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2025 Supreme(Online)(NCLT) 5160
NATIONAL COMPANY LAW TRIBUNAL
Shri. Prabhat Kumar, Member (Technical), Shri. Sushil Mahadeorao Kochey, Member (Judicial)
Asset Reconstruction Company (India) Limited – Appellant
Versus
Mr. Sanjay Vijay Jeswani, Interim Resolution Professional – Respondent
C.P.(IB) No. 762 OF 2024
For the Applicant: Mr. Navroz Seervai
For the Respondent: Mr. Amir Arsiwala
For debts to qualify as financial debt under Section 5(8) of the Insolvency and Bankruptcy Code, direct disbursement to the corporate debtor is essential; mere mortgage does not suffice.
Headnote:(A) Insolvency and Bankruptcy Code, 2016 - Section 60(5) - Definition of Financial Debt - The tribunal ruled that the Applicant's claim does not constitute financial debt as the corporate debtor did not directly receive disbursal from the loans secured by mortgages provided by the Applicant - The role of the corporate debtor was merely as a guarantor without a personal obligation to pay, contrary to statutory definitions - The claims were rejected based on the absence of direct loan disbursement to the corporate debtor, classifying the debts instead as other secured debts. (Paras 9, 12, 54)
Facts of the case:
This case involves an Application filed by an Asset Reconstruction Company seeking to admit a claim rejected by the Interim Resolution Professional. The substantial claim was in relation to loans made to other entities under the same corporate group, not to the corporate debtor itself.
Findings of Court:
The tribunal found no merit in the Applicant's claim for financial debt as no funds had been disbursed to the corporate debtor directly, and thus, the claims did not meet the essential definition outlined in the Code.
Issues: The main issues were whether the Applicant’s claims qualified as financial debt under Section 5(8) and whether the corporate debtor stood as a guarantor for debt without actually being liable.
Ratio Decidendi: The tribunal emphasized that the absence of direct disbursement to the corporate debtor was crucial; therefore, the Applicant could not be classified as a financial creditor despite having a secured interest.
Result: Application dismissed.
| Table of Content |
|---|
| 1. corporate debtor's insolvency application procedures (Para 1 , 2 , 3) |
| 2. applicant’s claim and rejection (Para 4 , 5 , 6 , 7) |
| 3. respondent's defense and legal precedents (Para 8 , 10 , 11) |
| 4. definition and interpretation of financial debt (Para 9 , 12 , 13 , 14 , 15 , 16) |
| 5. requirements for debt qualifying as financial debt (Para 17 , 18) |
| 6. contractual obligations in types of security (Para 19 , 20 , 21 , 22 , 23) |
| 7. examination of loan agreements and mortgages (Para 24 , 28 , 29 , 30 , 31 , 32 , 33) |
| 8. final decision and dismissal of application (Para 54 , 55 , 56) |
ORDER
1. This Application IA 1864 of 2025 is filed in C.P. (IB) 762 (MB) 2024 by Asset Reconstruction Company (India) Limited, a Creditor, (“Applicant”) in the Corporate Insolvency Resolution Process (“CIRP”) of Xrbia North Hinjewadi Developers Private Limited (“Corporate Debtor”) under Section 60 (5) of the Insolvency and Bankruptcy Code, 2016 (“Code”) read with Rule 11 of National Company Law Tribunal Rules, 2016 seeking following reliefs
a. That this Hon’ble Tribunal be pleased to allow the present application;
b. That this Hon’ble Tribunal be pleased to direct the Respondent to verify and admit the claim of the Applicant to the INR 1279,92,52,271/- (Indian Rupees Twelve Hundred Seventy-Nine Crores Ninety-Two Lakhs Fifty-Two Thousand Two Hundred and Seventy One Only), which was rejected vide email dated 30' January 2025 by the Respondent, as a financial debt;
c. That in light of the conduct of the Respondent herein, this Hon’ble Tribunal be pleased to remove and replace the Respondent in light of the manner in which he has conducted the present corporate insolvency resolution process and appoint Mr. Birendra Kumar Agarwal as the Resolution Professional in the present matter or any other competent Resolution Professional this Hon’ble Tribunal may deem fit;
d. In the event that prayer(c) is not granted, this Hon’ble Tribunal be pleased to appoint an external auditor to assist the Resolution Professional for verifying claims of Creditors who shall verify the claims of each creditor who has filed their claims in the present Corporate Insolvency Resolution Process;
e. That pending the hearing and final disposal of the present Application, this Hon’ble Tribunal be pleased to stay the Corporate Insolvency Resolution Process in respect of the Corporate Debtor;
f. That pending the hearing and final disposal of this Application, this Hon’ble Tribunal be pleased to restrain the Respondent from implementing any decision taken by the present CoC;
g. That pending the hearing and final disposal of the present Application, this Hon’ble Tribunal be pleased to direct that no further CoC meetings be held in the present Corporate Insolvency Resolution Process and the voting share of the Applicant is revised accordingly;
h. Alternatively, pending the hearing and final disposal of the present Application, this Hon'ble Tribunal be pleased to direct the Respondent to give appropriate notice of the meetings of Committee of Creditors of the Corporate Debtor to the Applicant;
i. Alternatively, pending the hearing and final disposal of the present Application, this Hon'ble Tribunal be pleased to allow the Applicant to attend the meetings of Committee of Creditors of the Corporate Debtor:
j. Ad interim reliefs in terms of clause (e) to (i) above.
k. Any such further Order (s) as this Hon'ble Tribunal may deem fit in the facts and circumstances of the present case.
2. The CIRP process commenced on 2nd January, 2025 in the case of Corporate Debtor and the Respondent, Mr. Sanjay Vijay Jeswani was appointed as the Interim Resolution Professional to carry on the CIRP process, and continuing as Interim Resolution Professional (“IRP/Respondent”).
3. The Applicant is an Asset Reconstruction Company (India) Ltd. incorporated under the Companies Act, 1956 and is registered as an Asset Reconstruction Company which carries on the business of asset reconstruction under Section 3 of the Securitizati
