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2025 Supreme(Online)(NCLAT) 162
NATIONAL COMPANY LAW APPELLATE TRIBUNAL
PRINCIPAL BENCH, NEW DELHI
Company Appeal (AT) (Insolvency) No. 2198 of 2024
&
I.A. No. 8172 of 2024
[Arising out of order dated 30.07.2024 passed by the Adjudicating Authority
(National Company Law Tribunal, New Delhi, Court III, in C.P.(IB)-
229(ND)/2024]
IN THE MATTER OF:
ILD Owners Welfare Association
Through its Authorized Representative,
Sh. Rakesh Kumar Koul
Registered office at: -
ILD Trade Centre,
Sector- 47, Sohna Road,
Gurugram - 122 018
Email ID: ildtcuoa@gmail.com
…Appellant
Versus
M/s. ALM Infotech City Pvt. Ltd.
Registered office at: -
B-418, New Friends Colony,
New Delhi - 110 025
Corporate office at: -
9th Floor, ILD Trade Centre,
Sector-47, Sohna Road,
Gurugram - 122 018
Email ID: cs@ild.co.in …Respondent
Present:
For Appellant : Mr. Sonal Anand, Mr. Aayush Sai and Ms. Surbhi
Singh, Advocates.
For Respondent :
Mr. Sonal Anand, Mr. Aayush Sai and Ms. Surbhi Singh
Payment for maintenance services does not qualify as financial debt under IBC as it lacks disbursal against the time value of money.
Headnote:(A) Insolvency and Bankruptcy Code, 2016 - Section 5(8) - Haryana Apartment Ownership Act, 1983 - Financial debt - Appeal against rejection of Section 7 application for claiming Interest Free Maintenance Security (IFMS) as financial debt - Adjudicating Authority held IFMS does not constitute financial debt, as it is not disbursed against the consideration for time value of money - Appeal dismissed. (Paras 2, 6, 10, 12, 14, 16)
(B) Definition of Financial Debt - The definition requires disbursal against time value of money, which was not established in this case - The nature of the transaction indicated that the amount was for services, not a financial loan. (Paras 10, 12)
(C) Operational Debt - The Tribunal noted that the claim could be categorized as operational debt due to its nature of service provision, thus not qualifying as financial debt under IBC. (Paras 12, 13)
Facts of the case:
The appellant, an owners' association, challenged the rejection of their application for IFMS as financial debt, arguing it was collected for maintenance services. The Adjudicating Authority ruled that IFMS does not meet the definition of financial debt under IBC.
Findings of Court:
The court found that the IFMS was for maintenance services, not a financial debt as it lacked the required disbursal against time value of money.
Issues: The key issue was whether IFMS constitutes financial debt under Section 5(8) of IBC.
Ratio Decidendi: The court emphasized that for a debt to be classified as financial, it must involve disbursal for the time value of money, which was not present in the transaction regarding IFMS.
Result: Appeal dismissed.
ORDER
ASHOK BHUSHAN, J.
This appeal has been filed challenging the order dated 30.07.2024 passed by the Adjudicating Authority (National Company Law Tribunal, New Delhi, Court – III), rejecting Section 7 Application filed by the appellant. Appellant, ILD Owners Welfare Association. Aggrieved by the impugned order has filed this appeal.
2. Brief facts of the case necessary to be noticed for deciding the appeal are:
i. The respondent launched a project by the name ILD Trade Centre at Sector 47, Sohna Road, Gurgaon, in which occupancy certificate was received on 19.11.2010.
ii. Various unitholders booked their respective units on consideration, Builder Buyers Agreement (BBA) was executed and subsequently Conveyance Deed were also executed in favour of the different unit holders in the year 2015 onwards.
iii. Under the Conveyance Deed, unitholders were also required to pay a sum of Rs.100 sq. ft. super area of their respective unit to the respondent towards the Interest Free Maintenance Security (IFMS).
iv. The IFMS was collected towards maintenance of the common area and other common facilities and common area amenities.
v. Completion Certificate was also received on 03.06.2016.
vi. With regard to maintenance, complaints were filed by the unitholders as well as the appellant.
vii. Appellant claim to have taken over the maintenance of the project on 08.09.2022.
viii. On 06.10.2023, appellant sent a demand notice of ₹2.95 Crore to the respondent, the project proponent and thereafter in April 2024 filed an application under Section 7, claiming default of the financial debt.
ix. Adjudicating Authority passed an order on 08.05.2024, directing the appellant to file an affidavit indicating therein that amount in question is a financial debt defined under Section 5(8). In compliance of the order dated 08.05.2024, affidavit was filed by the appellant, where it was pleaded that Conveyance Deed dated 09.12.2015 was executed between the allottees and the corporate debtor. Clause 26 of the Conveyance Deed was relied. Adjudicating Authority heard the appellant and by the impugned order rejected the application under Section 7 holding that the IFMS is not a financial debt, hence the application under Section 7 is not maintainable.
x. Aggrieved by the order, rejecting Section 7 application, this appeal has been filed.
3. We have heard learned counsel for the appellant.
4. Learned counsel for the appellant challenging the impugned order submits that amount in default means to raise a finance by the corporate debtor and clearly falls within definition of financial debt. It is submitted that amount in question is covered by Section 5(8)(f) of the Insolvency and Bankruptcy Code (for short ‘the IBC or ‘the Code’). It is submitted that as per Haryana Apartment Ownership Act, 1983 , responsibility of keep and maintenance of the complex is cast upon the appellant and the financial debt is to be handed over to the appellant. The corporate debtor is not maintaining the project and project is being maintained by the appellant. Hence, the amount which was collected by the corporate debtor towards IFMS was required to be handed over to the appellant for which a demand notice was rightly issued by the appellant. It is submitted that Adjudicating Authority committed an error in rejecting Section 7 application. Judgment relied in the impugned order of Coordinate Bench in the matter of ‘Vipul Green Residence Welfare Association’ Vs. ‘Vipul Limited’ is distinguishable.
5. We have considered the submissions of counsel for the appellant and perused the record.
6. From the facts as pleaded in the appeal, it is clear that present is a case where Conveyance Deed has already been executed in favour of the unitholders and the appellant has demanded the amount of IFMS from the corporate debtor, which was to be deposited as per Clause 26 of the Conveyance Deed by the allottees towards maintenance of common area services, installation, common passage, etc. Only question which needs to be
