Financial debt under the Insolvency Code requires proof of borrowing; a solar project payment claim failed that test.

A claim can qualify as a financial debt under the Insolvency and Bankruptcy Code, 2016 only if it is disbursed against consideration for the time value of money and fits within the inclusive categories in section 5(8). On the facts, the absence of a written loan document, reliable proof of agreed interest, and a consistent repayment demand, together with material showing the payment was linked to a solar project transaction, meant the amount was not established as borrowing with the commercial effect of borrowing. The petitioner therefore failed to prove a financial debt and was not a financial creditor entitled to invoke section 7 CIRP.

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Issues: Whether the amount claimed constituted a financial debt and whether the petitioner qualified as a financial creditor for initiating corporate insolvency resolution process under the Insolvency and Bankruptcy Code, 2016.

Analysis: The claim had to satisfy the definition of financial debt, namely a debt disbursed against the consideration for time value of money and falling within the inclusive categories in section 5(8) of the Insolvency and Bankruptcy Code, 2016. On the facts, there was no written loan document, no reliable proof of agreed interest, no consistent demand for repayment over the relevant period, and the amount was not shown to fit any of the statutory categories of financial debt. The surrounding material also supported the corporate debtor's stand that the payment was connected with the solar project transaction rather than a borrowing carrying the commercial effect of borrowing.

Conclusion: The petitioner failed to establish a financial debt and therefore was not a financial creditor entitled to invoke section 7 of the Insolvency and Bankruptcy Code, 2016.

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