Pledged shares for third-party loans: lender sought CoC inclusion as secured financial creditor; bid barred u/s60(5), dismissed.

An applicant sought directions to treat it as a secured financial creditor and include it in the CoC. The NCLAT held that the applicant's claim as a financial creditor had been rejected in 2017 and that determination, having not been challenged, had attained finality; the same relief could not be re-agitated in 2020 through an application under s.60(5) IBC, and the proffered justification was legally untenable; the application was therefore not maintainable and the appeal failed. Independently, on merits, the applicant had not disbursed any financial debt to the corporate debtor, and a mere pledge of shares by the corporate debtor for borrowings of third parties does not constitute guarantee/indemnity or a "financial debt"; hence the applicant was not a financial creditor and the appeal was dismissed.

---

---

Issues:
1. Dismissal of I.A. 62 of 2020 in CP (IB) No. 42/Chd./Hry./2017 by the Adjudicating Authority.
2. Appellants' claim as a secured financial creditor.
3. Rejection of the claim by the Resolution Professional.
4. Representation to preserve the pledge of shares.
5. Approval of resolution plan of 'Duccan Value Investor' (DVI).

The Appellants, 'M/s. Vistara (ITCL) Ltd. and Ors.', challenged the dismissal of their I.A. 62 of 2020 by the Adjudicating Authority in CP (IB) No. 42/Chd./Hry./2017. The application sought the inclusion of Appellant No. 1 in the Committee of Creditors as a secured financial creditor under Section 60(5) of the I&B Code. The Adjudicating Authority dismissed the application while approving the resolution plan of 'Duccan Value Investor' (DVI), leading to the appeal. The dismissal was based on the finding that the Appellants had not lent any money to the Corporate Debtor and thus could not be treated as financial creditors. The rejection of the claim by the Resolution Professional in 2017, which was unchallenged, was also noted. The Appellants' argument that their interests were protected under the 'Liberty House Group' resolution plan was deemed unreasonable and overruled.

The Appellants contended that they had requested the Resolution Professional to preserve the pledge of shares in favor of Appellant No. 1. They claimed that the 'Liberty House Group' resolution plan from 2017 recognized and preserved the pledge, which was approved by the Committee of Creditors. However, the Committee of Creditors was reconstituted, and a new resolution plan by DVI was considered. Despite representations to preserve the pledge, the Appellants' claim was not mentioned in the information memorandum. This led to the filing of I.A. No. 62 of 2020, which was rejected alongside the approval of DVI's resolution plan. The Appellants argued that the rejection of their claim as a Financial Creditor was not challenged earlier due to the belief that their interests were safeguarded under the previous resolution plan.

The Appellants' claim as a 'Secured Financial Creditor' was rejected in 2017, and this decision remained unchallenged. The Appellants' attempt to raise the same issue in 2020 through I.A. No. 62 was deemed impermissible. The explanation provided by the Appellants for the delayed challenge was considered unreasonable. It was clarified that the creation of a pledge of shares does not equate to a guarantee or indemnity, and since the Appellants had not directly lent money to the Corporate Debtor, they did not qualify as financial creditors. The essence of financial debt, including interest and time value of money, was found lacking in the transaction between the Appellants and the Corporate Debtor. Consequently, the appeal was dismissed at the initial stage for lack of merit.

---

---