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Issues: (i) whether the claimant could be treated as a financial creditor or secured financial creditor on the basis of the deed of agreement, mortgage arrangement and post-dated cheques; (ii) whether rejection of the claim on the ground of delay was sustainable.
Issue (i): whether the claimant could be treated as a financial creditor or secured financial creditor on the basis of the deed of agreement, mortgage arrangement and post-dated cheques.
Analysis: Financial debt under the insolvency law requires disbursal against consideration for time value of money. The arrangement in question did not involve any disbursal of funds by the claimant to the corporate debtor. The properties were only offered as collateral to secure the corporate debtor's borrowing from the bank. Post-dated cheques were treated as a promise to pay and did not create any mortgage, charge or hypothecation over the corporate debtor's assets. The guarantee arrangement was between the claimant and the bank, not the corporate debtor, and therefore did not establish a debt owed by the corporate debtor to the claimant. On these facts, the claimant could not be elevated to the status of a secured financial creditor, though its entitlement arising from the agreement could be recognised in the category of other creditor.
Conclusion: The claimant was not a financial creditor or secured financial creditor of the corporate debtor, but was entitled to have its claim considered as that of an other creditor.
Issue (ii): whether rejection of the claim on the ground of delay was sustainable.
Analysis: The claim was filed within the claim-invitation period and the initial rejection by the resolution professional was not based on delay. The later reliance on delay was found inconsistent with the record and the claim was being pursued promptly after rejection. Procedural delay could not defeat the substantive entitlement in the circumstances of the case.
Conclusion: Rejection of the claim on the ground of delay was unsustainable.
Final Conclusion: The order under challenge was set aside to the extent it treated the claimant as a secured financial creditor and rejected the claim on delay, and the claim was directed to be processed in the category of other creditor for appropriate treatment under the resolution plan.
Ratio Decidendi: A financial debt requires an actual disbursal by or on behalf of the creditor against consideration for the time value of money, and collateral provided only to secure another party's borrowing does not by itself create financial creditor status or a secured financial debt.
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