Raj Kumar Sahni & Ors. vs M/s Dilwara Leasing and Investment Ltd. & Ors.

[Per: Arun Baroka, Member (Technical)]

This present Appeal is being preferred by the shareholders and one of the Suspended Director of Vibrant Buildwell Private Limited against the Impugned Order dated 22.02.2022, passed by the National Company Law Tribunal, New Delhi Bench - IV in Company Petition No. (IB) -983(ND)/2020. The Impugned order allows Section 7 proceedings against Corporate Debtor – Vibrant Buidwell Pvt. Ltd. (‘VBL’) filed by the Shareholder and investor which is also the Financial Creditor – M/s Dilwara Leasing and Investment Ltd. (‘DLIL’).

Recapitulating the relevant facts, NCLT had closed the right of Corporate Debtor to file reply on 17.12.2020 in Company Petition No. (IB) -983(ND)/2020. The Appellants herein preferred Appeal against the order dated 17.12.2020 before NCLAT being Company Appeal No. 58/2021. The said appeal was dismissed by NCLAT on 01.02.2021. Appellants on 16.12.2020 preferred an application u/s 60(5) of Code read with Rule 11 of NCLT Rules being CA No. 1/2020 seeking intervention before AA. The Adjudicating Authority dismissed the intervention application on 02.03.2021 Against the said order of NCLAT, Appellants herein preferred a Civil Appeal No. 638/2021 before Hon’ble Apex Court wherein Appellants had taken similar and identical grounds as in the present Appeal. Even, Hon'ble Apex Court vide its order dated 29.06.2021 dismissed the same. The Appellant herein had filed a Company Appeal No. 3626/2021 under Section 65 of the IBC Code before the Adjudicating Authority, which was also dismissed along with the CP against which the present appeal has been filed.

The Financial Creditor entered into some terms by which “investment” was done by the Financial Creditor into the project owned by the Corporate Debtor. The Terms and Conditions of development of the Project were shared via email on 14.05.2012 and also cc-ed to the son of Mr. Birendra Kumar Pasari (Respondent No.3), Mr. Devanshu Pasari and the same was approved by Mr. Birendra Kumar Pasari.

While filing the Section 7 Petition, the Financial Creditor has not enclosed any financial contract. Respondent – Financial Creditor has suppressed “term sheet”, which contains terms and conditions received vide email dated 14.05.2012, which is the contract between the parties. It contained reciprocal rights and obligations and from its perusal it cannot be termed as financial debt.

Birendra Kumar Pasari, who is the Director of the Financial Creditor and also the Corporate Debtor had filed a police complaint under Section 464/420 read with Section 120B of the of the IBC, 1860 before the Delhi Police, complaining that the term sheet is a forged document. The said complaint was inquired by the Delhi Police, Defence Colony, in which it was confirmed that the said Terms and Conditions of Development of the Project duly exists and the signature of the Respondent No.3 are not forged as alleged. On information collected under RTI, it is revealed that the term sheet was duly exchanged between both the parties on their emails through their representatives/associates regarding development of the said project. So it is confirmed that the said terms and conditions of development of the project duly exists and the signature of the Respondent No.3 – Birendra Kumar Pasari are not forged and fabricated as alleged.

The Corporate Debtor also transferred its operations from earlier place of 22 Siri Fort Road New Delhi to A-359, Defence Colony, New Delhi. It is noteworthy that the new corporate office of the Corporate Debtor at A-359, Defence Colony is a premise owned by Ms. Bela Pasari i.e. wife of Mr. Birender Kumar Pasari (Respondent No.2) and thus, the complete records details etc. of the Corporate Debtor were under the control of Mr. Birendra Kumar Pasari. This was solely on account of cordial relationship and agreed ambit of exercise and control between Mr. Birendra Kumar Pasari and Appellant herein. The said access and control over the records of the Corporate Debtor are now being fraudulently used by the Financial Creditor herein, who is clearly an alter ego of Mr. Birendra Kumar Pasari.

Mr. Birendra Kumar Pasari, as per the said Terms and Conditions of Development of the Project, started investing through his group companies namely M/s. Bishwananth Industries Ltd., Financial Creditor and M/s. Bijay Papers Traders and Investment Ltd. and was appointed as a Director of the Corporate Debtor w.e.f. 09.07.2012. On 27.08.2012 - an amount of ₹3,00,00,000/- was transferred by the Respondent No.3 from his company M/s. Bishwananth Industries Ltd and on 26.09.2012, an amount of ₹2,99,00,000/- was transferred by the Financial Creditor. Needless to say that the Corporate Debtor transferred a huge sum to Financial Creditor, much prior to the alleged loan and the said transaction was carried out by Mr. Birendra Kumar Pasari, who was handling the Banking as per the understanding between the parties. This clearly shows that the investment was done by Mr. Birendra Kumar Pasari thorough his Companies, whereas now the Financial Creditor is adding the amount paid by the other group companies of Mr. Birendra Kumar Pasari into the amount of the Financial Creditor, whereas the amount invested by Mr. Pasari is less then claimed by Financial Creditor.

Corporate Debtor, at no point of time had agreed to avail loan for meeting day to day requirements of the Corporate Debtor. The Corporate Debtor has placed on record a letter dated 24.03.2013 which is a forged and a fabricated document. The fabrication of the alleged acknowledgment letter is placed at Page 549-551 of the Appeal. It is evident from the bare reading of the document that it does not bear the signatures of the Appellant or the Corporate Debtor. Further, the said letter of the Financial Creditor as addressed to the Corporate Debtor is signed by none other than Mr. Birendra Kumar Pasari and not by the other Director of the Corporate Debtor i.e. the Appellant Mr. Birendra Kumar Pasari is using Financial Creditor and he is the ultimate master mind of the entire fraud being committed on the Corporate Debtor. The alleged Loan Document does not have any Board Resolution and authority in favour of Mr. Birendra Kumar Pasari from the Corporate Debtor authorising him to enter into such loan transaction and is thus in contravention of Sec. 166 and Sec. 184 of the Companies Act, 2013, and Duties of Directors and Disclosure of Interest by Directors. A dispute between two set of shareholders has been given a colour of Section 7 petition and the Company/Corporate Debtor is sought to be taken over by appointment of RP.

The Adjudicating Authority got overwhelmed by the fact that the right to file reply of the Corporate Debtor was closed and such order was confirmed till the Hon’ble Apex Court. To bring the facts before the Adjudicating Authority the Appellants filed an I.A. No. 3626/ND/2021 under Section 65 of the IBC. This application was taken on board but was not appreciated by the Adjudicating Authority by holding that applicant cannot be allowed to defend by filing a such application.

Respondent No.3 - Birendra Kumar Pasari was dealing on behalf of Financial Creditor (being Director / Shareholder) and also Corporate Debtor being Director / Shareholder of both. The signed documents make the Financial Creditor an investor for bringing ₹16,00,00,000/- into the company and not a loan. He was acting contrary to the interest of the Corporate Debtor by making and writing letters. As per the term sheet, Respondent No.3 -Birendra Kumar Pasari entered into an agreement of taking equity to the extent of 50% against the money, which is being brought into the company. Having chosen to take equity into the Corporate Debtor, the same amount cannot be claimed back as loan. Therefore, there is no debt in the matter. After the acceptance of shares in terms of the MoU / Terms and Conditions there is no liability or obligation and Financial Creditor - ‘DLIL’ cannot be kept in any of the categories of financial debt under Section 5(8).

Financial Creditor has failed to make out any case of disbursal of any financial debt in consideration for the time value of money. Financial Creditors own ledger fails to provide basis for calculation of the alleged interest as the ledger account from 2012 to 2014 reflects no interest, even though the so called loans have been allegedly disbursed in the year 2012.

Corporate Debtor is a quasi-partnership firm wherein the appellants in the Financial Creditor have equal ownership and voting rights of 50%. The so-called Financial Creditor of the Corporate Creditor is merely a purchaser of equity who brought in funds on terms and conditions of the MoU for the development of the project. The Financial Creditor - ‘DLIL’ and Respondent No.3 - Birendra Kumar Pasari are entitled to the profits of the projects with no repayment obligation by the Corporate Debtor to Financial Creditor - ‘DLIL’ and Respondent No. 3 - Birendra Kumar Pasari.

Against the land parcel which was vested with the Corporate Debtor the two parties were entitled to become the shareholders in exchange for meeting the operational and development cost prior to the sale of the project.

Both the Financial Creditor - ‘DLIL’ and Corporate Debtor had a common Chartered Accountant, who in breach of the MoU acted on the dictates of Respondent No.3 - Birendra Kumar Pasari and made certain entries in the balance sheet of the Corporate Debtor, which do not depict the true understanding. Therefore, it is forged and fraudulent, done at the instance of Mr. Birendra Kumar Pasari and cannot be looked into.

The letter dated 24.03.2013 is a forged document. It is ‘me to me’ document i.e. Made by ‘me-to-me’ document, i.e. made by Birendra Kumar Pasari to serve the interest of Birendra Kumar Pasari. It is also noteworthy that the TDS in the instant case was never deposited by the Corporate Debtor and was actually paid by the Respondent No.1 - ‘DLIL’ itself. It demonstrates fraud being played by Respondent No.1 and Respondent No.3.

The Financial Creditor issued a Demand Notice dated 16.03.2020 to the Financial Creditor recalling the alleged loan. On a bare perusal of the said Notice, it is evident that the Financial Creditor did not mention/ refer about the false loan documents in the said Notice, which according to it were created in 2012. This clearly depicts that the false documents were created after sending the Demand Notice to the Financial Creditor with ulterior motives in order to mislead this Tribunal. The Financial Creditor has stated that the alleged loan was on need basis and has been given over a period of seven years from 2012-2019. Despite such a long period, the Financial Creditor has failed to annex a single request letter/communication from the Corporate Debtor in which the Corporate Debtor is requesting for disbursal of any alleged loan amount addressed to the Financial Creditor. It is pertinent to mention here that Mr. Birendra Kumar Pasari, who was in total control of the Corporate Debtor and the Financial Creditor was aware about the daily financial requirements of the Corporate Debtor and he used to transfer money as per the Terms and Conditions of Development of the Project out of the agreed investment amount of ₹15 Crores upto ₹ 20 Crores.

Adjudicating Authority has placed undue reliance on the closure of the right of the Corporate Debtor to file its reply to the Section 7 petition and rejected Section 65 application without considering the said application on merits. Since only two Directors of the Corporate Debtor remained and Corporate Debtor was not even allowed to defend the Section 7 proceedings initiated malafidely by Respondent No. 1, the ownership and control was with Mr. Birendra Kumar Pasari, who is also 50% shareholder. In view of the terms and conditions - with the development of the project, the Corporate Debtors right to file a reply was closed vide order dated 17.12.2020. Corporate Debtor appealed before this Tribunal against the right to file a reply by the Corporate Debtor, which was dismissed by this Tribunal on 01.02.2021 and by Hon’ble Apex Court vide order dated 29.06.2021. In order to bring the aforesaid facts to light, the appellant had filed an application bearing I.A. No. 3626/2021 under Section 65 of the IBC seeking rejection of the Application under Section 7 against the Corporate Debtor - ‘VBL’.

Section 65 application was required to be heard and adjudicated on merit which was not in this case. From a bare perusal of the Ledger Account annexed by the Financial Creditor, it can be seen that the Financial Creditor has alleged to have transferred odd figures like ₹ 309/- on 26.04.2013, ₹300/-on 06.05.2013, ₹ 723/- on 05.04.2014 and ₹ 1035/- on 06.05.2014, which is not a usual practice undertaken by a NBFC like the Financial Creditor, which clearly shows that the amount transferred was not a loan and was in furtherance of the Terms and Conditions of Development of the Project.

The Financial Creditor has stated that the Corporate Debtor never paid the interest and only deposited the TDS. It is pertinent to mention here that no TDS was paid till the financial year 2015-2016, although the first amount was transferred on 27.08.2012. It is pertinent to mention here that even the TDS amount was deposited by the Financial Creditor itself which is evident from as an amount of ₹ 5,54,122/- has been deposited towards the TDS allegedly by the Corporate Debtor, whereas as per the account’s statements of the Financial Creditor the amount of ₹ 5,54,122/- has been deposited to the Indian Bank TDS account by the Financial Creditor, which clearly depicts that even the TDS was deposited by the Financial Creditor. It is evident from where an amount of ₹ 5,69,442/- dated 30.04.2016 was transferred to the Corporate Debtor whereas as per the account’s statements of the Financial Creditor no such amount is mentioned. This clearly shows that the said amount relates to the TDS paid by the Financial Creditor itself.

Both the Financial Creditor and Mr. Birendra Kumar Pasari in their submissions have mentioned that Corporate Debtor and its Director Mr. Raj Kumar Sahni have delayed the sale of the project. On the contrary on 13.09.2018, which is much before the Demand Notice dated 16.03.2020, Mr. Raj Kumar Sahni who was always working in the interest of company wrote an e-mail addressed to Mr. Birendra Kumar Pasari, informing about the favourable market conditions and calling upon him about right time to sell the project and have better profits, whereas Mr. Birendra Kumar Pasari with ulterior motives never initiated the process of sale of the said project of the Corporate Debtor.

From the written submissions as filed by Mr. Birendra Kumar Pasari, it is evident that his primary objective is initiation of CIRP of the Corporate Debtor and not to provide a tenable defence on behalf of the Corporate Debtor against the vexatious petition file by the Financial Creditor. This is further strengthened by the fact that Mr. Birendra Kumar Pasari chose not to file any reply to the petition u/s 65 filed by Mr Raj Kumar Sahni. (Order dated 05.10.2021 passed by NCLT).

The instant case is clearly not a case falling within the ambit of Section 5(8) of the IBC and thus no petition under Section 7 of the IBC can be filed against the Corporate Debtor herein.

The Financial Creditor herein has failed to make out any case of disbursal of any financial debt. It is clear that even as per the Financial Creditor, there is no date of repayment of the alleged loan. The calculation sheet as provided by the Financial Creditor’s has no basis and there is no clarity as regards the interest paid, interest charged, adjustment made etc. by the Financial Creditor. It is noteworthy that the Financial Creditor’s, own ledger fails to provide for any basis of calculation of the alleged interest as claimed by the Financial Creditor. The ledger account for the year 2012 to 2014 reflects no interest, even though the loans have been allegedly disbursed to the Corporate Debtor in the year 2012.

The calculation sheet of the Financial Creditor reflects inflow and outflow of small amounts indicating the nature of relationship between the Corporate Debtor and the Financial Creditor. The mere reading of the entries establishes beyond doubt the fact that there was no consideration of the time value and money and the transaction was not in the nature having commercial effect of borrowing and thus clearly not a financial debt. The present case is not the case of any default by the Corporate Debtor towards repayment of dues of Financial Creditor herein. The present case is a case wherein as per common practice in the Real Estate sectors, investors fund projects and the realization with profits against the investments only takes place at the stage wherein the project is sold. Thus, the alleged claim of the Sh. Birendra Kumar Pasari through the Financial Creditor herein is premature as the milestone for seeking return of investment with profit has not been reached as yet. Thus, there is no default and in absence of default proceedings under Section 7 of IBC even otherwise not legally tenable.

The above-mentioned facts and circumstances clearly demonstrate the fraud as being played on Sh. Birendra Kumar Pasari thorough the Financial Creditor herein in their attempt to misuse the provisions of IBC to seek unjust enrichment.

The petition u/s 7 of IBC, 2016 had been filed by Respondent No.1 against Corporate Debtor for default in payment of its financial debts, which fell due on 16.03.2020 when Corporate Debtor despite demand failed to repay the loan amount along with interest accrued therein.

During F.Y. 2012-2013 Corporate Debtor approached Respondent No.1 and sought financial needs from time to time as per its requirement to develop its real-estate project at Bahadurgarh, Haryana. The Respondent No.1/ Financial Creditor agreed to provide loan which was repayable on demand -letter cum agreement dated 24.03.2013 at Pg. Nos. 461, 462 is acknowledged by Corporate Debtor. Accordingly, Corporate Debtor over a period of time had availed principal loan amounting to ₹ 14,55,36,849/- from Respondent No.1 during financial year 2012-2013 till 2018-2019. The Corporate Debtor also requested Respondent No.1 to provide margin money as and when required, to the bank, with a view to enable the Corporate Debtor to furnish a bank guarantee in favour of DTCP in order to renew license of Corporate Debtor whereupon Respondent No.1 vide its letter dated 24.09.2012, agreed to provide the same to the bank for the purpose of issuance of BG in favour of DTCP. Accordingly, Respondent No.1 provided margin money [₹2,44,47,000/-and ₹4,25,00,000/- on 27.09.2012 & 21.05.2013 respectively] to enable Corporate Debtor to furnish the BG in favour of DTCP, Haryana to get the license to develop the colony. The Corporate Debtor in the year 2016 applied for migration of its license from group housing colony to affordable plotted colony under Deen Dayal Jan Awas Yojna [in short 'DDJAY'], wherein Corporate Debtor is allowed to sell plots after demarcation. Despite receipt of License. i.e. License No. 41/2018. under DDJAY on 16.06.2018, the Corporate Debtor deliberately not sold its Plots/Project. The validity of licence expires on 15.06.2023.

Respondent No.1 had earlier filed the Insolvency Petition being Co. Pet. (IBC) No. 983/ND/2020 u/s 7 of the Code before AA. The AA issued notice of the said petition to Corporate Debtor on 19.10.2020 and due to non-filing of reply within stipulated time, Tribunal closed the right of Corporate Debtor to file reply on 17.12.2020. The Appellants herein preferred Appeal against the order dated 17.12.2020 before NCLAT being Company Appeal No. 58/2021. The said appeal was dismissed by NCLAT on 01.02.2021. Appellants [herein] on 16.12.2020 preferred an application u/s 60(5) of Code read with Rule 11 of NCLT Rules being CA No. 1/2020 seeking intervention before Ld. AA. The Adjudicating Authority was pleased to dismiss the intervention application on 02.03.2021 [the said fact is being concealed by Appellants from this Tribunal]. Against the said order of NCLAT, Appellants herein preferred a Civil Appeal No. 638/2021 before Hon’ble Apex Court. Apart from taking similar and identical grounds before Hon’ble Apex Court the Appellants, had also taken the grounds as mentioned herein below:

o Hon'ble National Company Law Appellate Tribunal failed to appreciate that the transaction between the Appellant and the Respondent was not a financial debt as per Sec. 5(8) of the IBC, 2016 as there was no consideration for the time value of money.

o Hon'ble National Company Law Appellate Tribunal failed to appreciate that the purpose of the transaction between the Appellant and the Respondent was not loan but investment.

The petition u/s 7 of IBC, 2016 had been filed by Respondent No.1 against Corporate Debtor for default in payment of its financial debts, which fell due on 16.03.2020 when Corporate Debtor despite demand failed to repay the loan amount along with interest accrued therein. Even Hon'ble Apex Court after considering the grounds taken before it [including the grounds mentioned herein above] vide its order dated 29.06.2021 dismissed the said Appeal. The Appellants, to abuse the process of law, again filed Application u/s 65 of Code being CA No. 3626/2021 before Ld. AA on same grounds which were already taken earlier in their Application/Appeals and was dismissed by Learned Adjudicating Authority/Tribunal/Supreme Court. Appellants were barred from raising same objections by way of different application when the same were already been dealt with.

Respondent No.1 further submits that Audited Financials Statement of the Corporate Debtor duly signed by all its directors including Appellants for the financial year commencing from 2012-2013 up till 2016-2017 clearly reflects the loan amount given by R-1 into the account of Corporate Debtor. The Audited Financial Statement of Corporate Debtor clearly indicates the Finance Cost in notes No. 9 of its Audited Financial Statements which was also confirmed in notes to accounts of AS-18 Statement of Corporate Debtor. The audited financial statement of Corporate Debtor reflects interest amount on loan given by respondent No.1 / Financial Creditor in their audited balance sheet. The Audited Financial Statement of Corporate Debtor duly signed by all its director commencing from 2012-13 up till 2016-17 clearly indicates the loan amount disbursed by Respondent No.1 as well as interest accrued therein along with the Bank Guarantee provided by Financial Creditor on behalf of Corporate Debtor. The audited Balance Sheets of Corporate Debtor duly signed by all its directors including Appellant No. 1 clearly indicates the interest component [Finance Cost] on the loan advanced by Financial Creditor. Respondent places its reliance in the Case of Asset Reconstruction Company (India) Ltd. v. Bishal Jaiswal & Anr. (Civil Appeal No. 323 of 2021).

The Appellants in its earlier appeal, i.e Company Appeal No. 58/2021, [Appeal against the closure of right to file reply to the Insolvency Petition] filed before Hon'ble NCLAT had admitted that an amount disbursed by Respondent No.1 shall be treated as 'loan' and the same shall be paid out of the sale proceeds of the project. The Appellants also in its pleadings filed before Apex Court admits that the amount disbursed by Respondent No.1 to Corporate Debtor shall be treated as 'loan'.

As per Section 5(8) of the Code, financial debt means a debt along with interest, if any, which is disbursed against the consideration for the time value of money. In the present case, the loan was disbursed by Financial Creditor against the consideration for the time value of money and additionally, interest component is also there. The letters cum agreement dated 24.09.2012 and 24.03.2013, which constitute the contract, under which loan was advanced. In any event, the loan, its receipt and the consideration for time value is reflected and admitted in the balance sheets and in 26AS form of the Corporate Debtor. It is an admitted position that Respondent No.1 has advanced loan to Corporate Debtor and the same is repayable on demand. It is an admitted position of Appellants herein before NCLAT in Company Appeal (AT) No. 58/2021 that amount disbursed by Respondent No.1 shall be treated as 'loan'. It is also admitted by Appellants herein before the Apex Court that amount disbursed by Respondent No.1 shall be treated as 'loan'. It is further submitted that there is time value of money. Also the outstanding amounts owed by Corporate Debtor to Respondent No.1 are covered under the definition of 'Financial Debt' under Section 5(7) of the Code, and the Financial Creditor is covered under the definition of 'Financial Creditor' under Section 5(8) of the Code.

The Corporate Debtor had even deposited the tax deducted at source at the rate applicable in respect of the interest amount for the relevant financial years up till the financial year 2017-18 and the same is reflected in 26AS. That even the audited Balance Sheets of Corporate Debtor duly signed by all its directors including Appellants herein also reflect the TDS payable on the interest amount.

It is also contended that despite receipt of License under DDJAY [License No. 41/2018] on 16.06.2018 for affordable Plotted Colony and after getting all necessary approvals including sanction plans, Corporate Debtor wilfully not sold its Plots to evade the payment towards its debts.

Respondent No.1 contends that the reliance placed by Appellants on the alleged Terms & Conditions is unwarranted as the same is self-serving, false and fabricated document. The same is based on concocted stories which never existed in the eyes of law.

Parties are not allowed to bring any new documents in an Appeal. Appellants are bound by the pleadings earlier filed by them before Ld. AA/NCLAT/SC. Both the documents at Page No. 94-96 of Appeal & Page No. 12-16 of IA No. 1102/2022 are materially different from each other. Respondent No.1 was not a party to the said document. The grounds taken in present Appeal is nothing but a carbon copy of earlier Appeals which were dismissed. At every stage the Appellants had tried to deny Respondent No.1 its rightful dues.

The Appellant herein Mr. Raj Kumar Sahni, before the Adjudicating Authority while raising objection to the Resolution Plan had taken a categorical stand that Corporate Debtor defaulted in making the repayment of loan to the Financial Creditor / Respondent No. 1 herein, as a result of which Corporate Debtor committed default on 16.03.2020 and the account of Corporate Debtor was declared as NPA on 14.06.2020.

The Appellant in present Appeal has failed to point out any instance of fraudulent or malicious stance of initiating the Insolvency Proceedings by the Financial Creditor. In fact, the material placed, i.e. disbursement details, bank account statement indicating disbursement, ledger statement, audited balance sheet since the financial year 2012-2013 to 2016-2017 and 26AS, on record confirms that Financial Creditor had provided Loan to the Corporate Debtor and the Corporate Debtor acknowledged the same as financial debt and committed default in repayment of the financial debt.

Thus, the Financial Creditor /Respondent No.1 is well within its right of the financial creditor to recall its financial debt from the Corporate Debtor.

Therefore, in the light of the facts and circumstances no grounds has been made out by the Appellants to set aside the order dated 22.02.2022 passed by Learned Adjudicating Authority. Thus, it prays to dismiss the present Appeal filed by Appellants.

In this case Section 7 petition under the Code was filed by the Respondent no1 / Financial Creditor - ‘DLIL’ against the Corporate Debtor -‘VBL’ on 19.10.2020 before the Adjudicating Authority. The Corporate Debtor did not file any reply. The right to file the reply was, therefore, closed by the Adjudicating Authority on 17.12.2020.

Against this order of the Adjudicating Authority, the Appellant namely Mr. Raj Kumar Sahni had filed an Appeal before this Appellate Tribunal vide Company Appeal (Ins) No. 58/2021, which was dismissed on 01.02.2021. The order of this Appellate Tribunal was further challenged by Mr. Raj Kumar Sahni before Hon’ble Apex Court in Civil Appeal No. 638/2021, which was also dismissed by Hon’ble Apex Court on 29.06.2021. It is to be noted that the Appellant had also filed Intervention Application before the Adjudicating Authority - Company Appeal No. 1 of 2020 under Section 60(5) read with Rule 11 of NCLT Rules, 2016, which was also dismissed by the Adjudicating Authority on 02.03.2021.

The Appellant herein had filed a Company Appeal No. 3626/2021 under Section 65 of the IBC Code before the Adjudicating Authority. The Adjudicating Authority, after going into the details of the various appeals of the Appellant, found no merit in the I.A. No.3626/ND/2021. In the impugned order the Adjudicating Authority has noted various appeals filed by the Appellant as follows:

Thereafter, the Adjudicating Authority has come to a conclusion that there is a clear case of debt and default and admitted the Corporate Debtor into insolvency, which is noted as follows:

The Adjudicating Authority, while passing the admission order dated 22.02.2022 as above against the Corporate Debtor, had also dismissed IA No. 3626 of 2021 filed by Appellant herein u/s 65 of the Code seeking rejection of the Insolvency Petition being CP (IB) No. 983 of 2020 filed by Respondent No.1.

While this matter was being heard by this Appellant Bench, for the same Corporate Debtor, the coordinate bench of this Appellate Tribunal was hearing Company Appeal (AT) (Insolvency) Nos. 253-254 of 2024, 256 & 257 of 2024 and 242 & 243 of 2024, which involved the appeals against the orders passed by the Adjudicating Authority in CP No. 983 of 2023, in which the Adjudicating Authority had passed orders for the liquidation of the Corporate Debtor and had rejected the Resolution plan as proposed by the CoC/RP. These Appeals were filed by Resolution Professional (“RP”) of M/s Vibrant Buildwell Pvt. Ltd.; the Committee of Creditors (“CoC”) of Vibrant Buildwell Company Appeal (AT) (Insolvency) Nos. 253-254, 256-257 & 442-443 of 2024 Pvt. Ltd. and Successful Resolution Applicant (“SRA”) of the Corporate Debtor (“CD”) against the same order dated 24.01.2024 in I.A. No.4173 of 2023 filed by Raj Kumar Sahni, Suspended Director and Shareholder of the Corporate Debtor and IA No.5458 of 2022 filed by RP for approval of Resolution Plan. The Adjudicating Authority, had allowed I.A. No.4173 of 2023 accepting the objection raised by Raj Kumar Sahni, Suspended Director and shareholder of the Corporate Debtor and consequently rejected IA No.5458 of 2022 filed by the RP for approval of Resolution Plan. The coordinate Appellate Bench had heard on the impugned order of the Adjudicating Authority for liquidation and it was set aside and resolution plan as proposed/approved by the RP and CoC was approved. The relevant extract of this order are as follows:

From the material on record, it is evident that no party raised the issue of the pendency of this Section 7 Appeal in the other case before the coordinate Bench.

In the above conspectus, when the matter was agitated before Adjudicating Authority, and thereafter in appeal before this Appellate Tribunal and thereafter before Hon’ble Supreme Court and also when the resolution plan has been approved by the coordinate Bench of this Tribunal, this appeal under Section 61 against the impugned order under Section 7 before this Appellate Tribunal becomes infructuous. We can dismiss the Appeal straightaway, but to put to rest all ongoing litigations, we will briefly look into the merits of the case also.

The petition u/s 7 of IBC, 2016 had been filed by Respondent No.1 against Corporate Debtor for default in payment of its financial debts, which fell due on 16.03.2020, when Corporate Debtor despite demand, failed to repay the loan amount along with interest accrued therein. Audited Financial Statement of the Corporate Debtor, duly signed by all its directors including Appellants for the financial year commencing from 2012-2013 up till 2016-2017 are on record, which clearly reflects the loan amount given by Respondent No.1 into the account of Corporate Debtor. In the present case, Financial Creditor had placed material i.e disbursement details, bank account statement indicating disbursement, ledger statement, audited balance sheet of the Corporate Debtor since the Financial Year 2012-2013 to 2016-2017 and 26AS, which confirms that Financial Creditor had provided Loan to the Corporate Debtor and the Corporate Debtor acknowledged the same financial debt and committed default in repayment of the financial debt.

Further Financial Creditor / Respondent No.1 gets support from the case of Asset Reconstruction Company (India) Ltd. v. Bishal Jaiswal & Anr (Civil Appeal No. 323 of 2021), wherein the Hon'ble Apex Court has held that entries in balance sheets will amount to acknowledgement of debt under Section 18 of the Limitation Act, 1963 for the purposes of filing of an Application under Section 7 of the Insolvency and Bankruptcy Code, 2016.

Thus, we find that even on merits, that the debt and default has been established, therefore, there is no merit in the Appeal.

Accordingly, we do not find any infirmity in the orders of the Adjudicating Authority in the CP(I.B.) -983(ND)/2020 and the Appeal is held to be infructuous and also lacks in merit and is therefore dismissed.