TaxTMI 
TaxTMI 
2021 (10) TMI 116
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.... No. 1145 (PB)/2019. 2. It has been held by the Adjudicating Authority in the application of the Appellant under Section 7 of the Insolvency and Bankruptcy Code, 2016 (in short IBC) for default in payment of interest by the Respondent (Corporate Debtor), that it is not maintainable as the default in payment of interest is not covered under the definition of 'financial debt' and Appellant is not a 'financial creditor' under the definition provided in the IBC. 3. The Appellant has claimed that the Corporate Debtor High Time Marketing Private Limited (Respondent in the appeal) approached the Appellant and received Rs. 40 lakhs on 27.10.2010 from the Appellant for issuing shares to him. The share application money was paid in an Account N....
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....ed at page 40 of the Appeal Paperbook). He has also referred to letter no. ROC/DL/COME/2019/IITMEL/AG/109 dated 14.5.2019 to show that he has made a complaint against the Appellant regarding non-payment of interest on the principal amount. In support of his contention about he has shown bank statement (attached at page 39 of the Appeal paperbook) wherein the refund of the principal amount is included in entry dated 9.2.2018. He has also shown bank statement and income tax return copies were sent to the Corporate Debtor by the Appellant through email dated July 22, 2019 (attached at page 41 of the Appeal Paperbook) and the balance sheet of the Corporate Debtor for FY 2017-18 to show that his claim is due and payable (page 111 of the Appeal P....
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.... his deposit, but no financial contract or agreement has been submitted by the Appellant to show that this interest is covered under the definition of 'financial debt' under Section 5(8) and that the Appellant is a 'financial creditor' under Section 5(7) of the IBC. The definition of 'financial debt' and 'financial creditor' provided in IBC is reproduced below: - "5. Definitions.- xxxxxxxxxx 5(7). "financial creditor" means any person to whom a financial debt is owed and includes a person to whom such debt has been legally assigned or transferred to. 5(8) "financial debt" means a debt along with interest, if any, which is disbursed against consideration for the time value of money and includes - ....
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....shall be taken into account; (h) any counter-indemnity obligation in respect of a guarantee indemnity; bond documentary letter of credit or any other instrument issued by a bank or financial institution; (i) the amount of any liability in respect of any of the guarantee or indemnity for any of the items referred to in cub-clauses (a) to (h) of this clause; Under Section 3(11) of IBC, 'debt' is defined as follows: - "3(11) "debt" means a liability or obligation in respect of a claim which is due from any person and includes a financial debt and operational debt." 10. It is clear from definition given in Section 3(11) that debt is a much bigger set of financial liabilities, whereas "financial debt" is only a s....