Transaction not financial debt under Insolvency Code. Appellant denied financial creditor status. Claim dismissed.

The Tribunal held that the amount advanced by the Respondent did not qualify as a financial debt under the Insolvency and Bankruptcy Code. The Appellant failed to establish that the transactions were disbursed against the consideration for the time value of money. As a result, the Appellant was not deemed a financial creditor, and the claim was dismissed.

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Issues Involved:
1. Whether the amount of INR 25,00,000/- advanced by the Respondent to the Appellant qualifies as a 'Financial Debt' under Section 5(8) of the Insolvency and Bankruptcy Code, 2016 (IBC).
2. Whether the Appellant is a Financial Creditor under IBC and if the debt satisfies the criteria of 'disbursal against the consideration for the time value of money'.

Summary:

Issue 1: Qualification as 'Financial Debt'
The Appellant argued that the amount of INR 25,00,000/- transferred by the Respondent on 12.02.2011 was repayable to Mr. Gitesh Muttemwar, a common promoter and director of both companies, and thus should be considered a financial debt. The Appellant's balance sheets and ledger accounts consistently recorded this amount as a loan payable to Mr. Muttemwar, which was fully repaid by 31.05.2016. However, the Respondent contended that this amount was a repayment of a previous loan given by the Respondent to the Appellant in 2011, and there was no written agreement, promissory note, or agreed interest rate to substantiate the Appellant's claim. The Adjudicating Authority held that the claim did not qualify as a financial debt under Section 5(8) of IBC, as there was no disbursement against the consideration for the time value of money.

Issue 2: Financial Creditor Status and Time Value of Money
The Appellant claimed that the unsecured loan of INR 25,00,000/- given to the Respondent on 21.07.2017 and 05.08.2017 qualifies as a financial debt. The Appellant cited various legal precedents to argue that interest is not a sine qua non for a borrowing to be considered a financial debt. However, the Respondent argued that there was no written agreement, repayment date, or consideration for time value of money, and thus the loan did not qualify as a financial debt. The Adjudicating Authority concluded that the Appellant had not produced any agreement indicating that interest would be payable by the Respondent and that the amount advanced was against the time value of money.

Judgment:
The Tribunal agreed with the findings of the Adjudicating Authority, stating that the Appellant had not produced any agreement indicating that interest would be payable by the Respondent against the alleged loan. The Tribunal affirmed that to qualify as a financial debt, the amount advanced must be against the time value of money, which was absent in this case. Consequently, the Appellant was not considered a financial creditor, and the claim did not qualify as a financial debt under Section 5(8) of the IBC. The appeal was dismissed, and the order of the Adjudicating Authority was affirmed.

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