT) (Ins.) No. 1143 of 2019