Anant Jain & Anr vs Kaushambi Paper Mills Pvt. Ltd
- CitationCompany Appeal (AT) (Insolvency)No. 1400 of 2019
Ratio decidendi
The rule this decision rests on
A creditor who advances money to a corporate debtor without the disbursement being made against the payment of interest, or raised under any credit facility, or for an equivalent amount, does not fall within the definition of "financial debt" in Section 8(5) of the Insolvency and Bankruptcy Code, 2016, and is therefore not a "financial creditor" entitled to initiate corporate insolvency resolution process under Section 7; such a creditor is an unsecured creditor and an application under Section 7 by it is liable to be rejected.
Written by Miss Lucy from the judgment below, not taken from a headnote.
Judgment
As delivered
IN THE MATTER OF: Anant Jain & Anr. .....Appellants Vs. M/s. Kaushambi Paper Mills Pvt. Ltd. ......Respondent
Present : For Appellant: Mr. Himanshu Tyagi, Mr. Ayush Negi, Advocates
O R D E R
04.12.2019 - The Appellants one of them a Director of M/s Kaushambi Paper
Mills Pvt. Ltd. filed an application u/s 7 of the Insolvency & Bankruptcy Code, 2016
('I&B' Code, for short) for initiation of 'Corporate Insolvency Resolution Process'
against the aforesaid 'Corporate Debtor'. The Adjudicating Authority('National
Company Law Tribunal') Principal Bench, New Delhi by impugned order dated 1st
November, 2019 rejected the application on the stand that Appellants do not come
within the meaning of 'Financial Creditors'.
Learned Counsel for the Appellant submits that the Appellants have
disbursed loan to the 'Corporate Debtor' which has also been accepted by the
....contd.
2
Corporate Debtor' and the Adjudicating Authority. However, the 'Corporate Debtor'
has not borrowed the money against payment of interest nor raised the amount
under any credit facility or for its equivalent amount thus the disbursal does not
come within any of the Clause of Sub-Section (5) of Section 8 which defines
'Financial Debt'.
In this background, Appellants not being a 'Financial Creditor' and only
'Unsecured Creditor', the application u/s 7 of the 'I&B' Code filed by them was rightly
rejected by the Adjudicating Authority.
The appeal is accordingly dismissed. No costs.
[Justice S. J. Mukhopadhaya] Chairperson
[ Justice Bansi Lal Bhat ] Member (Judicial)
[Justice Venugopal M.] Member (Judicial)
ss/sk
Company Appeal (AT) (Insolvency)No. 1400 of 2019
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