https://www.taxtmi.com/caselaws?id=751886 The SC dismissed an appeal regarding whether security deposits under sales promoter agreements constitute financial debt under IBC. The corporate debtor appointed respondent as sales promoter for Rs.4,000/- monthly plus security deposit refundable with 21% interest. The SC held that security deposits with interest represent financial debt under Section 5(8)(f) of IBC as they have commercial effect of borrowing, evidenced by corporate debtor treating amounts as long-term liabilities in financial statements. Since no forfeiture clause existed, refund obligation with interest qualified as financial debt, making respondent a financial creditor entitled to initiate CIRP under Section 7. en-us Thu, 25 Apr 2024 00:00:00 +0530 Sun, 28 Apr 2024 14:19:00 +0530 TaxTMI RSS Generator https://www.taxtmi.com/caselaws?id=751886 The SC dismissed an appeal regarding whether security deposits under sales promoter agreements constitute financial debt under IBC. The corporate debtor appointed respondent as sales promoter for Rs.4,000/- monthly plus security deposit refundable with 21% interest. The SC held that security deposits with interest represent financial debt under Section 5(8)(f) of IBC as they have commercial effect of borrowing, evidenced by corporate debtor treating amounts as long-term liabilities in financial statements. Since no forfeiture clause existed, refund obligation with interest qualified as financial debt, making respondent a financial creditor entitled to initiate CIRP under Section 7. Case-Laws Insolvency and Bankruptcy Thu, 25 Apr 2024 00:00:00 +0530 https://www.taxtmi.com/caselaws?id=751886