National Company Law Appellate TribunalK.S. Sreenivasan vs Landmark Housing Projects (India) Pvt. ... on 24 November, 20201\n\n\n\nNational Company Law Appellate Tribunal, New Delhi\n            Company Appeal (AT) (Ins) No. 97 of 2020\nIN THE MATTER OF:\n\nK.S. Sreenivasan,\nNo. 47/1, Sadullah Street,\nT. Nagar, Chennai - 600017                                   ...Appellant\n\nVs.\n\nLandmark Housing Projects (India) Pvt. Ltd.\nNo. 7, Saravana Street, T. Nagar,\nChennai - 600017                                             ...Respondent\n\nPresent:\nFor Appellant: Mr. Kumar Anurag Singh, Mr. DeveshTripathi, Ms. Anasuya\n               Choudhury, Advocates\nFor Respondent: Mr. R. Balasubramaniam, Senior Advocate. Mr. Kumar\n                 Dushyant Singh and Mr. Mukul Lather, Advocates.\n\n\n\n                              JUDGEMENTJarat Kumar Jain. J:The Appellant, Mr. K.S. Sreenivasan has preferred the instant\n\nAppeal under Section 61 of the Insolvency and Bankruptcy Code, 2016\n\n(In Short I&B Code) against the impugned order of dismissal of the\n\nApplication under Section 7 of the I&B Code, filed by him, claiming to be\n\na Financial Creditor.2.1   The Corporate Debtor (Respondent herein) Landmark Housing\n\nProjects (India) Pvt. Ltd. is engaged in the business of Real Estate\n\nDevelopment. The Corporate Debtor and the Financial Creditor (Appellant\n\nherein) entered into an agreement for sale on 03.04.2015. The Corporate\n\n\n\nCompany Appeal (AT) (Ins) No. 97 of 20202Debtor has agreed to sell 1,89,299 sq. ft. of saleable area in Schedule 'A'\n\nproperty described in Schedule 'B' (in short saleable area) @ pre-launch\n\nprice of Rs. 3,000/- per sq. ft. at the time of signing of this agreement,\n\nthe Financial Creditor has paid a sum of Rs. 5 lacs by way of cheque\n\ndated 03.04.2015 and freeze saleable area. The Financial Creditor agreed\n\nto pay the balance amount in stages together with other charges to the\n\nCorporate Debtor as per the progress of the project namely TORRENCE.\n\nIt is also agreed between the parties that the Corporate Debtor shall\n\nrepurchase the entire saleable area @ of Rs. 4,535/- per sq. ft. at any\n\ntime as may be desired by the Financial Creditor. The schedule for\n\npayment payable by the Corporate Debtor to the Financial Creditor on\n\nbuy back shall be as follows:-Sl.       Buy-back              On       or    Surrendering       Schedule\n No.       amount in Rs.         before date    extent in sq.      property\n                                                ft.\n\n 1.        10,01,98,660.00       22.02.2016     65276.00           B\n 2.        10,01,76,645.00       22.08.2016     65276.00           B\n 3.        9,01,76,645.00        22.02.2017     58747.00           B\n           29,05,73,965.00\n\n\n\n2.2    It is also agreed that ones the Financial Creditor desires that theCorporate Debtor shall buy back the entire saleable area all the\n\nobligations of the Financial Creditor for any further stage payments under\n\nthis agreement shall cease. As per the agreement, the Financial Creditor\n\nhas absolute right to assign, sell, dispose off or alienate saleable area to\n\nany third party/parties at any price.Company Appeal (AT) (Ins) No. 97 of 202032.3   The Corporate Debtor subsequently issued three cheques for the\n\ndifferential amount i.e. Rs. 1,535 per sq. ft. corresponding to each buy\n\nback date 22.02.2016, 22.08.2016 and 22.022017 respectively for the\n\namount of Rs. 10,01,98,660/-,10,01,98,660/- and 9,01,76,645. It is\n\nalleged that the Corporate Debtor made repeated requests not to deposit\n\nthe cheques and trust him to repay the entire amount in due time.\n\nHowever, the Corporate Debtor has not made any payment.\n\n2.4   Thereafter, the Financial Creditor issued a legal notice dated\n\n13.02.2019 to the Corporate Debtor demanding the financial debt which\n\nwas due and payable. After a prolonged discussion between the Corporate\n\nDebtor and the Financial Creditor, the Corporate Debtor vide letter dated\n\n07.02.2019 acknowledged the total debt amount of Rs. 29,05,73,965/.\n\nEven though the Corporate Debtor has not paid the outstanding amount\n\nto the Financial Creditor. Therefore, for the financial debt of Rs.\n\n29,05,73,965/- with interest @ 12.5% per annum, the Financial Creditor\n\nhas filed an Application under Section 7 of the I&B Code, for initiation of\n\nCorporate Insolvency Resolution Process (CIRP) against the Corporate\n\nDebtor.3.    The Corporate Debtor has resisted the Application and contended\n\nthat the Financial Creditor has not paid the balance price of saleable area\n\namounting to Rs. 56,73,97,000/- to the Corporate Debtor. The Financial\n\nCreditor has admittedly paid only a sum of Rs. 5 lacs. The Financial\n\nCreditor has claimed Rs. 29,05,73,965/- as financial debt. Such amount\n\n\n\n\nCompany Appeal (AT) (Ins) No. 97 of 20204never disbursed to the Corporate Debtor. Therefore, in the Application no\n\ndate of disbursement as well as date of default is mentioned.4.    After hearing Learned Counsel for the parties, the Adjudicating\n\nAuthority held that the Financial Creditor has disbursed only a sum of\n\nRs. 5 lacs as against the agreed sum to be disbursed under the buyback\n\nagreement i.e. Rs. 56,78,97,000/-. However, the Financial Creditor has\n\nclaimed for a sum of Rs. 29,05,73,965/- which was never disbursed to\n\nthe Corporate Debtor. The Financial Creditor has not fulfilled his\n\nobligation under the agreement to disburse a balance sum of Rs.\n\n56,73,97,000/- to the Corporate Debtor, therefore, the Corporate Debtor\n\nis not obliged to perform his reciprocal promise of buying back the\n\nsaleable area from the Financial Creditor. Thus, the Financial Creditor\n\nhas failed to satisfy that a sum of Rs. 29,05,73,965/- can be considered\n\nas a financial debt. Being aggrieved with this order the Financial Creditor\n\nhas filed this Appeal.5.    Learned Counsel for the Appellant submitted that under the\n\nagreement for sale dated 03.04.2015, the Appellant acquired two options\n\nbut not the obligation. Option 'A' the right but not the obligation to buy\n\nthe saleable area at a pre-launch price of Rs. 3,000 per sq. ft. and Option\n\n'B' the right but not the obligation to sell back the saleable area to the\n\nRespondent @ Rs. 4,535 per sq. ft. The Appellant invoked Option 'B'.\n\nClauses 9&10 of the said agreement for sale are non-obstante clauses,\n\ntherefore, these clauses have overriding effect on clause 2 of the\n\nagreement, that to purchase saleable area @ 3,000 per sq. ft.\n\n\n\nCompany Appeal (AT) (Ins) No. 97 of 202056.    Learned Counsel for the Appellant submitted that the Appellant\n\nhas acquired absolute right to sell the saleable area to any party at any\n\nprice. Taking advantage of upside fluctuation in the market price, the\n\nAppellant sold and the Respondent bought the said rights from the\n\nAppellant and promise to pay in three instalments a differential price (Rs.\n\n4535 - Rs. 3,000) Rs. 1,535 per sq. ft. x 1,89,299 sq. ft. = 29,05,73,965/-\n\n. Thus, the financial debt of Rs. 29,05,73,965/- was due and payable to\n\nthe Appellant by the Respondent. For the same, the Respondent issued\n\nthree cheques dated 22.02.2016, 22.08.2016 and 22.02.2017 for the total\n\nsum of Rs. 29,05,73,965/-. The Respondent vide its letters dated\n\n22.02.2017 & 07.02.2019 categorically acknowledged the liability, such\n\ntransaction constitutes a financial debt under Section 5 (8) (g) of the I&B\n\nCode. An acknowledgement of liability must involve an admission of\n\nsubsisting jural relationship between the parties. A conscious affirmation\n\nof an intention of continuing such relationship in regard to an existing\n\nliability. For this purpose, placed reliance on the Judgment of the Hon'ble\n\nSupreme Court in the case ofJ.C.Budhraja Vs. Chairman Orisha Mining\n\nCorporation Ltd.(2008) 2 SCC 444.7.    Learned Counsel for the Appellant further submitted that the\n\nRespondent had issued aforesaid three cheques that itself is an\n\nadmission on the part of the Respondent of the debt owed towards the\n\nAppellant and as per theSection 118of the Negotiable Instrument Act,\n\nuntil the contrary is proved, there shall be a presumption that negotiable\n\ninstrument was drawn for consideration. Moreover, in terms of Section\n\n\n\nCompany Appeal (AT) (Ins) No. 97 of 20206139 of theNI Act, it shall be presumed unless the contrary is proved that\n\nthe holder of cheque, received the cheque for the discharge in whole or in\n\npart of any debt or liability. The Respondent has not produced any\n\ndocumentary evidence against these presumptions.8.      Learned Counsel for the Appellant submitted that under the sale\n\nagreement dated 03.04.2015, the Appellant has initially paid Rs. 5 lacs\n\nto the Respondent and thereby fulfilled the obligation of payment and\n\nadmittedly, there is disbursal of money. The Adjudicating Authority\n\nerroneously entered into deciding the quantum of debt which is beyond\n\nthe scope ofSection 7of the I&B Code. For this he placed reliance on the\n\nJudgment of this Appellate Tribunal in the Case of Mr. Gouri Prasad\n\nGoenka Vs. PNB Company Appeal (AT) (Ins) No. 28 of 2019.This Appellate\n\nTribunal in the case ofDr. B.V.S. Lakshmi Vs. Geometrics Laser\n\nSolutions Pvt. Ltd. Company Appeal (AT) (Ins) No.38 of 2017 held that it\n\nis not necessary to show that an amount has been actually disbursed to\n\nthe Corporate Debtor. The disbursement against the consideration for the\n\ntime value of money is the main factor. Thus, a financial debt arose out\n\nof a derivative transaction benefiting from fluctuation in market price, in\n\nterms ofSection 5 (8) (g)of the I&B Code. Thus, in the instant case the\n\ntransaction is a financial debt as defined underSection 5(8) (g)of the I&B\n\nCode.9.      Learned Counsel for the Appellant also submitted that the Learned\n\nAdjudicating Authority has fell into error in holding that the agreement\n\nto sell is a reciprocal contact or a contingent contract. The transaction\n\n\n\nCompany Appeal (AT) (Ins) No. 97 of 20207under the agreement is not a transaction to purchase saleable area and\n\nhence, fulfilment of reciprocal promises does not arise. It is further\n\nsubmitted that the Adjudicating Authority or this Appellate Tribunal\n\nunder the I&B Code will not go into the aspects of the veracity of the\n\nagreement, It's breach, void or voidable etc. The Adjudicating Authority\n\nis not a Civil Court to decide the breach of contract between the parties.\n\nAs held by this Appellate Tribunal in the case of M/s Saregama India Ltd.\n\nVs. M/s Om Movie Makers Pvt. Ltd. Company Appeal (AT) (Ins) NO. 359\n\nof 2019.10.   It is also submitted that the Appellant has satisfied that the\n\ntransaction is a financial debt and the Appellant is a Financial Creditor\n\nand has also satisfied that there is a debt payable in law and a default on\n\nthe part of the Respondent (Corporate Debtor). In such a situation, the\n\nAdjudicating Authority is left with no option but to admit Application\n\nunderSection 7of the I&B Code, for initiation of CIRP. For this purpose,\n\nplaced reliance on the Judgment of this Appellate Tribunal in the case of\n\nRanveer Ranjit Vs. M/s Vijay R. Vakharia and Ors. Company Appeal (AT)\n\n(Ins) No. 646 of 2018.11.   Per contra learned counsel for the Respondent submitted that\n\nclause 2 of the agreement for sale provides that the Appellant shall have\n\nto purchase the saleable area @ of Rs. 3,000 per sq. ft. amounting to Rs.\n\n56,78,97,000/- once the amount is paid to the Respondent then the\n\nRespondent by exercising, the option of repurchase has to pay @ Rs.\n\n4,535 per sq. ft. amounting to Rs. 85,84,70,965/-. The Appellant has\n\n\n\nCompany Appeal (AT) (Ins) No. 97 of 20208admittedly paid only a sum of Rs. 5 lacs and he has not paid balance\n\nprice of the saleable area. The Appellant is claiming a financial debt\n\namounting to Rs. 29,05,73,965/- however, in the Application, date of\n\ndisbursement of a financial debt as well as the date of default is not\n\ndisclosed as this amount was never disbursed to the Respondent. The\n\nAdjudicating Authority has rightly held that under the buyback\n\nagreement, the Appellant ought to have fulfilled his promise at first and\n\nsince, he has not fulfilled his promise, the Respondent is not obliged to\n\nperform his reciprocal promise of buy back saleable area.12.   It is further submitted on behalf of the Respondent that for\n\nsecuring the differential amount between the pre-launch price and buy\n\nback price amounting to Rs. 29,05,73,965/-. The Respondent gave three\n\ncheques to the Appellant. Thus, this amount is not a financial debt.13.   It is also contended on behalf of the Respondent that this\n\nagreement does not reflect the real transaction between the parties and\n\nthe Appellant is guilty of suppression of material facts. The Appellant and\n\nthe Respondent have had commercial relationship from the year 2006.\n\nThe agreement for sale in question and several other agreements which\n\nhave been filed by the Respondent are suppressed by the Appellant.14.   Learned Counsel for the Respondent submitted that this Appellate\n\nTribunal in the case of M/s Saregama India Ltd. Vs. M/s Om Movie\n\nMakers Pvt. Ltd. Company Appeal (AT) (Ins) No. 359 of 2019 held that the\n\nAdjudicating Authority has a duty to inquire as to whether the debt is\n\npayable in law or in fact. There is no statutory presumption in favour of\n\n\n\nCompany Appeal (AT) (Ins) No. 97 of 20209a Financial Creditor, whereby, on a mere presentation of an Application\n\nunderSection 7of the I&B Code, the CIRP can be initiated. In the present\n\ncase, the Appellant has failed to satisfy the Adjudicating Authority about\n\nthe existence of financial debt, date of disbursement and so also date of\n\ndefault. Therefore, the Appeal is liable to be dismissed.15.   After hearing Learned Counsel for the parties we have perused the\n\nrecord, following issues are crop up for our consideration.(i) Whether the agreement to sell is not a reciprocal or\n\n           contingent contract?(ii) Whether the differential amount between the pre-\n\n           launch price and buy back price amounting to Rs.29,05,73,965/- is a financial debt underSection 5(8) (g)of the I&B Code?(iii) Whether the Adjudicating Authority cannot consider\n\n           the disbursement and the quantum of the debt?Issue No. 1Whether the agreement to sell is not a reciprocal or contingent\n\n      contract?16.   The Appellant and the Respondent entered into agreement to sell\n\non 03.04.2015, this is an admitted document. According to the Appellant\n\nas per clause 4 of the agreement the Appellant paid Rs. 5 lacs and under\n\nclause 9 of the agreement acquired the absolute right to assign, sell,\n\ndispose off or alienate the saleable area to any 3rd party at any price.\n\nAccording to the Appellant the clauses 9 and 10th of the agreement have\n\n\n\nCompany Appeal (AT) (Ins) No. 97 of 202010overriding effect on clause 2 of the agreement that to purchase saleable\n\narea @ of Rs. 3,000 per sq. ft. and the agreement stipulates two options\n\n'A' the right but not the obligation to buy saleable area at a pre-launch\n\nprice of Rs. 3,000 per sq. ft. and option 'B' the right but not the obligation\n\nto sell back the saleable area to the Respondent @ of Rs. 4,535/- per sq.\n\nft. The Appellant opted option 'B'. Thus, the Appellant has no obligation\n\nunder the agreement.17.   we have examined the terms and conditions of the agreement to\n\nknow the intention of the parties. When we read the agreement as a\n\nwhole it is manifestly clear that the agreement is a buy back agreement.\n\nBuy back means first the Appellant buy the saleable area as per clause 2\n\nof the agreement and pay price as per clause 4 and 5 then the Respondent\n\nshall buy back the saleable area as per clause 6. The Respondent assured\n\nthe Appellant that Respondent will repurchase the entire saleable area at\n\na higher price of Rs. 1,535/- per sq. ft. i.e. assured return amounting to\n\nRs. 29,05,73,965/-. For securing this amount the Respondent issued\n\nthree cheques in favour of the Appellant.18.    We are unable to convince with the argument of the learned\n\ncounsel for the Appellant that after payment of Rs. 5 lacs the Appellant\n\nacquired the absolute right to assign, sell, alienate the saleable area to\n\nany 3rd party to any price. This agreement does not stipulate two options\n\nthat without paying the balance price as per clause 5 the Appellant\n\nacquired the right to sell back the saleable area to the Respondent @ of\n\nRs. 4535/- per sq. ft. it cannot be said that clauses 9 and 10 have\n\n\n\nCompany Appeal (AT) (Ins) No. 97 of 202011overriding effect on such a manner that clause No. 2, 3 and 5 became\n\nredundant. Thus, we hold that the agreement consists of reciprocal\n\npromises and the Appellant has not fulfilled his obligation under the\n\nagreement.Issue No. 2Whether the differential amount Rs. 29,05,73,965/- is a\n\n          financial debt?19.   In the Application, the Appellant has shown financial debt Rs.\n\n29,05,73,965/-, however, the Appellant has not disclosed the date of\n\ndisbursement of the amount and the date of default.20.   According to the Appellant, the Respondent has issued three\n\ncheques for the amount of Rs. 29,05,73,965/-, and acknowledged the\n\ndebt in letters dated 22.02.2017 and 07.02.2019. Thus, this amount is\n\nfinancial debt. To show that there is a debt due which was disbursed\n\nagainst the consideration for time value of money, it is not necessary to\n\nshow that an amount has been disbursed to the Corporate Debtor. A\n\nperson can show that the disbursement has been made against the\n\nconsideration for time value of money through any instrument.      Thus,\n\na financial debt arose out of a derivative transaction benefiting from\n\nfluctuation in the market price, hence, this amount is financial debt\n\nunderSection 5(8) (g)of the I&B Code. For this purpose, cited the\n\nJudgment of this Appellate Tribunal in the Case of Dr. BVS Lakshmi\n\n(Supra)\n\n\n\n\nCompany Appeal (AT) (Ins) No. 97 of 20201221.   We have considered the submissions of Learned Counsel for the\n\nAppellant in the light of the Judgment of this Appellate Tribunal in the\n\ncase ofDr. B.V.S Lakshmi(Supra) in para 29 of this Tribunal held as\n\nunder:-"For coming within the definition of financial debt as defined\n       under sub-section (8) ofsection 5, the claimant is required to\n       show that there is a debt alongwith interest, if any which has\n       been disbursement and such disbursement has been made\n       against the consideration for the time value of money.\n       Thereby, if the claimant claims to be Financial Creditor he will\n       have to show that debt is due which he has disbursed against\n       the consideration for the time value of money and that the\n       borrower has raised the amount directly or through other\n       modes like credit facility or its dematerialised equivalent, note\n       purchase facility or the issue of bonds, notes debentures, loan\n       stock or any other similar instrument. The amount of any\n       liability in respect of any lease or higher purchase contract\n       which is deemed as a finance or capital lease under the Indian\n       Accounting Standards or such other Accounting Standards\n       can also be referred to buy the creditor to claim that there is\n       a financial debt due even which has been disbursed against\n       the consideration for the time value of the money.\n       "To show that there is debt due which was disbursed against\n       the consideration for the time value of money, it is not\n       necessary to show that an amount has been disbursed to the\n       Corporate Debtor. A person can show that the disbursement\n       has been made against the consideration for the time value of\n       money through any instrument. For example, for any\n       derivative transaction entered into in connection with\n       protection against or benefit from fluctuation if any rate or\n       price and for calculating the value of any derivative\n       transaction for which only the market value of such\n       transaction shall be taken into account, it is not necessary to\n       show that amount has been disbursed. The disbursement\n       against the consideration for the time value of money is the\n       main factor."22.   In the present case, the Appellant has failed to bring on record any\n\nevidence to suggest that he disbursed Rs. 29,05,73,965/- to the\n\nRespondent which has been made against the consideration for the time\n\n\n\nCompany Appeal (AT) (Ins) No. 97 of 202013value of money. In the agreement, there is no such term or condition to\n\ninfer that the transaction in question may be a derivative transaction.\n\nThus, it cannot be held that the transaction is a financial debt as defined\n\nunderSection 5 (8) (g)of the I&B Code. Admittedly, this is buy back\n\ntransaction and as contemplated bySection 5 (8) (f)may or may not be\n\nregarded as financial transaction for this purpose, we would like to refer\n\nthe decision of this Appellate Tribunal inNikhil Mehta and Sons (HUF)\n\nVs. AMR Infrastructure Ltd. C.A. (AT) (Ins) No.7/2017 in which vide\n\nnotice sub-Section (8) ofSection 5of the I&B Code observed: -"17. The first question arises for consideration is as to who\n       is a 'Financial Creditor'. Learned Adjudicating Authority, for\n       determination of the aforesaid issue examined the definition\n       provided inSection 5 (7)and5(8)and in the impugned\n       judgement rightly observed: - "12. A perusal of definition of\n       expression 'Financial Creditor' would show that it refers to a\n       person to whom a Financial debt is owed and includes even\n       a person to whom such debt has been legally assigned or\n       transferred to. In order to understand the expression\n       'Financial Creditor', the requirements of expression 'financial\n       debt' have to be satisfied which is defined inSection 5(8)of\n       the IBC. The opening words of the definition clause would\n       indicate that a financial debt is a debt along with interest\n       which is disbursed against the consideration for the time\n       value of money and it may include any of the events\n       enumerated in sub-clauses (a) to (i). Therefore, the first\n       essential requirement of financial debt has to be met viz. that\n       the debt is disbursed against the consideration for the time\n       value of money and which may include the events\n       enumerated in various sub-clauses. A Financial Creditor is a\n       person who has right to a financial debt. The key feature of\n       financial transaction as postulated bysection 5(8)is its\n       consideration for time value of money. In other words, the\n       legislature has included such financial transactions in the\n       definition of 'Financial debt' which are usually for a sum of\n       money received today to be paid for over a period of time in a\n       single or series of payments in future. It may also be a sum\n       of money invested today to be repaid over a period of time in\n       a single or series of instalments to be paid in future. In\n       Black's Law Dictionary (9th edition) the expression 'Time\n\n\nCompany Appeal (AT) (Ins) No. 97 of 202014Value' has been defined to mean "the price associated with\n       the length of time that an investor must wait until an\n       investment matures or the related income is earned". In both\n       the cases, the inflows and outflows are distanced by time and\n       there is a compensation for time value of money. It is\n       significant to notice that in order to satisfy the requirement\n       of this provision, the financial transaction should be in the\n       nature of debt and no equity has been implied by the opening\n       words ofSection 5(8)of the IBC. It is true that there are\n       complex financial instruments which may not provide a\n       happy situation to decipher the true nature and meaning of\n       a transaction. It is pertinent to point out that the concept\n       'Financial Debt' as envisaged underSection 5(8)of the IBC is\n       distinctly different than the one prevalent in England as\n       provided in its Insolvency Act, 1986 and the 'Rules' framed\n       thereunder. It appears that in England there is no exclusive\n       element of disbursement of debt laced with the consideration\n       for the time value of money. However, forward sale or\n       purchase agreement as contemplated bySection-5 (8)(f)may\n       or may not be regarded as a financial transaction. A forward\n       contract to sell product at the end of a specified period is not\n       a financial contract. It is essentially a contract for sale of\n       specified goods. It is true that some time financial\n       transactions seemingly restructured as sale and repurchase.\n       Any repurchase and reverse repo transaction are sometimes\n       used as devices for raising money. In a transaction of this\n       nature an entity may require liquidity against an asset and\n       the financer in return sell it back by way of a forward\n       contract. The difference between the two prices would imply\n       the rate of return to the financer." (See Taxman's Law\n       Relating to IBC, 2016.) (Emphasis supplied)23.   In the present case, the Appellant has not fulfilled his obligation\n\nunder the agreement, therefore, the amount claimed cannot be termed as\n\nfinancial debt as defined underSection 5(8)(f)of the I&B Code.24.   Now, we have considered the letters dated 22.02.2017 and\n\n07.02.2019. The Respondent had issued a cheque amounting to Rs.\n\n9,01,76,645/- and vide letter dated 22.02.2017 sent to the Appellant.\n\nThereafter, on 07.02.2019 the Respondent sent a letter to the Appellant\n\n\n\n\nCompany Appeal (AT) (Ins) No. 97 of 202015stating that the Respondent had issued three cheques towards\n\ncompensation for surrender of right of purchase of the Appellant.25.   Bare reading of this letter it is clear that the Respondent has issued\n\nthree cheques towards the compensation for surrender of right of\n\npurchase amounting to Rs. 29,05,73,965/-. This amount was not\n\ndisbursed against the consideration for the time value of money.\n\nTherefore, cannot be considered as a financial debt as defined underSection 5 (8)of the I&B Code.26.   There is no quarrel with the proposition as held by this Appellate\n\nTribunal in the case of Ranveer Ranjit (Supra) that once the Financial\n\nCreditor is able to satisfy the Adjudicating Authority that there is a debt\n\npayable in law and a default on the part of the Corporate Debtor, whether\n\nfrom record of default recorded with the information utility or other\n\nevidence, the Adjudicating Authority is left with no option but to admit\n\nthe Application underSection 7of the I&B Code. In the present Case, the\n\nAppellant has failed to satisfy the Adjudicating Authority that there is a\n\nfinancial debt payable in law or in fact and also failed to satisfy a default\n\non the part of the Respondent (Corporate Debtor).27.   This Appellate Tribunal in the case ofAnil Kumar Vs. Rakesh CA\n\n(AT) (Ins) No.35 of 2019 held that if an allottee does not pay the full\n\namount, cannot allege default on the part of the Corporate Debtor. We\n\ncan say with this analogy that if the Financial Creditor under the buyback\n\nagreement does not pay the full agreed consideration to the Corporate\n\nDebtor cannot allege default on the part of the Corporate Debtor.\n\n\n\nCompany Appeal (AT) (Ins) No. 97 of 202016Issue No. 3Whether    the    Adjudicating   Authority   cannot    consider   the\n\n      disbursement and the quantum of debt?28.   Learned Counsel for the Appellant cited the Judgment of this\n\nAppellate Tribunal in the case ofDr. BVS Lakshmi(Supra) and submitted\n\nthat it is not necessary to show that an amount has been disbursed to\n\nthe Corporate Debtor.29.In the case ofDr. BVS Lakshmi(Supra) in para 29 (Please see Para\n\n21 of the Judgment) it is held that disbursement of the amount is not\n\nnecessarily made to the Corporate Debtor but it may be shown that the\n\ndisbursement has been made against the consideration for the time value\n\nof money through any instrument. It is also held that the disbursement\n\nagainst the consideration for the time value of money is main factor.\n\nThus, the observations made in aforesaid Judgment is not helpful to the\n\nAppellant.30.   Learned Counsel for the Appellant placed reliance on the\n\nobservations made by this Appellate Tribunal in the case of Gouri Prasad\n\nGowenka (Supra) in which it is held that "in so far as joining of issue by\n\nthe Corporate Debtor qua the quantum of payable debt is concerned,\n\nsame does not fall for consideration of the Adjudicating Authority at the\n\nstage of admission of the Application underSection 7of the I&B Code."31.   In Gouri Prasad Goenka's case: - there was no controversy as\n\nregards facts qua advancement of loan and allied financial facilities to the\n\nCorporate Debtor falling within the purview of the financial debt, the\n\n\n\nCompany Appeal (AT) (Ins) No. 97 of 202017status of parties before the Adjudicating Authority as Financial Creditor\n\nand Corporate Debtor besides the admitted position as regards default in\n\nclearing the outstanding amount of debt, which according to the\n\nFinancial Creditor stood at Rs. 273,09,68,793/- as on 31.03.2018. In the\n\ninstant case, it is not admitted fact that the amount claimed in the\n\nApplication underSection 7of the I&B Code is a financial debt and the\n\nRespondent committed default. The Adjudicating Authority has not\n\ndecided the quantum of payable debt. Thus, the finding of Gouri Prasad\n\nGoenka (Supra) case is not helpful to the Appellant.32.      With the aforesaid, the Appellant is miserably failed to prove that\n\nany financial debt is due and payable in law or in fact and the Respondent\n\ncommitted the default. We agree with the findings of the Learned\n\nAdjudicating Authority and affirmed the impugned order.Accordingly, the Appeal is dismissed.    However, no order as to\n\ncosts.[Justice Jarat Kumar Jain]\n                                                            Member (Judicial)\n\n\n                                                             [Balvinder Singh]\n                                                           Member (Technical)\n\n\n                                                                  [V.P.Singh]\n                                                           Member (Technical)\n\n\n\nNew Delhi\n24th November, 2020.SC\n\n\n\n\nCompany Appeal (AT) (Ins) No. 97 of 2020