Without Proof Of Disbursement No Financial Debt Can Be Claimed: NCLT Mumbai Reiterates

Background Facts

In 2018, Mr. Sudhir T Deshpande ("Financial Creditor") had filed a petition under Section 7 of IBC, seeking initiation of Corporate Insolvency Resolution Process ("CIRP") against Dhanada Corporation Limited ("Corporate Debtor") for a default of Rs. 23,22,23,222/- as on 30.09.2018.

The Financial Creditor claimed that Rs. 4,61,00,000/- was disbursed to the Corporate Debtor by Mr. Sudhir and his family members on his behalf, as an investment in the Corporate Debtor. The said amount was payable along with further interest @ 19% p.a. from 01.10.2018.

On 28.01.2011, the Director of the Corporate Debtor had sent an email stating that the Financial Creditor would be paid an amount of Rs. 7,07,92,646/- on the date of maturity i.e. on 31.12.2011. However, no payments were received.

The Financial Creditor claimed that in order to partly discharge the debt, the Corporate Debtor had issued various cheques aggregating to Rs. 2,20,00,000/-, which were returned as dishonoured. The Bank statements reflecting the payments by and on behalf of Financial Creditor were placed on record.

Contentions Of Corporate Debtor

The Corporate Debtor submitted that the Financial Creditor has not demonstrated any claim, debt or default and has neither produced any evidence to prove the existence of the claim.

Further, the debt is time barred as amounts were due in 2011 and the petition has been filed in 2018 and in the meanwhile there was no acknowledgment of debt by the Corporate Debtor.

Decision Of NCLT

The Bench held that the debt is barred by limitation. It was further observed that the copies of the cheques placed on record by the Financial Creditor as payment proof, were issued from the personal account of one Mr. Ramesh Havele in his personal capacity. Therefore, the said cheques are not a proof of evidence of any liability owned to the Corporate Debtor.

"Further, the working computation for arriving at the aforesaid amount is baseless and the rate of interest applied is in absence of any valid document or agreement and hence not binding. Financial Creditor has not established that the money was disbursed to the Corporate Debtor and hence the question of default on the part of the Corporate Debtor does not arise. Without proof of disbursement, the said amount cannot be claimed as financial debt, as a disbursement is a sine qua non for any debt to fall within the ambit of the definition of financial debt."

The Bench placed reliance on NCLAT judgment in Dr. B.V.S Laxmi v Geometrix Laser Solution Private Limited [2018] 142 CLA 321, wherein it was held:

"30. In the present case, the Appellant has failed to bring on record any evidence to suggest that she disbursed the money has been made against 'consideration for the time value of money'. There is nothing on the record to suggest that the Respondents borrowed the money. In absence of such evidence, the Appellant cannot claim that the loan if any given by the Appellant comes within the meaning of 'financial debt' in terms of sub-section (8)(a) of Section 5 of the 'I & B Code".

Accordingly, the Bench rejected the petition.

Case Title: Sudhir T Deshpande v Dhanada Corporation Limited

Case No.: CP (IB) 4671/MB/2018

Counsel For the Petitioner: Mr. Pulkit Sharma

Counsel For the Respondent: Mr. Sahil Salvi

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