TaxTMI 
TaxTMI 
2022 (1) TMI 1178
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....cant had paid the amount, on different dates and in support of his contention, the applicant has enclosed the bank statement. 4. He further contended that total outstanding dues of Rs. 3,11,32,500/- liable to be paid by the Corporate Debtor to the applicant and so there is a default in payment of the amount. 5. The matter was reserved to consider the issue whether the amount paid by the applicant as short term loan without claiming any interest comes under the definition of the "Financial Debt" or not? 6. Before considering the submission of the applicant, at this juncture, we refer to the recent judgment of the Hon'ble Supreme Court in Civil Appeal No. 2231/2021 decided on 26th July, 2021 in the matter of M/S. ORATOR MARKETING PVT. LTD. ... Appellant(s) Vs. M/S. SAMTEX DESINZ PVT. LTD. ... Respondent(s). 7. The question for consideration before the Hon'ble Supreme Court in the aforesaid matter was whether the term loan advanced to meet the working capital requirement of the Corporate Debtor which did not carry interest, comes under the definition of Financial Debt or not? 8. Therefore, at this juncture, we would like to refer to the relevant paragraphs of th....
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....lude something, the definition is prima facie extensive. 27. Of course, depending on the context in which the word 'includes' may have been used, and the objects and the scheme of the enactment as a whole, the expression 'includes' may have to be construed as restrictive and exhaustive. 28. In a recent judgment of this Court in Anuj Jain, Interim Resolution Professional for Jaypee Infratech Ltd. V. Axis Bank Ltd. this court, speaking through Maheswari, J. referred to various precedents on restrictive and expansive interpretation of words and phrases used in a statute, particularly, the words 'means' and 'includes' and held:- "46. Applying the aforementioned fundamental principles to the definition occurring in Section 5(8) of the Code, we have not an iota of doubt that for a debt to become "financial debt" for the purpose of Part II of the Code, the basic elements are that it ought to be a disbursal against the consideration for time value of money. It may include any of the methods for raising money or incurring liability by the modes prescribed in clauses (a) to (f) of Section 5(8); it may also include any derivative tran....
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....mes clear that a third party to whom the corporate debtor does not owe a financial debt cannot become its financial creditor for the purpose of Part II of the Code. 49. Expounding yet further, in our view, the peculiar elements of these expressions "financial creditor" and "financial debt", as occurring in Sections 5(7) and 5(8), when visualised and compared with the generic expressions "creditor" and "debt" respectively, as occurring in Sections 3(10) and 3(11) of the Code, the scheme of things envisaged by the Code becomes clearer. The generic term "creditor" is defined to mean any person to whom the debt is owed and then, it has also been made clear that it includes a "financial creditor", a "secured creditor", an "unsecured creditor", an "operational creditor", and a "decree holder". Similarly, a "debt" means a liability or obligation in respect of a claim which is due from any person and this expression has also been given an extended meaning to include a "financial debt" and an "operational debt". 49.1. The use of the expression "means and includes" in these clauses, on the very same principles of 20 interpretation as indicated above, makes it clear that for....
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....ted by the legislature with such a role that it would look forward to ensure that the corporate debtor is rejuvenated and gets back to its wheels with reasonable capacity of repaying its debts and to attend on its other obligations. Protection of the rights of all other stakeholders, including other creditors, would obviously be concomitant of such resurgence of the corporate debtor." 29. In Jaypee Infratech Ltd. (supra), the debts in question were in the form of third-party security, given by the Corporate Debtor to secure loans and advances obtained a third party from the Respondent Lender and, therefore, held not to be a financial debt within the meaning of Section 5(8) of the IBC. There was no occasion for this Court to consider the status of a term loan advanced to meet the working capital requirements of the Corporate Debtor, which did not carry interest. Having regard to the Aims, Objects and Scheme of the IBC, there is no discernible reason, why a term loan to meet the financial requirements of a Corporate Debtor for its operation, which obviously has the commercial effect of borrowing, should be excluded from the purview of a financial debt. ....