NCLAT | Claim to be a ‘financial creditor’ valid when amount disbursed has been made for consideration of time value of money in favour of borrower

National Company Law Appellate Tribunal (NCLAT): A Coram of Sudhansu Jyoti Mukhopadhaya, J. (Chairperson), A.I.S. Cheema, J. (Judicial Member) and Kanthi Narhari (Technical Member) dismissed the appeal of Indiabulls Housing Finance Limited claiming to be a financial creditor of Rudra Buildwell Projects Private Limited.

The appellant, Indiabulls, had sanctioned a loan of Rs 73,23,391 in favor of the borrower, Devender Singh and Sushma Rajput vide loan agreement dated 06-04-2015. In addition a tripartite agreement dated 06-04-2015 was also executed between the appellant, respondent (Corporate Debtor) and the borrower according to which the borrowers informed the appellant about the scheme of arrangement between the borrower and the builder in terms whereof the builder assumed the liability on account of interest payable by the borrower to the IHFL during the period to be referred to as the “Liability Period” in terms of 24 months i.e. till 30-04-2017. The appellant has preferred this appeal challenging the order dated 30-11-2018 passed by the Adjudicating Authority (National Company Law Tribunal), Special Bench, New Delhi rejecting the application under Section 7 of the Insolvency and Bankruptcy Code, 2016 (I&B Code) filed by the appellant.

The learned counsel for the appellant, Sumesh Dhawan, argued that according to the terms of the tripartite agreement, the borrower and the Corporate Debtor are jointly and severally liable for payment of the pre-equated monthly installment interest till the commencement of the equated monthly installment. The learned counsel alleged that the borrowers and the corporate debtor had defaulted in the payment of pre-equated monthly installment interest/ equated monthly installment. The appellant claimed to be a ‘Financial Creditor’ of the respondent.

The Court observed that IHFL, had disbursed the amount for consideration of time value of money in favor of borrower, Davender Singh and not to the builder and hence the Court, referring to the Sections 5 (7) and 5(8) of I&B Code, found that the Adjudicating Authority had rightly held that respondent was not the corporate debtor of the appellant and the application under Section 7 of I&B Code was not maintainable.

In view of the above, the Tribunal dismissed the appeal.[Indiabulls Housing Finance Ltd. v. Rudra Buildwell Projects (P) Ltd.,  2019 SCC OnLine NCLAT 200, decided on 14-05-2019]

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