2019 (1) TMI 1717

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....ure and production of Low Carbon Ferro Chrome. 2. As per averments, the Corporate Debtor approached the Financial Creditor for financial assistance in the last quarter of 2016. At their request, the financial creditor disbursed a total sum of Rs. 2,51,44,385/- in instalments between October, 2016 to March, 2017. The said amount was repayable by 30th June, 2017 or on demand, together with interest @ 24% per annum. The financial assistance was renewed on execution of a Finance Facility/Share Pledge Agreement dated 04.04.2017 agreeing to extend the limit to Rs. 5 crores. A demand promissory note dated 17th April, 2017 was executed by one of the Directors of the Corporate Debtor for and on behalf of the company, as well as in his personal capa....

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.... Corporate Debtor, the prayer made is vehemently opposed. It is their case that the parties have had long standing trade relationship. The Financial Creditor had been purchasing Carbon Ferro Chrome produced by the Corporate Debtor. All this was in the nature of ordinary trade transaction and there was never any relationship of a financial creditor but that of a buyer and a supplier only. It is submitted that the money received from the petitioner was against supplies of future material and at no point of time any disbursement was made by the Financial Creditor against time value of money to qualify as a financial debt as per the definition of the Code. It is averred that the respondent faced a liquidity crunch in the last quarter of 2016 an....

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....ectors of the Corporate Debtor vide their written communique. 6. Upon appraisal of the facts of the case and arguments advanced on behalf of both parties, this Bench is of the opinion that a financial transaction did taken place. The agreement on record is prima-facie one of granting financial assistance to be repaid along with interest. Further, a financial debt as defined under Section 5(8)(f) includes any amount raised under any other transaction, including any forward sale or purchase agreement having the commercial effect of borrowing. 7. The facts of this case squarely fall within the definition of Section 5(8)(f) to qualify as a financial debt, notwithstanding that it was a loan attracting interest. The execution of the demand prom....