Financial debt requires actual disbursal for time value of money; brokerage adjustments against flat allotments do not qualify.

Claims based on brokerage or commission adjustments, with only limited booking payments, did not satisfy the requirement of disbursal against time value of money under the Insolvency and Bankruptcy Code. The amounts adjusted against flat allotments were not money actually raised by the corporate debtor from the claimants, so the claims could not be treated as financial debt or allotment-based financial creditor claims. The attempt to reclassify the same underlying brokerage liability as financial debt was also rejected because the claimants had earlier pursued insolvency on the footing of operational debt, and the substance of the transaction remained one for commission or brokerage services rather than borrowing.

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Issues: (i) Whether the appellants' claim arising from brokerage/commission adjustments and limited booking payments could be treated as a financial debt and brought within the category of allottees of a real estate project. (ii) Whether the appellants, having earlier pursued insolvency proceedings as operational creditors, could later assert a different character of debt for the same underlying transaction.

Issue (i): Whether the appellants' claim arising from brokerage/commission adjustments and limited booking payments could be treated as a financial debt and brought within the category of allottees of a real estate project.

Analysis: The governing test under Section 5(8) of the Insolvency and Bankruptcy Code, 2016 requires disbursal against the consideration for time value of money. The explanation to clause (f) deems amounts raised from an allottee under a real estate project to be financial debt, but the core requirement remains that the corporate debtor must have raised money from the claimant in the relevant capacity. On the admitted facts, only a limited amount was actually paid towards an initial booking, while the substantial consideration for the later units was met by adjustment of brokerage/commission dues payable by the corporate debtor. The amounts adjusted were not money disbursed by the appellants to the corporate debtor for the project. The transaction therefore lacked the essential element of disbursal and did not exhibit the commercial effect of a borrowing.

Conclusion: The claim was not financial debt, and the appellants could not be treated as financial creditors or allottees for that purpose.

Issue (ii): Whether the appellants, having earlier pursued insolvency proceedings as operational creditors, could later assert a different character of debt for the same underlying transaction.

Analysis: The record showed that the appellants had earlier invoked insolvency proceedings on the basis of operational debt arising from brokerage and related dues. The later attempt to recharacterise the same liability as financial debt was inconsistent with the earlier asserted position and with the settled nature of the underlying transaction. The nature of the debt, viewed in its substance, remained one for commission or brokerage services rather than for money raised as a borrowing against time value of money.

Conclusion: The appellants were not permitted to change the character of the debt, and the objection to their reclassification was upheld.

Final Conclusion: The rejection of the appellants' claims as financial debt was legally justified, and both appeals failed.

Ratio Decidendi: A debt qualifies as financial debt only when money is actually disbursed to the corporate debtor against the consideration for time value of money, and mere adjustment of brokerage or commission dues against flat allotments does not satisfy that requirement.

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