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of <h1>Jurisdiction based on registered office location; debtor found ineligible as financial creditor; importance of time value of money.</h1> <h3>Ludhiana Scrips Pvt. Ltd. Versus. K.C. Land & Finance Ltd.,</h3> The National Company Law Tribunal, Chandigarh held that the petition falls under its jurisdiction due to the debtor's registered office location. Ludhiana ... Admissibility of petition - Initiation of Corporate Insolvency Resolution Process - scope of Financial Creditor - Section 7 of IBC - territorial jurisdiction - HELD THAT:- The petitioner has failed to show that it is covered within the definition of the term “financial creditor” eligible to maintain a petition under Section 7 of the Code. We say for the reason that the amount disbursed to the corporate debtor does not in any way show that the same was against the consideration for time value of money and not falling within any of the clauses (a to (i) of sub-section 8 of Section 5 of the Code. There is no document relied upon by the petitioner with this petition about the terms of original disbursement of amount made to the respondent-corporate debtor so as to bring the case within the four corners of the definition of the term ‘financial debt’ as given in sub-section (8) of Section 5 of the Code - Perusal of the demand notice dated 16.03.2018 Annexure5 does not indicate that the amount was borrowed by the respondent on payment of interest or for consideration for the time value and the transaction is not shown to be covered under any of the sub clauses (b) to (i) of Section 5(8) of the Code. The petitioner can be considered as a financial creditor as defined in the Code and the application for initiating the insolvency resolution process cannot be maintained - Petition dismissed. Issues:1. Jurisdiction of the National Company Law Tribunal, Chandigarh.2. Eligibility of the petitioner as a financial creditor under Section 7 of the Insolvency & Bankruptcy Code, 2016.3. Interpretation of the term 'financial creditor' and 'financial debt' under the Code.4. Validity of the compromise agreement and its impact on the insolvency resolution process.Jurisdiction of the National Company Law Tribunal, Chandigarh:The judgment establishes that the petition filed by Ludhiana Scrips Pvt. Ltd. falls within the territorial jurisdiction of the National Company Law Tribunal, Chandigarh as the corporate debtor's registered office is located in the State of Punjab.Eligibility of the petitioner as a financial creditor:The Tribunal analyzed whether Ludhiana Scrips Pvt. Ltd. qualifies as a financial creditor under Section 7 of the Code. It was observed that the petitioner failed to demonstrate that the disbursed amount was against the consideration for the time value of money, a crucial element for being classified as a financial creditor.Interpretation of the term 'financial creditor' and 'financial debt' under the Code:The judgment delves into the definitions provided under the Code for 'financial creditor' and 'financial debt.' It highlights that the amount disbursed must be against the consideration for the time value of money to qualify as a financial debt, encompassing various financial transactions specified in Section 5(8) of the Code.Validity of the compromise agreement and its impact on the insolvency resolution process:The Tribunal scrutinized the compromise agreement entered into by the parties, emphasizing that the petitioner did not provide evidence regarding the terms of the original disbursement to establish the case as falling within the definition of a financial debt. The judgment concluded that the petitioner could not be considered a financial creditor under the Code, leading to the rejection of the insolvency resolution process application.This comprehensive analysis of the judgment from the National Company Law Tribunal, Chandigarh, elucidates the key issues surrounding jurisdiction, eligibility as a financial creditor, interpretation of relevant terms under the Code, and the impact of the compromise agreement on the insolvency resolution process.
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