Financial debt requires time value of money; commercial supply payments alone cannot sustain section 7 insolvency proceedings.

A claimed advance arising from ongoing customer-supplier transactions was not treated as a financial debt under the Insolvency and Bankruptcy Code because there was no loan documentation, no separate accounting as an unsecured loan, and no material showing disbursal against consideration for the time value of money. The transaction was found to reflect commercial supply dealings rather than borrowing, so the essential ingredients of section 5(8) were not proved. On that basis, the section 7 insolvency application was held not maintainable and was rejected.

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Issues: Whether the amount advanced by the petitioner to the corporate debtor constituted a financial debt under the Insolvency and Bankruptcy Code, 2016 so as to sustain initiation of corporate insolvency resolution process under section 7.

Analysis: The account ledger showed continuing commercial transactions between the parties, with the petitioner purchasing goods from the corporate debtor and making payments in that course of business. There was no loan documentation, no separate accounting of the amount as an unsecured loan, and no material showing that the money was disbursed against consideration for the time value of money. The surrounding circumstances indicated a customer-supplier arrangement rather than a borrowing transaction. In the absence of proof of the essential ingredients of section 5(8), the claimed amount could not be treated as a financial debt.

Conclusion: The petitioning creditor failed to establish that the debt was financial in nature, and the issue was decided against the petitioner.

Final Conclusion: The application for initiation of corporate insolvency resolution process was not maintainable on the footing of financial debt and was therefore rejected.

Ratio Decidendi: A debt is financial only if it is disbursed against consideration for the time value of money, and a mere payment arising out of ongoing commercial supply transactions does not satisfy that requirement absent material showing a borrowing character.

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