Based on the provided legal document, a bank that has given a home loan to an allottee can indeed be considered a financial creditor. Here is the reasoning based on the text: Definition of Financial Creditor: A financial creditor is defined as a person to whom a "financial debt" is owed. A financial debt is described as a debt along with interest, if any, which is disbursed against the consideration for the time value of money. This category explicitly includes individuals such as debenture holders and fixed deposit holders, alongside banks and financial institutions (!) (!) . Status of Home Buyers vs. Banks: The document distinguishes between the allottee (home buyer) and the bank. While the allottee is treated as a financial creditor vis-à-vis the real estate developer because their advance payments have the commercial effect of a borrowing, the bank is a separate entity. The bank lends money to the allottee for the purpose of purchasing the flat. In the relationship between the bank and the allottee, the bank is the lender and the allottee is the borrower (!) . Tripartite Agreement Context: In a tripartite agreement involving a developer, an allottee, and a bank (where the bank finances the purchase), the bank's claim against the allottee arises from the loan advanced for the time value of money. Therefore, the bank fits the definition of a financial creditor owed a financial debt by the allottee. The document notes that allottees who have taken loans from banks are distinct from those who have used their own finances, but in both cases, the bank remains a financial creditor of the allottee (!) (!) . Committee of Creditors: If the corporate debtor (developer) goes into insolvency, the bank, as a financial creditor, is entitled to be represented in the Committee of Creditors. If the allottees are also financial creditors of the developer, they may be represented by an authorized representative, but the bank retains its independent status as a financial creditor of the allottee (!) (!) . In summary, the bank is a financial creditor of the allottee because it has advanced money against the consideration for the time value of money, regardless of the tripartite arrangement with the developer.

Pioneer Urban Land and Infrastructure Limited vs Union of India

Judicial Analysis Court Copy Headnote Facts Arguments Court observation

2019 Supreme(SC) 843

R.F.NARIMAN, SANJIV KHANNA, SURYA KANT
Pioneer Urban Land and Infrastructure Limited – Appellant
Versus
Union of India – Respondent

Advocates Appeared:
For the Petitioner(s):Abhishek Manu Singhvi, Nikhil Nayyar, Pritha Srikumar Iyer, Mansi Binjrajka, Neha Mathen, Vasudha Sharma, Azeem Samuel, Bharat Bhushan Parsoon, Manpreet Kaur, Naresh Bakshi, Shovit Singh, Sonam Priya, Vivek Kumar, Sumesh Dhawan, Vatsala Kak, Rajat Malhotra, Sunil Malhotra, Pritha Srikumar Iyer, Neha Mathen, Vikas Tiwari, Sunil Prakash Sharma, Rakesh Kumar-I, Joby P. Varghese, Abhinav Ankit, Nipun Malhotra, Jitendra Kumar, P. V. Yogeswaran, Rishi Kapoor, Ashish Kumar Upadhyay, Karthik Bhardwaj, Neeraj Kishan Kaul, Devanshu Sajlan, Deepak Joshi, Sanyat Lodha, Akash Lamba, Pranaya Goyal, Nikhil Ranjan, Abhishek Sharma, Apoorva Kaushik, Harsit Sanwal, Janmejay Verma, Viveka Nand Singh, Abhishek Sharma, S. K. Verma, Reeva Gujaral, M. R. Shamshad, Aditya Samaddar, Sarah Haque, Udit Arora, Sanjay Kumar Tyagi, B. Vijayalakshmi Menon, Pulkit Deora, Udit Gupta, For M/s. Udit Kishan and Associates, Archana Pathak Dave, Piyush Kant Roy, Kunal Chatterji, Mohit Singh, Elisha Srivastava, Paridhi Dixit, Manasi Chatpaliwar, Yash Kumar. Adv. Mr. Alok Dhar, Varsha Banerjee, Ashu Kansal, Stuti Vatsa, Milan Singh Negi, T. V. S. Raghavendra Sreyas, Mrigank Prabhakar, Nitin Wadhwa, Abhishek Nag, Jeetender Gupta, Sanchar Anand, Atul K. Sinha, Neeraj K. Sharma, Devendra Singh, Zorawar Singh, Vivek Kishore, Sanyat Lodha, Sanjana Saddy, Ambuj Agarwal, Swati Chowdhary, Anindita Mitra, Yadav Narender Singh, Senthil Jagadeesan, Abhimanyu Bhandari, Nattasha Garg, Arav Pandit, Aashima Singhal, Roohina Dua, Cheitanya Madan, Somesh Tiwari, Ahmed Said, Naveen Kumar, Syed Mehdi Imam, Mrs. Bina Gupta, Sheena Taqui, Kshitij Vaibhav, Kanishka Prasad, Prem Prakash, Ujjal Banerjee, Sameer Abhyankar, Shekhar Kumar, Tejas Patel, Rakesh K. Sharma, Raj Kamal, D.K. Sharma, Gaurav Kejriwal, Gaurav Chaudhry, Gaurav, Kaushik Poddar, Surbhi Mehta, Neeraj Kishan Kaul, Devanshu Sajlan, Deepak Joshi, Akash Lamba, P. N. Puri, Vivek Sibal, Rahul Sharma, Yash Patel, P.N. Puri, Vikas Tiwari, Dharmendra Kumar Sinha, Raju Sonkar, Charu Ambwani, Garima Goel, Aakanksha Nehra, Aditi Pundhir, Abhishek Agarwal, Shilpa Chohan, Rajesh Singh, Vivek Jain, Suchitra Kumbhat, Rajat Joseph, Mayank Pandey, Abhinav Agrawal, Rajesh Kumar, Ninad Laud, Ananyaa Mazumdar, Neeraj Matta, Joel, Abhimanyu Bhandari, Ranjeeta Rohatgi, Natasha Garg, Arav Pandit, Aashima Singhal, Roohina Dua, Cheitanya Madan, Somesh Tiwari, Ahmed Said, Pradeep Aggarwal, Adv Mr. Lal Pratap Singh, Umesh Pratap Singh, Ram Ugrah Singh, V. Nagpal, Arjun Aggaral, Ruchi Kohli, Rameshwar Prasad Goyal, Anurag, Ankur Prakash, Arvind Dattar, Jayant Bhushan, Amar Gupta, Daksh Ahluwalia, Manish Jha, Pallavi Kumar, Adhiraj Gupta, Divyam Agarwal, Puneet Singh Bindra, Simran Jeet, Sanampreet Singh, Abdhesh Chaudhary, Mukesh Tripathi, Manisha Suri, Sakshi Arora, Apurva Bharadwaj, Pramod Rai, Om Prakash Shukhla, Radha Gupta, Harish Pandey, Chirag M. Shroff, Mahima C. Shroff, Sanchit Garga, Sriram P., Gopal Sankaranarayanan, Sumeer Sodhi, Aman Nandrajog, Aarzoo Aneja, Shreya Nair, Kunal Vajani, Manek Singh, Ridhima Juneja, Amitabh Sinha, Arjun Nanda, Ashish Tiwari, Sherick Dhingra, Keshav Mohan, R.K. Awasthi, Prashant Kumar, Santosh Kumar - I, Abhay Kumar, Saurabh Mishra, Vineet Kr. Singh, Mahesh Agarwal, Rishi Agrawala, Parminder Singh, Ankur Saigal, Aastha Mehta, Nishant Rao, Shruti Arora, Sanam Tripathi, Simranjit H. Virk, E. C. Agrawala, Shivendra Dwivedi, Rajesh Mahale, Saurabh Mishra, Krishna Dev Jagarlamudi, Simranjeet Singh, Gautam Talukdar, Rohan Ahuja, Aadhar Nautiyal, Rhea Dube, Rohit Sharma, Ram Mohan, Atul Sharma, Abhishek Sharma, Ashly Cherian, Purva Kohli, Tanvir Nayar, Praful Sinha, Prashant Singh, Akshay Sharma, Vandana Sehgal, Rajat Sehgal, Sinha Shrey Nikhilesh, Swastik Verma, Sumit Sinha, Nayan Dubey, Tushar Singh, Narender Hooda, Simranjeet Singh, Surender Singh Hooda, Pooja Dhar, Sanjeev Kumar, Prashant Katara, Rohit Mehra, Debasis Misra, M.P. Parthiban, Rajesh P., Manoranjan Sharma, Prashant Jain, Kumar Mihir, Mohit Chaudhary, Puja Sharma, Anup Kumar Mishra, Kunal Sachdeva, Garima Sharma, Sristhi Gupta, Balwinder Singh Suri, For M/s. Kings And Alliance LLP, Inderanil Ghosh, Palzer Moktan, Sampurna Sanyal, Arushi Arora, Gaurav Singh, Satish Kumar, Pranab Prakash, Narender Singh Yadav, M/s. Mitter & Mitter Co., Ashutosh Jha, Ashutosh Gupta, Vijay Kumar, R.C. Sharma, R.P. Chhibber, Kamakshi S. Mehlwal, Ritin Rai, Sonia Dube, Kanchan Yadav, Anurag Singh, Harshita Verma, Surbhi Anand, For M/s. Legal Options, Saurabh Trivedi, For M/s Corporate Legal Partners, Advocates
For the Respondent(s):K.K. Venugopal, Attorney General for India Tushar Mehta, SG Madhavi Diwan, ASG Mr. Rajat Nair, Rajan Kumar Chourasia, Rajiv Ranjan, Chinmayee Chandra, Shraddha Deshmukh, Kanu Agrawal, D.L. Chidanand, Raj Bahadur, Arvind Kumar Sharma, Shantwanu Singh, Pragya Singh, Kunal Aganpal, A. Venayagam Balan, V. Elanchezhiyan, Salim Inamdar, Pragya Baghel, Ravi Shehgal, Tejas Sanghrajka, Sunil Fernandes, Nupur Kumar, Zeeshan Diwan, Darpan Sachdeva, Sujata Kurdukar, Rashi Bansal, P. Niroop, Chandan Kumar, Manoj C. Mishra, Shohit Chaudhry, Mrs. Anil Katiyar, R. Balasubramanian, B. Karunakaran, Mohd. Tabish Zia, Anirudh, S. Gowthaman, Neha Malik, Vaibhav Kumar, Narendra Kumar, Rajiv Kumar Sinha, Radhika Gautam, Priyanka Arora, Ravindra S. Garia, Kumar Dushyant Singh, Abhishek Anand, Devavrat, Krishna Kumar, Mridula Ray Bharadwaj, Vikas Mehta, Apoorv Khator, Rajesh Goyal, Dilpreet Singh, Mayank Goel, Gaurav Goel, Awanish Sinha, Naresh Kaushik, Vardhman Kaushik , Nishant Gautam, Neeraj Khapra, Rahul Sharma, Ritesh Kumar, Atul Sharma, Nidhi Mohan Parashar, Soayib Qureshi, Devansh Jain, Arjun Singh Bhati, S. Janani, (Mrs.) Vipin Gupta, Vaibhav Manu Srivastava, Satyajit A. Desai, Anagha S. Desai, Vipul Ganda, Astha Sharma, Dimple Nagpal, Pramod Dayal, Annam Venkatesh, Rahul Mishra, A. Sharma, Bharat Arora, Pramit Saxena, Amit Gaurav Singh, Priyanjali Singh, Rahul Joshi, Sagar Kumar Pradhan, Saket Aggarwal, Vedant Singh, Nikilesh Ramachandran, Navdeep Jain, Aakash Choudhary, Sunil Dalal, S.S. Ray, Rakhi Ray, Amit Agrawal, Aanchal Tikmani, Sahil Raveen, Aniket Deepak Agrawal, Parveen Kumar Aggarwal, Abhishek Grover, Sanjay Jain, Preeti Singh, 18 Mr. Sudhansu Palo, Madhusmita Bora, Rohit Kumar Singh, Sumant De, Abhay Pratap Singh, Prithu Garg, Siddharth Mehta, Lzafeer Ahmad, V. K. Biju, Sudhir Kumar Gupta, Raghunatha Sethupathy, Sabarish Subramanian, Vishnu Unnikrishnan, Y. William Vinoth Kumar, R. Maheshwari, K. Paari Vendhan, Charu Sangwan, Rajiv Shankar Dvivedi, Pallavi Mishra, Dinkar Kalra, Respondent-in-person Mr. Sachin Jain, Isha Aggarwal, Akhil Sharma, Rajiv Ranjan Dwivedi, Mukti Chaudhry, Atul Kumar, Deepali, Ishan Diwan, U. Sharma, Tarun Gupta, P.V. Dinesh, Sindhu T.P., Mukund P. Unny, Bineesh K., R.S. Lakshman, Ashwin Kumar Singh, For M/s. Indialaw, Snehasish Mukherjee, Azmat Hayat Amanullah, Sarvam Ritam Khare, Urvi Kuthiala, Vrinda Kapoor, Shweta Chaurasia, For M/s. Ace Legal, Manjeet Kirpal, Anzu. K. Varkey, Subhro Sanyal, Garima Bajaj, Misha Rohatgi, Pradeep Dhingra, Shalini Dhingra, Keshav Thakur, Satya Ranjan Swain, Rajesh Singh Chauhan, Liju V. Stephen, Indu Jacob, James P. Thomas, Md. Shahid Anwar, Ajay Bansal, Mrs. Veena Bansal, Kuldip Singh, Gaurav Yadava, Advocates

Judgement Key Points

Based on the provided legal document, a bank that has given a home loan to an allottee can indeed be considered a financial creditor.

Here is the reasoning based on the text:

Definition of Financial Creditor: A financial creditor is defined as a person to whom a "financial debt" is owed. A financial debt is described as a debt along with interest, if any, which is disbursed against the consideration for the time value of money. This category explicitly includes individuals such as debenture holders and fixed deposit holders, alongside banks and financial institutions (!) (!) .
Status of Home Buyers vs. Banks: The document distinguishes between the allottee (home buyer) and the bank. While the allottee is treated as a financial creditor vis-à-vis the real estate developer because their advance payments have the commercial effect of a borrowing, the bank is a separate entity. The bank lends money to the allottee for the purpose of purchasing the flat. In the relationship between the bank and the allottee, the bank is the lender and the allottee is the borrower (!) .
Tripartite Agreement Context: In a tripartite agreement involving a developer, an allottee, and a bank (where the bank finances the purchase), the bank's claim against the allottee arises from the loan advanced for the time value of money. Therefore, the bank fits the definition of a financial creditor owed a financial debt by the allottee. The document notes that allottees who have taken loans from banks are distinct from those who have used their own finances, but in both cases, the bank remains a financial creditor of the allottee (!) (!) .
Committee of Creditors: If the corporate debtor (developer) goes into insolvency, the bank, as a financial creditor, is entitled to be represented in the Committee of Creditors. If the allottees are also financial creditors of the developer, they may be represented by an authorized representative, but the bank retains its independent status as a financial creditor of the allottee (!) (!) .

In summary, the bank is a financial creditor of the allottee because it has advanced money against the consideration for the time value of money, regardless of the tripartite arrangement with the developer.

JUDGMENT

R.F. Nariman, J.

1. The large number of writ petitions that have been filed in this Court challenge the constitutional validity of amendments made to the Insolvency and Bankruptcy Code, 2016 (hereinafter referred to as “the Code”), pursuant to a report prepared by the Insolvency Law Committee dated 26th March, 2018 (hereinafter referred to as the “Insolvency Committee Report”). The amendments so made deem allottees of real estate projects to be “financial creditors” so that they may trigger the Code, under Section 7 thereof, against the real estate developer. In addition, being financial creditors, they are entitled to be represented in the Committee of Creditors by authorised representatives. The amendments so made to the Code are as follows:

PROVISIONS OF THE INSOLVENCY AND BANKRUPTCY CODE, 2016 BEING CHALLENGED

1. Explanation to Section 5(8)(f):

“5. Definitions
In this part, unless the context otherwise requires, –
(8) “financial debt” means a debt along with interest, if any, which is disbursed against the consideration for the time value of money and includes-
(f)

Click Here to Read the rest of this document

2019 Supreme(SC) 843

R.F.NARIMAN, SANJIV KHANNA, SURYA KANTPioneer Urban Land and Infrastructure Limited – AppellantVersusUnion of India – Respondent

Cases Referred (38)

R.F.NARIMAN, SANJIV KHANNA, SURYA KANT
Pioneer Urban Land and Infrastructure Limited – Appellant
Versus
Union of India – Respondent