Shubhlaxmi Investment Advisory Private Limited vs Sai Industries Limited

PER: SH. L. N. GUPTA, MEMBER (T)

The present petition has been filed by Shubhlaxmi Investment Advisory Private Limited (for brevity, the ‘Applicant/ Financial Creditor’) under Section 7 of the Insolvency and Bankruptcy Code, 2016 read with Rule 4 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016 with a prayer to initiate the Corporate Insolvency Resolution Process against M/s Sai Industries Limited (for brevity, the ‘Respondent’).

The Respondent namely, M/s Sai Industries Limited is a Listed Company incorporated on 16.09.1991 with CIN L74999DL1991 PLC045678 under the provisions of the Companies Act, 1956 having its registered office at 302, 3^RD Floor, C-2/4 Community Centre Ashok Vihar Phase-2, New Delhi-110052, which is within the jurisdiction of this Tribunal. The Authorized Share Capital of the Respondent Company is Rs.5,00,00,000/- and Paid-up Share Capital is Rs.2,96,759/- as per the Master Data.

It is stated by the Applicant that in 2022, the Respondent approached the Applicant for business assistance of Rs.1,04,00,000/- @ 10% rate of interest. The Applicant has further averred that, after considering the request (it) “..agreed to pay a sum of Rs. 1,04,00,000/-. And accordingly transferred a sum of Rs.20,00,000/- through Cheque/RTGS on 20.12.2022, further a sum of Rs.30,00,000/- was transferred on 21.12.2022, further purchased securities worth Rs.29,00,000/- from Financial creditor on 31.12.2022 and further a sum of Rs.25,00,000/- was transferred on 03.01.2023 in the bank account by the Corporate Debtor maintained @ 10% interest per annum.” Both parties also entered into a Mutual Loan Agreement and when the Respondent failed to pay back the loan amount, as per the terms and conditions, a legal notice was sent to the Respondent to recall the Loan, but the Respondent failed to comply with the same.

The particulars of the total unpaid financial debt and the date of default as mentioned in Part IV of the application are reproduced below:

Thus, as per Part IV of the Application, the Applicant has claimed a debt of Rs.1,06,34,000/- as on 31.03.2023 (including principal amount of Rs.1,00,00,000/- along with unpaid accumulated interest @ 8.25% per annum along with penal interest @ 2% per annum as on 16.01.2023 and Miscellaneous Expenses) and relied on 02.05.2022 as the ‘date of default’.

To prove the existence of financial debt, the Applicant has relied on the following documents:

ii) A Copy of Balance/Amount Conformation statement.

iii) A Copy of Legal notice dated 29.04.2023

iv) A Copy of letter dated 30.09.2022 issued by the Applicant.

Basing on the aforesaid facts and documents, the Applicant has prayed for initiation of CIRP against the Respondent.

On issuance of the notice, the Respondent filed its reply and has admitted its liability towards claim of the Applicant.

During the hearing on 14.09.2023, the Ld. Counsel for the Respondent again admitted the debt. In the backdrop, the parties were directed to file affidavits stating that the Petition is not a collusive one and the parties are not related with each other.

In compliance of the aforesaid directions, both parties filed their respective affidavits stating that the Petition is not a collusive one and they are not related with each other.

From the record it is noticed that the Applicant vide its affidavit dated 22.10.2023 has averred that RBI vide its press release dated 10.12.2018 had cancelled the Certificate of Registration of the CD as NBFC and currently, the CD is not an NBFC. Further, according to the Ld. Counsel for the Applicant, the present loan amount was disbursed to the respondent in the year 2020, whereas the NBFC license of the CD was cancelled by the RBI in the year 2018 itself.

The Respondent, in its reply as well as during hearing, has admitted the claim of the Applicant. However, we would like to examine whether there is an unpaid Financial debt subsisting over the threshold limit for which the CIRP could be initiated against the Respondent and whether the Section 7 Application is complete in all respects.

The transactions for which the Applicant has filed the present Section 7 Application is stated to be a loan advanced in 04 tranches by the Applicant to the Respondent. The details of the disbursements made by the Applicant to the Respondent, as provided, reads thus:

With respect to the amount of Rs. 29,00,000/- appearing at serial no.(iii), it has been stated by the Applicant in Part IV of its Application that securities were purchased from the Applicant of the aforesaid amount by the Respondent on 31.12.2022. This fact indicates that the amount of Rs.29,00,000/- is not arising out of the alleged Loan transaction. To examine the genuineness of the transaction and find more particulars of the transaction about purchase of Securities of Rs.29,00,000/-, we visit the Legal notice dated 29.04.2023 (on record) issued by the Applicant Company to the Respondent, which reads thus:

On perusal of the aforesaid legal notice, we find that the amount of Rs.29,00,000/- alleged to have arisen on account of purchase of securities from the applicant as per part IV of the application, has been treated as a part of the Loan Transaction and there are no particulars provided or mentioned regarding the alleged purchase of securities.

The Applicant has also annexed the Bank Statements to depict disbursements of alleged loan amount to the Respondent. We would therefore like to visit the Bank statement to find any trace of the transaction of Rs.29,00,000/-. The banks statements annexed by the Applicant are reproduced overleaf:

On perusal of the bank statement (ibid), we find no trace of the alleged transaction of Rs.29,00,000/-. Hence, we find no document on record which supports the claim of the Applicant of Rs.29,00,000/-towards the Respondent. Further, the Applicant has not mentioned what type of securities were purchased by the Respondent, how much amount was paid, whether any allotment was made, and how the Applicant is claiming a default committed by the respondent towards the security. All these material facts/particulars have not been disclosed by the Applicant. In view of the above, the said amount of claim i.e. towards Rs.29,00,000/- as a Debt is not free from doubts.

If this amount of Rs.29,00,000/- is ignored/excluded from the total amount claimed by the Applicant, the Applicant fails to meet the minimum threshold limit of Rs one Crore prescribed under Section 4 of IBC, 2016. Hence, we are of the considered view that the present Application is not maintainable in terms of Section 4 of IBC, 2016.

Further, in Part-III of the Application, the Applicant has suggested the name of Mr. Tanveer Ilahi as the proposed IRP. However, the Applicant has annexed the consent in Form-II of Mr. Mohd Nazim Khan. Hence, the proposal regarding the name of IRP is not clear.

Nevertheless, the Application is not meeting the minimum threshold limit, the question of going into the appointment of IRP is obviated.

In the sequel to the above, the Application is dismissed being barred by Section 4 of IBC, 2016.