R. Varadharajan, Member - (1.) This is an application which has been filed by the Applicants under the provisions of Insolvency and Bankruptcy Code, 2016 who claim to be the Financial Creditors of the Respondent company which has been termed as the Corporate Debtor. The transaction leading to filing of the present Application as reflected in the list of dates and events is stated to be as under:- (i) On 16.8.2010 based on the representation of the Corporate Debtor it is claimed by the Financial Creditors that they have initially invested a sum of Rs. 10.00 lakhs towards provisional registration in relation to the project promoted by the Corporate Debtor named as "IERO FIVERIVER" Consequent to the above booking, on 18.5.2011 a provisional plot allotment letter for Type C, Plot No. P-62, measuring 502.32 sq. yard was issued to the Financial Creditors and the Financial Creditors paid a further sum of Rs.15,11,600/- on being allotted the said plot. On 27.6.2011, upon payment of 25% of the basic sale price, Plot Buyers' Agreement was entered into between the Financial Creditor and the Corporate Debtor. Further payment, it is claimed by the Financial Creditor, was made on 18.5.2015 in a sum of Rs.21,19,627/-, on 13.9.2015 in a sum of Rs.21,75,674/- and further on 31.3.2016 a payment of Rs.21,97,649/- was made. Despite the above payments made towards the plot allotted, since the Corporate Debtor had failed to fulfill its obligations under the agreement entered into between the parties, the Financial Creditor through letter dated 10.11.2016 sought for the repayment of the Principal amount along with penal interest at the rate of 15% in view of the nonfulfillment of obligations on the part of the Corporate Debtor. (ii) Subsequent to the above letter dated 10.11.2016, a Settlement Deed dated 15.2.2017, it is claimed had been executed by the Corporate Debtor and the Financial creditor wherein the Corporate Debtor agreed to repay a sum of Rs. 1,16,05,751/-along with interest at the rate of 9% per annum with effect from the date of respective deposits till actual payments in full and final settlement of the claims and in relation to the repayment it is averred by the Financial Creditor that cheques were issued including post dated cheques. Even though in relation to cheque dated 14.2.2017 drawn on Kotak Mahindra Bank Ltd. for Rs.13,80,977/- issued in favour of the Financial Creditor was honored by the Corporate Debtor but the subsequent cheques bearing No.003591 and 003592 both dated 13.8.2017 drawn on Kotak Mahindra Bank Ltd. for Rs.14,36,162/- and Rs. 14,36,161/- in favour of the Financial Creditors was not honored and the same was returned by the bankers for the reason "insufficient funds". The above dishonor of cheque it is averred by the Financial Creditors was duly communicated to the Corporate Debtor vide email sent on 18.8.2017 and even though the said email was acknowledged, the Corporate Debtor had failed to discharge amounts in default and in the circumstances this Petition.
(2.) After due service of notice it is seen from the records of this Tribunal that the Corporate Debtor had entered appearance on 10.10.2017 on which date an opportunity was given by this Tribunal to the Corporate Debtor to file its reply to the Application as filed by the Financial Creditor.
(3.) Perusal of the reply shows that the Corporate Debtor has taken the contention that the applicants are not Financial Creditors in the first place and the debt cannot be categorized as a financial debt as defined under the provisions of Insolvency and Bankruptcy Code, 2016 (for brevity IBC,2016) and in the circumstances, the Application itself is not maintainable and it Is further contended that in order to maintain the Application under Section 7 of IBC,2016, the Applicants are required to establish or qualify under Section 5(7) of IBC,2016 as a Financial Creditor and that the requirement of expression 'financial debt' as defined under Section 5(8) of IBC,2016 is required to be satisfied. It is also contended that the deduction of tax deducted at source under Section 194A of the Income Tax Act, 1961 in relation to interest paid by the Corporate Debtor does not in any way change the status of the Applicants/Financial Creditors from a Flat Buyer to a Financial Creditor. It is also pointed out that deduction of TDS is a statutory obligation and that the Income Tax Act, 1961 does not make a classification as to the payment of interest, namely, as interest on borrowed capital, interest on refund etc. and to rely on the deduction of income tax in relation to the interest payment by the Financial Creditors in order to establish that the debt owed is a financial debt, is not given. Reliance is also placed on the Settlement Deed dated 15.2.2017 by the Corporate debtor to state that no where has the Applicants herein have been classified as Financial Creditors and the Respondent herein as the Corporate Debtor and that the parties did not have any intention to classify themselves as such. It is also contended that proper notice has not been served upon the Corporate Debtor, as mandated under the provisions of IBC,2016 and the Attendant Rules. Taking into consideration all the above, it is the submission of the Corporate debtor that this Application is liable to be dismissed with costs.;