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Issues: Whether the amount invested by the appellant in the real estate joint venture project, in the capacity of a promoter and investor, constituted a financial debt so as to make the appellant a financial creditor or allottee under the Insolvency and Bankruptcy Code, 2016.
Analysis: The Memorandum of Understanding and the Joint Venture Agreement showed that the relationship between the parties was that of a promoter/land owner and a developer in a joint development arrangement. The appellant was engaged in the project as a promoter and was interested in the completion and sale of the project, rather than as a person to whom money was disbursed against the consideration for the time value of money. The explanation to Section 5(8)(f) of the Insolvency and Bankruptcy Code, 2016, which deems amounts raised from an allottee in a real estate project to have the commercial effect of borrowing, was held inapplicable because the appellant could not be treated as an allottee under the Real Estate (Regulation and Development) Act, 2016. On the terms of the arrangement, the investment was part of a joint venture for development and not a borrowing transaction.
Conclusion: The amount invested by the appellant did not constitute financial debt, and the appellant was not a financial creditor or allottee.
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