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Judgment
Justice Anant Bijay Singh;
This Appeal has been preferred by the Appellant being aggrieved and dissatisfied by the order dated 14.06.2019 in CP (IB) No. 383 (ND) of 2019 passed by the Ld. Adjudicating Authority (National Company Law Tribunal), New Delhi, Bench-III whereby and where under the Application under Section 7 of the Insolvency and Bankruptcy Code, 2016 (for short IBC) filed by the Appellant herein – Prayag Polytech Pvt. Ltd. was dismissed.
The facts giving rise to this Appeal are as follows:
The Appellant agreed to advance certain amount as loan to the Respondent to the tune of Rs. 1,60,00,000/- against payment of interest at the rate of 15% per annum for the period from May 8, 2017 till date, which is as hereunder:
| Particulars | Amount (in Rupees) |
| Amount disbursed on 8.5.2017 | 50,00,000 |
Amount further disbursed by the Financial Creditor on 9.5.2017 | 80,00,000 |
| Balance as on 9.5.2017 | 1,30,00,000 |
Amount further disbursed by the Financial Creditor on 12.5.2017 | 30,00,000 |
| Balance as on 12.5.2017 and onwards | 1,60,00,000 |
ii) Further case of the Appellant is that the Respondent had paid interest and deposited the tax deducted at source in favour of the Appellant. The said tax deducted at source is also reflected in the Form 26AS of the Appellant. The interest payable as on December 25, 2018 is as follows:
| Particulars | Amount (in Rupees) |
| Total Interest Accrued | 29,98,192 |
| Less: TDS | (1,64,214) |
| Less: Interest Paid | Nil |
Total Interest Payable (as on December 25, 2018) | 28,33,978 |
iii) The Appellant sent a recall notice dated January 2, 2019 to the Respondent, requesting it to repay the Total Amounts Due to the Appellant which was due and payable by the Respondent to the Appellant. The Respondent neither paid the Total Amounts Due to the Appellant pursuant to the said recall notice or did they respond to the said recall notice.
iv) The Respondent did not repay the Total Amounts Due to the Appellant, the Appellant initiated the Corporate Insolvency Resolution Process in relation to the Respondent by filing Application under Section 7 of the IBC before the Ld. Adjudicating Authority in which the total amount due including interest shown as Rs. 1,88,33,978/- till 25.12.2018 (Annexure 2 Colly at page 33 to 93 of the Appeal).
The Respondent then appeared and filed a reply affidavit before the Ld. Adjudicating Authority and after hearing the parties, the Ld. Adjudicating Authority has dismissed the Application filed by the Appellant under Section 7 of the IBC. Hence this Appeal.
Submissions on behalf of the Appellant
The Learned Sr. Counsel for the Appellant during the course of argument and in his Written Submissions submitted that the Appellant under an oral agreement, disbursed an amount of Rs. 1,60,00,000/- during the period commencing on May 8, 2017 till May 12, 2017.
It is further submitted that the Appellant is neither a Non-Banking Financial Company nor registered with the Reserve Bank of India as a Non-Banking Financial Institution or Bank under the Reserve Bank of India Act, 1934 nor has any other business related with the Respondent.
It is further submitted that the Ld. Adjudicating Authority dismissed the Insolvency Petition on the basis of mere speculation and on oral submission of the Respondent (without any supporting document), that the amounts have been given for a period of more than 10 years.
It is further submitted that the Ld. Adjudicating Authority erred in not appreciating that the amounts due is reflected in the balance sheet of the Respondent in the name of the Appellant. Based on these submissions and also in the eyes of law, the impugned order is fit to be set aside.
Submissions on behalf of the Respondent
The Learned Counsel for the Respondent during the course of argument and in his Reply Affidavit along with Written Submissions submitted that the entire case of the Appellant as well as the Respondent is based on an alleged oral agreement/arrangement and the correctness of the same can be verified only by leading evidence available to both the parties and cannot be done in summary proceedings before NCLT/NCLAT.
It is further submitted that the Appellant did not file any books of accounts maintained by them under Section 186(p) of the Company’s Act. 2013 nor placed any document / resolutions in respect of the transaction involved in the present proceedings, therefore, the Ld. Adjudicating Authority has rightly passed the Impugned Order. Based on these submissions, no merit in the Appeal, the Appeal is fit to be dismissed.
FINDINGS
After hearing the parties and having gone through the pleadings made on behalf of the parties, we are of the considered view that the following facts are admitted in the instant Appeal.
The claim of the Appellant that the loan is payable on demand and recall notice sent on 02.01.2019 to pay the amount by 09.01.2019, in this regard no reply given by Respondent, hence in default from 09.01.2019. The Respondent has taken the stand that the notice at page No 59 of the Appeal is different from the correct address mentioned by the Appellant themselves at page No. 42 of the Appeal and thus no delivery was ever made. Further, a track report of the Post Office as “Not Delivered Unclaimed” at page 63 of the Appeal filed by the Appellant themselves shows there is not cause of action.
The entire case of the Appellant as well as the Respondent is based on an alleged oral agreement/arrangement and the correctness of the same can be verified only by leading evidence available to both the parties before the Civil Court and cannot be done in summary proceedings before NCLT/NCLAT. The disputed facts are arrived between the parties as hereunder:
Sl. No. | Facts as per the Appellant | Facts as per the Respondent |
| i. | Relies on alleged oral agreement. Claims that the amount remitted was a loan. | Oral understanding but claims of the said oral understanding disputed. The amount remitted was not a loan but as investment with Corporate Debtor and the details in Reply filed before NCLT. |
| ii. | Loan of Rs.1,60,0000/-was given to the Corporate Debtor. | Amount was remitted to the account of corporate debtor for long term investment. |
| iii. | Interest chargeable was 15% p.a. for the period 08.05.2017 till date. | No interest was specifically payable. |
| iv. | Said Loan is Payable on demand. | No such arrangement or agreement was arrived at. It was agreed that the amount has to be kept for long term of 10 years. |
| v. | Claims to have sent notice recalling the loan on 02.01.2019. | No notice whatsoever was received. The said claim is false on the face of the record in as much as: a) The alleged notice was sent to a wrong address and not the address of the Corporate Debtor; b) The Postal Tracking Report filed by the Appellant says that the post was not delivered; c) That the Appellant has made false averments before the NCLT stating that even after service the Corporate Debtor has not paid the amount; and d) The Appellant has falsely claimed that the same is served. |
| vi | TDS has been deducted by the Corporate Debtor. | a) TDS was deducted for interest at the rate of 11% p.a. as required under law; b) No payment made to the Appellant. The said interest added to the long term Borrowings; and, c) No amount is due as alleged. |
| vii | The Appellant is a company under Companies Act and is a defaulter in filing financial statements from time to time. The Appellant has not brought on record its books of account and balance sheet to show that the alleged amount was a short terms loan. | a) No such loan was ever granted; b) No entry in the relevant registers prescribed by law are maintained by the Appellant; c) The Appellant has not filed any documents of its own to prove its case; d) Claims that the loan is based on oral agreement. |
It is seen from the record that the Appellant has not disputed the rate at which the interest was payable either before the Adjudicating Authority or before this Tribunal and therefore we are of the view that the claim of the Appellant that interest was payable at 15% per annum is not substantiated by any documentary evidence. We find force in the contention of the Counsel for the Appellant that the amount remitted by the Appellant has been reflected in the Balance Sheet of the Respondent Company as ‘Long Term Borrowings’ due to its tenure being 10 years and later to be converted to ‘Investment’. Hence, we are of the view that the amount cannot be construed as a ‘default’ as on January, 2019. We are satisfied that the Appellant could not establish any ‘default’ on the part of the Respondent by way of any documentary evidence.
It is also an admitted fact that the Balance Sheet of the Respondent which was relied on by the Appellant, perusal thereof, crystal clear that the amount was accepted by the Respondent for investment purposes.
ORDER
Taking all these facts and circumstances of the case, we are of the considered view that there is no illegality in the impugned order while dismissing the Application filed by the Appellant under Section 7 of the IBC, therefore, the impugned order dated 14.06.2019 passed by the Ld. Adjudicating Authority (National Company Law Tribunal), New Delhi, Bench-III in CP (IB) No. 383 (ND) of 2019 is hereby affirmed. There is no merit in the instant Appeal, the Appeal is hereby dismissed. No order as to costs.
Registry to upload the Judgment on the website of this Appellate Tribunal and send the copy of this Judgment to the Ld. Adjudicating Authority (National Company Law Tribunal), New Delhi, Bench-III, forthwith.