Payment to SBI not considered 'financial debt' under IBC despite qualification - dismissal affirmed

The Tribunal held that the payment made by the Appellant to SBI on behalf of the Corporate Debtor qualifies as a 'financial debt' under the IBC. However, it found that the debt had not become due and payable, as the full consideration amount was not paid by the Appellant. Therefore, the Tribunal affirmed the dismissal of the Section 7 application, advising the Appellant to seek remedial action in another forum for debt recovery.

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Issues Involved:
1. Whether the payment of Rs.10.46 crore by the Appellant to the SBI on behalf of the Corporate Debtor qualifies as a 'financial debt' under Section 5(8) of the IBC.
2. Whether there was a debt that had become due and payable by the Corporate Debtor to the Appellant and whether there was a default.

Summary:

1. Financial Debt Qualification:
The Appellant argued that the payment made to SBI on behalf of the Corporate Debtor qualifies as a 'financial debt' under Section 5(8) of the IBC. The Adjudicating Authority dismissed this claim, stating that the payment lacked the essential elements of a financial debt, namely interest and disbursal against time value of money. The Tribunal, however, disagreed with this finding, emphasizing that the absence of interest does not preclude a debt from being considered a financial debt. The Tribunal noted that the payment was made with the expectation of gaining ownership of the subject property, which constitutes time value of money. The Tribunal concluded that the disbursal made by the Appellant did qualify as a financial debt.

2. Debt Due and Payable:
The Appellant contended that the Corporate Debtor failed to repay the amount or transfer the subject property, thus defaulting on the debt. The Corporate Debtor argued that the Appellant did not fulfill its obligation to pay the full consideration amount, and therefore, no debt had become due. The Tribunal found that the full consideration amount of Rs.27.16 crore was not paid by the Appellant, and as per the MoUs and Agreement to Sell, the Corporate Debtor's obligation to transfer the property or repay the amount was contingent upon the full payment. Consequently, the Tribunal held that the debt had not become due and payable, and therefore, no default occurred.

Conclusion:
The Tribunal affirmed the dismissal of the Section 7 application, agreeing that the debt had not become due and payable. The Tribunal clarified that while the payment qualified as a financial debt, the conditions for the debt to become due were not met. The Appellant was advised to seek remedial action in an appropriate forum for recovery of the debt.

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