Rushil Garg vs M/s Revelation Unique Retail And Marketing (P) Ltd.

This is an application filed by Rushil Garg to initiate corporate insolvency resolution process (""CIRP"") against M/s Revelation Unique Retail and

Marketing (P) Ltd. under Section 7 of the Insolvency and Bankruptcy Code 2016 (""the Code"") for the alleged default on the part of the Respondent in

settling an amount of Rs. 18,78,230/- (Principal Amount of Rs.17,88,000/- and Interest of Rs. 50,000/-) paid to the Applicant. The details of

transactions leading to the filing of this application as averred by the Applicant are as follows:

a. That the Managing Director of the Respondent company Mt Anshul Barisal is the first maternal cousin of the Applicant. The applicant alleges that

the Respondent induced him to join the job with the Applicant company.

b. The applicant submits that he joined the Real Estate Company of Mr. Anshul Barisal named Revelation Infra Private Limited on dated 08.08.2017

and later on he was induced to join the Respondent as a paid employee on 03.11.2018. The applicant further alleges that the Managing Director of the

Respondent company fraudulently persuaded the applicant to be a paid Director in the Respondent Company in place of one Mr. Lalit Mohan Gupta

and insisted the applicant to pay Rs. 3,33,334/- on pretext of repaying the same as early as possible. The applicant also alleges that the outgoing

director has neither transferred his share to applicant nor refunded the same despite receiving the same from the applicant.

c. The applicant states that the Respondent used to give credit of salary amount in the Bank account of Applicant from time to time, but later the

Respondent used to ask the applicant to re-transfer the amount in the account of the Respondent. The applicant submits in this very way the

Respondent availed the advance from the applicant.

d. The applicant submits that he left the company and resigned from the Directorship of the Respondent Company on 19.09.2019. The applicant

further submits in the petition that when he left the respondent's Company and resigned from the same, he alleges that the M.D. of the Respondent

Company has tried to get him attacked by some of the Muscle Men. He further submits that the father of the applicant lodged a police FIR bearing

No. 0286 against the said Mr. Ankush Barisal and others on 15.09.2019 with Police Station Taraori, Distt. Karnal.

e. The applicant submits that a demand notice was served vide dated 22.10.2019 to the Respondent in regard to the outstanding debt. It was further

submitted that no reply to the said notice was made by the Respondent nor the outstanding debt was paid.

f. The applicant in the present application's part III Form 1 has submitted the bank statements showing transfer of amount pertaining to date

14.03.2019 to 23.08.2019 made to the Respondent's bank account.

Consequent to the notice issued by this Tribunal, the Respondent filed its reply in which the following contentions are made:

i. The Respondent submits that the present application filed under section 7 of IBC, 2016 is not maintainable as the application is undated, self-

contradictory and without any basis. The Respondent further submits that the said application appears to have been filed against Sh. Ankush Barisal

and not against the Respondent Company as numerous allegations have been made against Ankush Bansal.

ii. The Respondent further submits that there has been no actual disbursement of any amount for consideration for the time value of money as the

disbursement was in relation to issue/allotment of equity shares of the respondent Company, therefore the alleged debt does not fall under the

definition of the Financial Debt as defined under section 5(8) of the IBC, 2016.

iii. The Respondent further states in his reply that the applicant used to withdraw funds from the Respondent company, take petty advances from the

Respondent Company as and when required by the applicant and used to repay the same to the Respondent Company.

iv. The Respondent submits in his reply that the said petition is not maintainable as nothing has been furnished on record to substantiate nature of

advances given by the applicant to the Respondent.

We have gone through the documents filed by both the parties and heard the arguments made by the counsels. The applicant has claimed the

default on part of the Respondent for the amount of Rs. 18,78,230/- (Eighteen Lakhs Seventy-Eight Thousand Two Hundred Thirty Rupees).

Mere plain reading of the provision under section 7 of IBC and decision (supra) shows that in order to initiate CIRP Under Section 7 the applicant is

required to establish that there is a financial debt and that a default has been committed in respect of that financial debt. That while dealing with an

application under section 7 the Adjudicating Authority is not required to consider the other issues like filing of FIR etc., as long as the 'debt' and

'default' is proved.

The Corporate Debtor in his reply to the present petition has submitted that the present application is not maintainable as the same lacks the

pecuniary jurisdiction as the said petition has been filed for the alleged default of Rs. 17,88,000/- however, vide notification dated March, 24, 2020, the

pecuniary limit for filing a petition under the Insolvency and Bankruptcy Code, 2016 has been enhanced to Rs. 1 Crore. This contention of the

Corporate Debtor does not deserve any merit consideration as the present petition has been filed vide dated 03.03.2020, i.e., before the MCA

notification dated 24.03.2020.

Another contention raised by the Corporate Debtor is that there has been no actual disbursement of any amount for consideration for the time value

of money, hence the alleged debt does not fall within the meaning of ""Financial Debt"" as defined under section 5(8) of the IBC, 2016. On a keen

examination in the application and perusal of the documents submitted by the Financial Creditor nothing has been furnished by the Financial Creditor

which can clearly substantiate that the nature of alleged advances was given for a consideration for the time value of money.

In light of the above discussion, after giving careful consideration to the entire matter, hearing the arguments of the parties and upon appreciation of

the documents placed on record to substantiate the claim, this Tribunal Dismiss this petition as the Financial Creditor failed to categorize the said debt

as the ""financial debt"" as defined under section 5(8) of the IBC, 2016.