Case Title:- N.C. Goel & Maya Goel v. Piyush Infrastructure India Private Limited
The National Company Law Tribunal, Allahabad while dealing with a section 7 application under the Insolvency and Bankruptcy Code, held that presumptions drawn under Section 118 and Section 139 of the Negotiable Instruments Act, 1881, are rebuttable and therefore, issuance of post-dated cheques cannot be said to be an unqualified admission of debt.
The brief facts of the case are that the Financial Creditors had lent a total amount of Rs 12,00,000/- at an interest rate of 18% p.a., to the Corporate Debtor. The Respondent paid total interest amounting to Rs.18,000/- to the Applicants till 04.06.2016 and subsequently issued Post-dated cheques for repayment of the principal amount, starting from 15.01.2018 to December 2018. The problem began when the first cheque got dishonoured on 23.01.2018 and no payments were received after that.
It is the contention of the Respondents that they never paid any interest to the Applicants and that transactions in default pertain to 2012 to 2014 and are therefore barred by limitation. It was further submitted that since no interest was payable on the principal amount, the same cannot be said to be a financial debt u/s 5(8) of the Code. It was further also stated that the post-dated cheques were never present for their encashment and the Applicants are now concocting a false story to put the Respondents in bad light before this Hon’ble Tribunal.
The Applicants however vehemently rebutted the above-stated submissions made by the Respondents and it was submitted that a complaint under Section 138 of the Negotiable Instruments Act, 1881, had been preferred against the Respondents in respect of the dishonoured cheques, and the same is pending adjudication. The cheques were dishonoured in 2018 and the application is filed well within the limitation.
The Hon’ble Tribunal observed that it may be correct that the loan was extended between 2011-2016 but without any documentation, the date of default cannot be determined. It was further held that Section 118 and Section 139 of the Negotiable Instruments Act are rebuttable, and issuance of post-dated cheques does not ipso facto mean an unqualified admission of debt.
It also held that "In summary jurisdiction, without adequate documentation, it is difficult to establish the purpose for which the money was lent and accepted. It is also not possible to establish whether there was any interest required to be paid. The time value of money is an important factor to be considered in order to establish whether this is a financial debt. Ex facie, this appears to be a petition which has been filed for recovery of money and not for resolution of the corporate debtor. The Insolvency & Bankruptcy Code, 2016, should not be allowed to be used as an easy way of recovery of money."