Proceedings u/s 7 of IBC not valid when Financial Creditor already Received Pending Amount: NCLAT [Read Order]

In a recent case, the New Delhi bench of the National Company Law Appellate Tribunal (NCLAT)has held that proceedings initiated under section 7 of the Insolvency Bankruptcy Code (IBC), 2016 is not valid when the Financial Creditor already received the Pending Amount.

Girish Maganlal Limbachiya, the Appellant’s case is that in Part IV of the application, the financial creditor had claimed total amount of Rs.1,60,00,000/- toward principal with interest totalling to Rs.2,43,97,659/-. It is submitted that there was no written agreement between the parties to pay interest, and the appellant, during pendency of the proceeding, has offered to pay the entire amount as well as interest i.e. Rs.2,43,97,659/-, which fact has been noticed by the Adjudicating Authority in Para 21 of the impugned order.

It is submitted that the Financial Creditor refused to accept the amount. It is submitted that the amount was offered to be paid by cheques payable within 9 months which the Financial Creditor refused without giving any valid reason, hence, the Adjudicating Authority committed error in admitting Section 7 application.

Counsel for the Appellant submitted that the Appellant is ready to hand over the bank draft for entire amount claimed in Part IV along with the interest totalling to Rs.2,62,00,000/-. Counsel for the appellant submitted that appellant is ready to hand over the bank draft and entire amount claimed in Part IV along with the interest totalling to Rs.2,62,00,000/-.

It is submitted that the appellant had offered before the adjudicating authority which was not accepted, however, they are ready to pay the entire amount by bank draft or by R.T.G.S to the operational creditor within a week. Counsel for the respondent submitted that he shall intimate the bank details by tomorrow.

Counsel for the Financial Creditor submitted that the amount has been received totalling to Rs.2,62,00,000/- by Bank Draft/ RTGS. Counsel for the Financial Creditor submitted that the Appellant has not given TDS Certificate which is required to be given. Counsel for the Appellant submitted that TDS Certificate will be given in due course to the Financial Creditor.

When the Appellant has already offered the entire amount claimed in Part IV, which was refused to be accepted by the Financial Creditor before the Adjudicating Authority, which during pendency of the appeal has already been accepted, and the Financial Creditor has received a total amount of Rs.26,200,000/-, the two-member bench of Chairperson Justice Ashok Bhushan and Barun Mitra, Member (Technical) observed that present is not a case for initiating Section 7 proceeding against the Corporate Debtor.

Support our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates