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Judgment
The Company Petition bearing CP No. 77/7/JPR/2024 has been filed by Mr. Patel Kumar ('Petitioner No. 1'), Mr. Kailash Chander ('Petitioner No. 2') and Mr. Ripin ('Petitioner No. 3') ('Financial Creditors'/ 'Petitioners') against the Corporate Debtor, namely, M/s Neemrana Land Private Limited ('Corporate Debtor') under section 7 of the Insolvency and Bankruptcy Code, 2016 ('IBC'/ 'Code') read with Rule 4 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016 seeking initiation of the Corporate Insolvency Resolution Process ('CIRP') of the Corporate Debtor on account of default in repayment of the outstanding loan amount.
The Corporate Debtor is a Private Limited Company incorporated and registered under the provisions of the Companies Act, 2013 on 31.08.2016. The registered office of the Corporate Debtor is situated at Plot No. CC-10, Phase-1, RIICO Industrial area, Alwar, Neemrana (Rajasthan)-301705. The Corporate Debtor is engaged in the business of real estate.
The details of the transactions leading to the filing of the Company Petition bearing CP No. (IB)- 77/7/JPR/2024 as averred by the Financial Creditors are as follows:
The Financial Creditors have preferred instant Petition under Section 7 of the Code against the Corporate Debtor due to default in repayment of the loan by the Corporate Debtor. The Financial Creditors are individual persons and shareholders of the Corporate Debtor. The petitioner no. 3 is the son and successor of Late Mr. Subhash Chandra Bhadu who was one of the financial creditors. 3.2 The Corporate Debtor is engaged into the business of real estate and got registered its real estate project in commercial category namely "FIRST AVENUE" on 23.03.2018 under the provisions of Rajasthan Real Estate (Regulation & Development) Act, 2016 ("RERA") with Rajasthan Real Estate Regulatory Authority ("RERA Authority"). The said project was to be completed on 14.03.2023 however it could not be completed therefore, the RERA registration got lapsed.
Subsequently, the Corporate Debtor through its representatives requested the Petitioners for extending financial assistance as a loan. Accordingly, the Petitioners had granted the loan at the interest rate of 24% p.a. for the business purposes. The Corporate Debtor received the aforesaid requested loan amount from the Petitioners as under: -
| DATE | PRINCIPAL LOAN AMOUNT (In Rupees) | NAME OF APPLICANT/FINANCIAL CREDITOR |
|---|---|---|
| 01.06.2018 | 50,00,000/- | Mr. Patel Kumar S/o Sh. Rajaram |
| 05.06.2018 | 13,00,000/- | Mr. Patel Kumar S/o Sh. Raja Ram |
| 21.05.2018 | 50,00,000/- | Mr. Kailash Chander S/o Sh. Raja Ram |
| 22.05.2018 | 13,50,000/- | Mr. Kailash Chander S/o Sh. Raja Ram |
| 22.05.2018 | 63,50,000/- | Mr. Subhash Chander S/o Sh. Raja Ram |
| TOTAL | 1,90,00,000/- |
In view of the aforementioned circumstances, the Corporate Debtor received a principal loan amount of Rs. 63,00,000/- from the Petitioner No.1, Rs.63,50,000/- from the Petitioner No. 2 and Rs. 63,50,000/- from Late Mr. Subhash Chander. Thus, the Corporate Debtor has collectively received total principal loan amount of Rs. 1,90,00,000/-.
It is further submitted the Corporate Debtor partly paid the accrued due interest of Rs. 2,46,614/- to the Petitioner No.1, Rs. 2,57,925/- to the Petitioner No.2 and Rs. 2,57,175/- to Late Mr. Subhash Chandra till 31.03.2019. The Corporate Debtor further partly paid the accrued interest of Rs. 1,98,450/- to the Petitioner No.1, Rs. 2,00,025/- to the Petitioner no.2 and Rs. 2,00,025/- to Late Mr. Subhash Chandra till 16.10.2019. The same is corroborated from the TDS statement in Form 26AS of the Financial Creditors.
The Corporate Debtor has not made the payment of interest accrued to the principal loan amount from 17.10.2019 to 31.03.2024. Therefore, the Financial Creditors sent legal notices through registered speed post and E-mail on 09.05.2024 and 10.05.2024 respectively to the Corporate Debtor and its directors for demanding the payment of the principal amount along the interest. However, the said legal notices were not accepted and returned with the remark refused to be taken by guard hence returned.
The relevant details as enumerated under Part IV of the instant Application are reproduced hereunder:
Part IV
PARTICULARS OF FINANCIAL DEBT
| 1. | Total Amount of debt granted Date(s) of Disbursement | Financial Creditor | Date of Disbursement | Principal loan amount (In Rs.) |
|---|---|---|---|---|
| Patel | 01.06.2018 | 50,00,000/- | ||
| Kumar S/o | 05.06.2018 | 13,00,000/- |
| Shri Raja Ram | TOTAL | 63,00,000/- | ||
| Kailash Chander S/o Sh. Raja Ram | 21.05.2018 | 50,00,000/- | ||
| 22.05.2018 | 13,50,000/- | |||
| TOTAL | 63,50,000/- | |||
| Ripin S/o Late Sh. Subhash Chander | 22.05.2018 | 63,50,000/- | ||
| TOTAL | 63,50,000/- | |||
| TOTAL PRINCIPAL LOAN AMOUNT | 1,90,00,000/- | |||
| The principal loan amount granted by the Financial Creditors to the Corporate Debtor are payable on demand and the same is carrying an interest rate @24% accruing thereon. | ||||
| 3. | Amount claimed to be in default and the date on which the default occurred | Financial Creditor | Principal loan amount (In Rs.) | Accrued Interest due for payment (In Rs.) |
| Patel Kumar S/o Sh. Raja Ram | 63,00,000/- | 1,46,46,735.55/- | ||
| TOTAL | 2,09,46,735.60/- | |||
| Kailash Chander S/o Sh. Raja Ram | 63,50,000/- | 1,48,77,704.70/- | ||
| TOTAL | 2,12,27,704.70/- | |||
| Ripin S/o Late Sh. | 63,50,000/- | 1,48,82,505.74/- | ||
| Subash Chander | ||||
| TOTAL | Rs. 2,12,32,505.74/ - | |||
| TOTAL AMOUNT CLAIMED TO BE IN DEFAULT | Rs. 6,34,06,946/- (Rupees Six Crore Thirty- Four Lakh Six Thousand Nine Hundred Forty-Six Only) | |||
The Corporate Debtor filed a Reply to the Petition vide Dairy No. 787/2025 dated 21.04.2025 wherein it raised the following contentions: -
It is submitted that there is no specific date of default. The Financial Creditors have mentioned the date of default is 13.05.2024, which is the date of expiry of the period to repay the alleged outstanding dues under the demand notice dated 09.05.2024 however the said demand notice was never served upon the Corporate Debtor. 4.2 There is no document/financial contract or agreement detailing the terms of the debt which specifies the repayment schedule. Thus, a Petition under Section 7 of the IBC can only be filed when there is a debt and default occur. In the instant case, there is no debt and default.
It is stated that the financial creditors have mentioned that the loan has been given in the year 2018 and the present petition is filed in the year 2024, which is beyond three-year period from the date when the alleged loan has been given. Therefore, the instant petition is ex-facie barred by limitation.
There is no agreement or contract between the Petitioners and Corporate Debtor that the said amount has been given as loan against interest and classified as financial debt as defined in the Code. The alleged outstanding amount is not due and payable by the Corporate Debtor in absence of any document/financial contract, it cannot be said that the said disbursement was disbursed as a loan to the Corporate Debtor.
The present insolvency petition is not maintainable as the debt which has been claimed by the Financial Creditors in the instant matter is outside the purview of the Financial Debt as defined under Section 5(8) of the IBC, 2016. It must establish that the debt should be disbursed against the consideration for the time value of money as envisaged under Section 5(8) of the Code.
The Corporate Debtor has never paid any interest to the financial creditors against the alleged outstanding amount. The alleged interest paid by the Corporate to the Petitioners was share in profit disbursed to the Petitioners as being the shareholders of the Corporate Debtor.
We have heard the Ld. Counsels for the parties and perused the averments made in the Petition and Reply, along with the documents enclosed therein.
Before delving into the merits of the case, we may recapitulate some of the significant events and relevant dates which are going to have a bearing on the determination of the present case. To deal with the contentions raised by the parties, it is relevant to set out certain facts concerning the debts advanced by the Financial Creditor to the Corporate Debtor: -
The present case has been preferred under Section 7 of the Code, 2016 by the Petitioners on account of default of an amount of Rs. 6,34,06,946/- having been committed by the Respondent/ Corporate Debtor. 6.2 The Financial Creditors had sent a legal notice dated 09.05.2024 through registered post and E-mail to the Corporate Debtor for demanding the payment of the aforesaid loan amount along with interest @24% p.a. 6.3 It has been further stated by the Respondent/ Corporate Debtor that the Petitioner are not the financial creditors and do not fall within ambit of Section 5(8) of the IBC.
7 Before we appraise the matter at hand, it is important to refer to the following definitions:
"3(11) debt means a liability or obligation in respect of a claim which is due from any person and includes a financial debt and operational debt;"
"3(12) default means non-payment of debt when whole or any part of 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;"
"5(7) financial creditor means any person to whom a financial debt is owed and includes a person to whom such debt has been legally assigned or transferred to;"
"5(8) financial debt means a debt along with interest, if any, which is disbursed against the consideration for the time value of money and includes –
(a)money borrowed against the payment of interest;
(b)any amount raised by acceptance under any acceptance credit facility or its de-materialised equivalent;
(c)any amount raised pursuant to any note purchase facility or the issue of bonds, notes, debentures, loan stock or any similar instrument;
(d)the amount of any liability in respect of any lease or hire purchase contract which is deemed as a finance or capital lease under the Indian Accounting Standards or such other accounting standards as may be prescribed;
(e)receivables sold or discounted other than any receivables sold on non-recourse basis;
(f)any amount raised under any other transaction, including any forward sale or purchase agreement, having the commercial effect of a borrowing;
[Explanation. -For the purposes of this sub-clause,-
(i)any amount raised from an allottee under a real estate project shall be deemed to be an amount having the commercial effect of a borrowing; and
(ii)(ii) the expressions, “allottee” and “real estate project” shall have the meanings respectively assigned to them in clauses (d) and (zn) of section 2 of the Real Estate (Regulation and Development) Act, 2016 (16 of 2016);]
(g)any derivative transaction entered into in connection with protection against or benefit from fluctuation in any rate or price and for calculating the value of any derivative transaction, only the market value of such transaction shall be taken into account;
(h)any counter-indemnity obligation in respect of a guarantee, indemnity, bond, documentary letter of credit or any other instrument issued by a bank or financial institution;
(i)the amount of any liability in respect of any of the guarantee or indemnity for any of the items referred to in sub-clauses (a) to (h) of this clause;
8 From the documents produced before us, it is observed from the Balance Sheet of the Corporate Debtor that under the head of “Long-Term Borrowing” it is seen that there is an unsecured loan as against the Corporate Debtor by the Petitioners. Thus, from the Balance Sheet it is deciphered that the Corporate Debtor acknowledged that unsecured loans have been received from the Petitioners under the head of “Long Terms Borrowing”.
9 It is also an admitted fact that the interest component on which TDS was deducted and paid by the Corporate Debtor to the credit of the Financial Creditors, and that the amount of TDS corroborated with the figures showing in the TDS Certificate/Form 26AS. This is a categorical admission on the part of the Corporate Debtor that interest has been paid on the said unsecured loans. There is no explanation given by the Corporate Debtor as to why they deducted and deposited the TDS or issued the confirmation of the accounts.
10 In view of the aforementioned circumstances, we consider it relevant to refer to the Judgment of Hon’ble NCLAT in the matter of Pradeep Tayal vs Essbert Fashion Pvt. And Others 2023 SCC OnLine NCLAT 43. The relevant extracts are given below:
“23.This Tribunal in the above case referring to documents and correspondences between the parties concluded that financial debt was there despite there being no MoU formerly executed between the parties containing the terms and conditions of transaction. Further when we look into the definition of transaction as contained in Section 3(33) of the Code as extracted above, the definition is an inclusive definition and the provision does not lead to the conclusion that unless there is written transaction between the parties incorporating the terms and conditions of the loan, no transaction can come within the meaning of Section 5(8) of the Code. Financial Debt can be proved from other documents as contemplated in Column 8 of Part-V of Form 1 of Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016 as noted above.”
11 Thus, deduction of TDS and deposit by the Corporate Debtor may not itself prove that there is any financial debt but the deduction of TDS and deposit in Form 26AS under Section 194A of the Income Tax Act clearly proves that the deduction which was deposited was towards TDS relating to “Interest other than interest on securities”. Form 26AS was filed by the Financial Creditors along with the present petition under Section 7 of the Code, 2016 supporting the case of the Petitioners that the loan which was granted to the Corporate Debtor was with interest.
12 There can be no dispute to the preposition that on the basis of the deduction of TDS, it cannot be concluded that the transaction in question is Financial Debt. However, the aforementioned judgment of the Hon’ble NCLAT, held that Financial Debt can be proved from other documents as contemplated in Column 8 of Part-V of Form 1 of Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016 as noted above.
13 Further, the Corporate Debtor raised a contention that in the absence of any document/financial contract or agreement, it cannot be said that the disbursement was disbursed as loan. At this juncture, it relevant to refer the judgement of Hon’ble NCLAT in the matter of Agarwal Polysacks Ltd. v. K. K. Agro Foods and Storage Ltd. 2023 SCC OnLine NCLAT 624 wherein it was held that:
“21.When we look into the statutory scheme as reflected in the Application to Adjudicating Authority Rules, 2016 and CIRP Regulations, 2016, it is clear that financial debt can be proved from other relevant documents and it is not mandatory that written financial contract can be only basis for proving the financial debt. We, thus, answer Issue No.1 holding that it is not necessary that written financial contract be the only material to prove the financial debt.”
14 Therefore, the statutory scheme under the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016 and CIRP Regulations makes it is clear that financial debt can be proved from other relevant documents and it is not mandatory that written financial contract can be only basis for proving the financial debt.
15 In the present case, the Applicant has annexed a list of the documents to prove the existence of the Financial Debt in Part-V of Form-1 such as a copy of the legal notice dated 09.05.2024, a copy of the Balance Sheet for the financial year 2021-22 and a copy of the confirmation of account by the Corporate Debtor and deduction of TDS in financial year 2019-20.
16 In addition to that, the Corporate Debtor raised an argument that the instant petition is barred by limitation. In the present case there is an entry made in the balance sheet for the financial year 2021-22 under the head of long-term borrowings. It is pertinent to refer the Judgement of Hon'ble Supreme Court in the matter of Vidyasagar Prasad Vs. UCO Bank & Anr. 2024 SCC OnLine SC 2993 wherein it was held that:
“10.1... the entry made in the balance sheet coupled with the note of the auditor of the appellant clearly amounts to acknowledgement of the liability...”
17 The instant petition filed in the year 2024. There is an entry made in the balance sheet for the financial year 2021-22 under the head of long-term borrowings which means that the Corporate Debtor acknowledges its liability towards the Petitioners. After considering the aforementioned judgement of the Hon’ble Supreme Court we find that the present Petition has been filed within the prescribed limitation period.
18 Therefore, in the present case, loan has been given for the consideration of the time value of money and the default has been committed by the Corporate Debtor.
19 In view of the aforementioned, we are of the view that Corporate Insolvency Resolution Process ought to be initiated against the Corporate Debtor. Therefore, we are inclined to initiate CIRP of the Corporate Debtor i.e., M/s. Neemrana Land Private Limited.
20 Further, we hereby appoint Mr. Prabhu Dayal Parsoya having registration no. IBBI/IPA-002/IP-N01132/2021-2022/13748 as Interim Resolution Professional of the Corporate Debtor from the available list of panel of Resolution Professionals as maintained by IBBI to conduct the Insolvency Resolution Process as mentioned under the Insolvency and Bankruptcy Code, 2016. The email address of the IRP is ‘pdparsoya60@gmail.com’.
21 The IRP is directed to take all such steps as are required under the statute, inter-alia in terms of Sections 15, 17, 18, 19, 20 and 21 of the Code and transact proceedings with utmost dedication, honesty and strictly in accordance with the provisions of the Code, and Rules and Regulations thereunder. The Interim Resolution Professional /Resolution Professional to check the genuineness of the claim while admitting the operational dues of the Applicant.
22 Consequences of initiation of CIRP shall be inter-alia as follows:
The IRP appointed by the Adjudicating Authority is directed to take over the affairs of the Corporate Debtor and duties as required to be performed by him under the provisions of Code including issue of publication in widely circulated Newspapers as contemplated under the provisions of the Code and calling for claims from the creditors of the Corporate Debtor; and collation of the same.
Further, as a sequel of admission, moratorium as envisaged under Section 14 of the Code is invoked in relation to the Corporate Debtor which will be in vogue during the CIRP of the Corporate to Debtor. The IRP shall carry out CIRP strictly as per the timelines specified and as envisaged under the provisions of the Code in relation to the Corporate Debtor.
The said IRP shall act strictly in accordance with the provisions of the Code. This Bench also directs for an advance payment of Rs. 1,00,000/- (Rupees One Lakh only) to be paid by the Petitioners to the Interim Resolution Professional immediately to initiate the process which shall be adjusted towards the CIRP Cost. In terms of Section 17 and 19 of the Code all personnel of the Corporate Debtor including promoters and Board of Directors, whose powers shall stand suspended, shall extend all cooperation to the IRP during his tenure as such and the management of the affairs of the Corporate Debtor shall vest with the IRP.
The Registry is directed that this order shall be communicated within 3 days from passing of this order, to the Petitioners, the Corporate Debtor as well as the IRP appointed by this Adjudicating Authority to carry out CIRP. A copy of this order shall also be communicated to IBBI for its records.
23 Accordingly, CP No. (IB)-77/7/JPR/2024 is admitted.
24 The Registry is directed immediately to send a soft copy of the instant Application along with this order to the parties along with the IRP appointed herein.