Srimanta Kumar Tripathy v SS Mining Section 7

AN APPLICATION CANNOT BE FILED UNDER SECTION 7 FOR CIRP WITHOUT ANY REASONABLE CAUSE OF DELAY

FACTUAL BACKGROUND

The case was filed under Section 7 of the Insolvency and Bankruptcy Code, 2016 (hereinafter referred to as “IBC”) by the Petitioner / Financial Creditor for initiation of CIRP against the Respondent / Corporate Debtor for a default of outstanding dues amounting to Rs. 2,74,00,000/-

The case of the Financial Creditor is that-

• The FC filed the present petition against the CD to make payment of an outstanding amount of Rs.2.74 Crores. The FC alleges that it had spent the claim amount pursuant to the MoU signed between the parties on 29.03.2014. The CD after receiving the money did not increase the share capital and the money was shown as unsecured loan according to the financial statement as on 31.03.2014. It is alleged that Rs.74,000/- was paid by the Financial Creditor to the loan account of the Corporate Debtor and the same has not been returned.

The case of the Corporate Debtor is that-

• The MoU executed with the Petitioner on 20.01.2014 by virtue of which the authorised share capital of the company was supposed to be increased from Rs.20 lakhs to Rs.50 lakhs equity shares @ Rs.10/- each and were supposed to be allotted to the Petitioner at a premium of Rs.100/- per share.

• The Respondent submits that the Petitioner after taking over the reins of the company did not involve the deponent and control the entire company. The Respondent came to know about the huge financial losses in the company’s account only after unilaterally resignation of the Petitioner from the post of Director in the year 2017.

• Further, the amount which was syphoned off by the Petitioner are now being repaid by the Respondent. The Petitioner immediately after taking the company into its own hands, started issuing cheques by putting his signature and further control the management of the company and did not allow the Respondent any control in the affairs of the company. They also did not take any steps to get the Share Certificates issued in their favour. The Petitioner having the sole control of the bank accounts of the company, started transferring money to certain firms, which were owned by the Petitioner and his wife.

COURT FINDINGS

The Hon’ble Tribunal noted that the amount of Rs.2 Crores in dispute was transferred on 21.02.2014 to become 50% stakeholders in the Company as is evident from Clause 3 of the MoU dated 29.01.2014 and hence it cannot be considered as a financial debt.

Further, the claim of the Petitioner that the said amount is an unsecured loan as it was mentioned as “unsecured loan from the Director” in the Financial Statement of the company as on 31.03.2014 to which, the Learned Tribunal noted that the amount transferred by the Corporate Debtor in terms of the MoU, nowhere states that it is an unsecured loan.

Furthermore, Clause 3 of the same MoU states about contribution by the Petitioner to the tune of Rs 1.80 crores towards working capital requirements, wages salary to staff and workers, etc. to make the Petitioners at par with the other two Directors of the company. Hence, such contribution or infusion of funds cannot be in any way considered as unsecured loan.

JUDGEMENT

The Learned Tribunal further noted that even if they agree with the submissions of the Petitioner, that Rs.2 crores was spent towards share capital on 21.02.2014 and the other amount to the tune of Rs.74 lakhs was also paid during 05.05.2014 to 22.08.2014 and even if it is considered to be a financial debt, which is not the case here, the Petitioners are unable to provide any justification as to how the same is not barred by limitation as the instant petition has been filed on 07.04.2022 which is almost after eight years.

In light of such arguments advanced and facts presented, the Learned Tribunal dismissed this petition as being hopelessly and grossly barred by limitation.