TaxTMI 
TaxTMI 
TaxTMI 
2026 (3) TMI 309
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....n order dated October 24, 2024, passed by the National Company Law Tribunal (NCLT), Kolkata, admitting a Section 7 petition filed by Respondents Nos. 1 to 4 against Respondent No. 5, the Corporate Debtor- Citystar Infrastructures Ltd. Submissions of Appellant 2. The present Appeal under Section 61 of the Insolvency and Bankruptcy Code, 2016, arises from an order dated October 24, 2024, passed by the National Company Law Tribunal (NCLT), Kolkata, admitting a Section 7 petition filed by Respondents Nos. 1 to 4 against Respondent No. 5, the Corporate Debtor. 3. The Appellant, a Suspended Director of the Corporate Debtor- Citystar Infrastructures Ltd, challenges this order. 4. The Corporate Debtor, a real estate development company, had been involved in a project at Premises No. 530/1, Jodhpur Park, Kolkata, which was owned by a housing society. Premises No. 530/1, Jodhpur Park, Kolkata is owned by the Bengal Secretariat Cooperative Land Mortgage Bank & Housing Society Ltd. (hereinafter referred to as "Society"); At the time of the acquisition of the said premises by the society, there was already a market operating therefrom. An agreement was entered between the Society an....
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.... the said premises. The Corporate Debtor also got prepared a building plan for construction on the vacated portion of the said premises which it thereafter submitted for sanction to the KMC. The Corporate Debtor received a demand of Rs. 4,97,21,868/- from the KMC on 08.03.2018, which was not paid by the Respondent No. 1 in breach of the terms of the agreement. 9. In the year, 2021, the Respondent No. 1 expressed interest in developing the project itself by compensating the Corporate Debtor for relinquishing its rights as developer and upon reimbursing all expenses incurred by the Corporate Debtor in connection with the project. The proposed agreement in this connection did not provide for refund of the said sum of Rs. 13.20 crores or any part thereof. As no final agreement could be reached between the parties, the Respondent No. 1 started wrongfully contending that the security deposit paid under the agreement of February 18, 2014 was a loan and was required to be refunded with interest. Several correspondences were exchanged between the parties on November 23, 2022, February 25, 2022 and December 7, 2022 wherefrom the disputes would become evident. In the circumstances, the Cor....
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.... pleadings of the Respondent No.1 in the pending arbitral proceeding; and (c) is an attempt on the part of the Respondents to shop judicial fora. 14. Having made a counter claim against the Corporate Debtor in the pending arbitral proceeding for damages allegedly suffered on account of the Corporate Debtor's breach of the agreement dated February 18, 2014, the Respondent No. 1 (purporting to represent the claim of the other Respondents in the arbitration), has made a subsequent contrary claim in the petition filed under Section 7 of the Code. 15. TDS is not an acknowledgement of liability. As such no reliance can be placed on any Form 26AS filed on behalf of the Corporate Debtor, which in any event is confined to the claim of the Respondent No. 4 for the sum of Rs. 15 lakhs. 16. Money invested in a development project cannot be a "Financial Debt" under Section 5(8) of IBC. 17. The Application under Section 7 of the Code had been filed in abuse of the provisions of the Code and in abuse of the process of the Tribunal. 18. The primary issue involved in this present appeal arises out of an agreement dated 18th February 2014 (@page 214) entered by the Appellant/CD an....
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....fulfil its obligation (ii) will be entitled to the profit at the ratio of 50:50. The Respondents in course of their arguments sought to project that interest is the element of profit. Even in that case, the element of interest falls within FCs' obligation (ii) which was never fulfilled, and no amount was ever paid by the FCs under the category of obligation (ii) and thus profit/interest cannot be claimed under obligation (i) which was admittedly an interest free security deposit. 25. Respondent in their arguments have relied upon Clause 6 and have tried to supersede all other clauses in the agreement. Such argument is contrary to Clauses 2, 3 read with 9 of the agreement. A General Clause in the contract cannot override the Specific/Special Clauses. Such interpretation must be adjudicated in the arbitration. 26. Further, as will appear from the said agreement (page 214), FC No. 1 had agreed to invest as a partner towards the entire cost of development of the property in question in consideration for a portion of the profits of such development (page 217 at Clause 2) Clause 6 records in unambiguous terms that the FC 1 would pay the said sum of Rs. 20 crores by itself or th....
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.... of Bihar reported in (2007) 11 sec 447 has clearly held that one cannot be allowed to take undue advantage of their own default in failure to act in accordance with law and initiate fresh proceedings. 28. The said agreement being clear and unambiguous, there can be no question of the FCs now contending that the sum of Rs. 13.20 crores was paid to the CD as a loan or is refundable with interest. 29. The Respondent No. 1/FC No. 1 has not submitted any loan agreement showing that the CD, was obligated to pay interest on the alleged investment or that same was in consideration of the time value of money, which is clearly absent in this case. Reply filed by Respondents to the present Appeal do not reflect any admission or acknowledgement of Rs: 13.20 Crores. It is only the sum of Rs. 15 lacs paid by the FC No. 4 namely, S.M. Niryat Private Limited that has been shown as loan in the books of the CD to which interest has been credited. Since the date of execution of the agreement till date, the financial statements of the Appellant/CD would show that entire sum of Rs. 13.20 Crore has been treated as a Security Deposit. It is now settled law that deduction of TDS is not in itself ei....
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....l Creditor has failed to adduce credible evidence to substantiate its claim that the transaction was, in fact, a financial debt owed by the Corporate Debtor to the Financial Creditor and that there was a borrower-lender relationship between the Corporate Debtor and the Financial Creditor which is mandatory for an application under Section 7 of the Code to succeed. Submissions of the Respondent: 34. Appellant has not substantiated in its grounds for appeal as to why the order dated 24.10.2024 merits the interference of this Hon'ble Appellate Tribunal. Appeal under Section 61 of IBC is meritless and ought to be dismissed by this Hon'ble Appellate Tribunal. 35. All of the development obligations under the Development Agreement of 12.10.2007 remained that of the Corporate Debtor. No obligations were cast on Respondent No. 1-4/FCs vis-à-vis the development of the property, nor is there any stipulation in the 18.02.2014 agreement to indicate that the FCs were investors/partners in the development of the project. Their status was solely and exclusively that of a FC. It is for this reason that Respondent No. 1 and its associates i.e., Respondent No. 2, 3 and 4 had disbursed....
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....le to recoup profit in the share of 50:50 (which amounted to time value of money), FCs demanded refund of the disbursed amount of INR 13.20 crores along with interest from the Corporate Debtor vide letter dated 23.11.2022. 41. It is also submitted that the nature of the transaction between the parties herein, cannot be determined solely and exclusively by reference to the term - 'security deposit' in light of the well settled law that for a debt to be considered a 'financial debt', the nature of the underlying transaction is seen and not its nomenclature; therefore, the Appellant cannot contend that the financial assistance availed by the CD cannot be construed as a financial debt, as defined under Section 5(8) of IBC. 42. It is claimed of the FCs is indisputably a 'financial debt' as it falls squarely within the contours of the definition under Section 5(8) of IBC: "Firstly, the debt of INR 13.20 crores disbursed by the FCs to the CD was indisputably lent in the nature of financial assistance and had a commercial effect of borrowing. Secondly, the 50:50 profit sharing from the revenue earned from the project between the FCs and the CD was the consideration ....
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....ealing and suppressing material documents. 46. Furthermore, the Corporate Debtor also deposited TDS in accordance with the provisions of Income Tax Act, 1961 from 2019 till March, 2020 towards the interest payable on account of financial assistance granted by the Respondent No.4/FC. 47. Once the Corporate Debtor has acceded to the nature of the transaction being a 'financial debt', it cannot later resile from it on the ground that it is payable only after the purported completion of the project, wherein the Corporate Debtor is yet to obtain basic necessary permits. It is submitted that in a similarly placed matter, the Hon'ble Supreme Court in Global Credit Capital Limited & Anr. v. Sach Marketing Pvt. Ltd. & Anr. 2024 INSC 340 has reiterated the settled principles of law in order to determine whether a security deposit and its underlying interest could be construed as 'financial debt' under Section 5(8) of IBC, 2016. 48. Upon the demand of the disbursed amounts by the FCs vide letter dated 23.11.2022 and the subsequent termination of the Agreement dated 18.02.2014 by the Corporate Debtor on 24.12.2022, the debt of INR 13.20 crores and the interest thereupon became due and....
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....e interest accrued on the loan disbursed by Respondent No.1, the said stand cannot later be resiled from vis-à-vis loans availed from other FCs under the Agreement dated 18.02.2014. 52. Hon'ble Supreme Court in para 31 of Orator Marketing v Samtex Desinz Pvt Ltd. Civil Appeal No. 2231 of 2021 has settled the law in this regard that financial assistance even though it may not carry interest, can still qualify to be a financial debt under Section 5(8) of IBC, 2016. 53. In light of the above, it becomes clear that the amounts disbursed by the FCs to R-5/ Corporate Debtor, to the tune of INR 13.20 crores (being the principal amount) and its accrued interest is the 'debt' due and payable by R5/ Corporate Debtor to the FCs. The 'default' of R-5/ Corporate Debtor is also evident from the record inasmuch it failed to meet its obligations under the Agreement dated 18.02.104, including getting building plans sanctioned and developing the premises within three years, failing to refund the financial assistance disbursed by the FCs and also being unable to repay the FCs profits in the ration of 50:50. The Corporate Debtor further committed a default when it failed to repay the FCs ....
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....ursement of SD is an obligation independent of the disbursement of funds for construction of the project. It is most pertinent to note that it is not open for the CD to contend that the amounts disbursed to it was merely in the nature of SD and not financial assistance for construction of the project, in light of its own repeated admissions in correspondences with the FC, pleadings before the Arbitral Tribunal, NCLT as well as its treatment of the funds disbursed by the FCs towards construction and development of the project. Admittedly, Clauses 3, 6 and 7 of the Agreement have to be read harmoniously. While Clauses 3 and 7 stipulates that the FCs will make available funds to the CD from time to time for meeting costs of construction, not a single document has been brought on record either before the NCLT or before this Appellate Tribunal which establishes that CD asked for more funds, which fact has not been refuted by the CD. 59. Additionally, after CD itself unilaterally terminated the agreement, it has no right to retain the amounts paid. The impugned judgement in paras 7.16 records that the moment there is no denial by the CD that he received money, upon termination, money ....
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....o claims that in any case, the 50:50 profit sharing arrangement as per Clause 9 of the Agreement is also indicative of the commercial effect of borrowing in the Agreement. The Hon'ble Supreme Court in Pioneer Urban Land & Infrastructure Limited & Anr. vs. Union of India (2019) 8 SCC 416 has observed when a debt can be construed to be a financial debt having 'commercial effect of a borrowing'. The commercial effect of borrowing in the present case is in the form of profit sharing as well as interest. Such amounts fall under Section 5(8)(f) of IBC i.e., the 'catch all provision' which states that Section 5(8)(f) of IBC is a residuary 'catch-all' provision, taking within its matters which are not subsumed within the other sub-clauses. The issue regarding similar disbursement of debt for consideration for time value of money has been categorically held to be a 'financial debt' by the judgement of the Hon'ble Supreme Court in Global Credit Capital Limited v. Sach Marketing, 2024 INSC 340. 64. The CD further submits that even if INR 13.20 crores is taken as a debt, it is not due and payable as it is refundable only upon completion of the project, that the development contracts for mut....
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....ribunal, Kolkata in CP(IB)/78(KB)/2024, whereby the application filed under Section 7 of the IBC by Respondents No. 1-4 ("Financial Creditors" / "FCs") was admitted. Before proceeding further, we recapitulate the chronology of events as noted below: Date Events June 1998 An agreement was executed between Bengal Secretariat Co- operative Land Mortgage Bank and Housing Society ('Society') as Owner of the premises and Kolkata Municipal Corporation ('KMC') for construction of market complex as a residential cum commercial complex at premises ('Project'). 12.10.2007 KMC decided to exit from the project and accordingly an agreement was executed between Society, KMC and the Corporate Debtor, wherein KMC transferred all its rights in the Project to CD for a consideration of INR 3.51 Crore. A second Agreement was executed between CD and Society wherein exclusive rights were given to CD to develop the project. 28.01.2014 Four years after the 2007 development agreement, R-/CD passed a Board Resolution dated 28.01.2014 authorizing its representative/the Appellant herein to, "enter into an agreement with M/s Sumangal Dealmark Private Limited for f....
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....'SOD') and Counter Claim ('CC') claiming an award of INR 13.20 crores with 18% interest p.a. and an award for INR 5.11 crores as damages. 18.04.2024 C.P. (IB) No. 78/KB/2024 instituted by FCs showing that an amount of INR 13.20 crores was due and payable by the CD along with accrued interest. Total amount claimed in Section 7 is INR 78.73 crores. 24.10.2024 NCLT passed order dated 24.10.2024, whereby it admitted the petition filed by the Respondent No.1-4 against Respondent No.5/Corporate Debtor under Section 7 of the IBC. 68. We note that the CD was engaged in redevelopment of premises at 530/1, Jodhpur Park, Kolkata. On 18.02.2014, the CD and Respondent No. 1 had entered into an agreement under which: i. Respondent No. 1 (with associates, Respondents 2-4) would provide an interest-free security deposit of Rs. 20 crores, refundable after completion of the project (Clause 6 of the Agreement). ii. Respondent No. 1 would also arrange further funds for construction and development (Clause 7 of the Agreement). 69. Against this, Rs. 13.20 crores was disbursed by the FCs. The CD utilised these funds towards development-related obligatio....
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....SC 513 (P.M. Cold Storage Pvt. Ltd. v. Goouksheer Farm Fresh Pvt. Ltd., NCLAT, 09.09.2024) - even interest-free financial assistance can be financial debt. • Global Credit Capital Ltd. v. Sach Marketing Pvt. Ltd., Global Credit Capital Ltd. v. Sach Marketing Pvt. Ltd., 2024 INSC 340, 2024 INSC 340 - refundable deposits with profit/interest are financial debt. • Pioneer Urban Land & Infrastructure Ltd. v. Union of India (Pioneer Urban Land & Infrastructure Ltd. v. Union of India, (2019) 8 SCC 416), (2019) 8 SCC 416 - Section 5(8)(f) is a "catch-all" covering commercial borrowings. • Arunkumar Jayantilal Muchhala v. Awaita Properties Pvt. Ltd. (Arunkumar Jayantilal Muchhala v. Awaita Properties Pvt. Ltd., CA(AT)(INS) 4828/2023), CA(AT)(INS) 4828/2023 - infusion with expectation of profit is financial debt. • Century Aluminum Co. v. Religare Finvest (Century Aluminum Co. v. Religare Finvest, CA(AT)(INS) 1719/2024), CA(AT)(INS) 1719/2024: Arbitration pendency does not bar IBC proceedings. 72. We note that the impugned order of the NCLT has given the following findings: "7.5. In terms of the said agreement the financial cre....
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....In lieu of interest, the agreement provides for paying 50 per cent of the profit share made from the project to the financial creditor. It may be relevant to note that the agreement does not provide for sharing of losses, unlike the normal Joint Venture Agreements where the partners are required to share profits and losses in the agreed ratios. Thus, the financial creditor has lent money with clear intention of getting compensation (time value of money) in the form of profit. ... 7.16. Once, the agreement is terminated the corporate debtor cannot hold on to one Clause of the same agreement which allows him to refund the amount upon completion of the project. Moment there is no denial by the corporate debtor that he has received 13.2 crores from the financial creditor, the same will have to be returned to them, upon termination of the agreement that too by the corporate debtor unilaterally on 24.12.2022. 7.17. Therefore, the debt and default has been established and the defaulted debt, according to us is a financial debt as funds disbursed by the financial creditor meets the definition of financial debt under Section 5(8) of IBC. The amount has been d....
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....) any derivative transaction entered into in connection with protection against or benefit from fluctuation in any rate or price and for calculating the value of any derivative transaction, only the market value of such transaction 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 sub-clauses (a) to (h) of this clause; The definition of financial debt as reproduced above clearly indicates to include debt and interest, if any. 75. Further we see the financial debt in the light of the agreement (@ page 214) between the parties. Relevant excerpts of the agreement dated 18.02.2014 and the CD's reply are reproduced herein below: "Excerpts of Agreement dated 18.02.2014 "AND WHEREAS by virtue of a Development Agreement dated 12th October, 2007 made between the said Society and the said Developer and registered at Additional Registrar of Assurances, Kolkata under Registration No. I....
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.... project through its team. 8. The developer agrees not to assign and transfer or deal with the Developers right under the development agreement without obtaining confirmation/consent from the Company. 9. The said Developer and the said Company do hereby confirm and agree that in lieu of this arrangement for development of the project in the manner stated in preceding paragraph, the profits arrived at from the project would be shared equally between the Developer and the Company. The project profit shall be arrived at by sharing the total cost of the project in the ratio of 50:50 including the cost already incurred till date." 76. We find that Agreement Clauses (6-9) clearly indicates that the disbursed funds were to be refunded with profit share-profit, representing time value of money. Perusal of the clauses of the Agreement indicates that it clearly provides for return of the amounts disbursed. This is unlike a joint venture where partners share profits and losses. 77. Furthermore, CD has repeatedly admitted that amount disbursed to it by the FCs was in the nature of 'financial assistance' in its correspondences with the FCs, its own pleadings before the A....
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....t await the completion of development of the premises and the realization of revenue therefrom." 79. We also note another similar admission with respect to financing in the Corporate Debtor's termination letter dated 24.12.2022 which amounts to an admission of the financial assistance rendered by Respondent No.1-4: "....an agreement was entered into between you and ourselves whereby and whereunder you agreed to make payment of a sum of Rs.20 crores to us as interest free security deposit as also to finance the entire cost of development of the said premises including all construction and incidental costs. As will appear from the agreement of 18th February,2014, you had thereby undertaken to provide such required finance for the project including furnishing of interest free security of Rs.20 crores, either by yourselves or through your associates.... .... The agreement clearly obliged you, by yourselves and/or your associates, to make payment of the entire committed security amount and to finance the entire cost of development... ... you and your associate namely S.M. Carriers Private Limited, Samridhi Metals Private Limited and S.M. Niryat Private Limited made payment o....
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....uyer would have the "commercial effect" of a borrowing, in that, money is paid in advance for temporary use so that a flat/ apartment is given back to the lender. Both parties have "commercial" interests in the same-the real estate developer seeking to make a profit on the sale of the apartment, and the flat/apartment purchaser profiting by the sale of the apartment. Thus construed, there can be no difficulty in stating that the amounts raised from allottees under real estate projects would, in fact, be subsumed within Section 5(8)(f) even without adverting to the Explanation introduced by the Amendment Act." 83. Respondent contends that the commercial effect of borrowing in the present case is in the form of profit sharing as well as interest and such amounts fall under Section 5(8)(f) of IBC i.e., the 'catch all provision' as contained in paras 75 & 84 of Pioneer Urban Land (supra) which states that Section 5(8)(f) of IBC is a residuary 'catch-all' provision, taking within its matters which are not subsumed within the other sub-clauses. Paras 75 & 84 of Pioneer Urban Land (supra) are extracted as below for convenience: "... 75. It is clear from a reading of t....
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....llant contends that Respondents cannot claim this profit - which is interest as per their claim as they have not fulfilled second obligation. Contradicting the claims of the Appellant, the Respondents place their reliance on the case of Global Credit (supra), where in similar disbursement of debt was in consideration for time value of money and it has been categorically held to be a financial debt by the judgment of the Hon'ble Supreme Court wherein, it was held that: ".... 14. Where one party owes a debt to another and when the creditor is claiming under a written agreement/arrangement providing for rendering 'service', the debt is an operational debt only if the claim subject matter of the debt has some connection or co- relation with the 'service' subject matter of the transaction. The written document cannot be taken for its face value. Therefore, it is necessary to determine the real nature of the transaction on a plain reading of the agreements. What is surprising is that for acting as a Sales Promoter of the beer manufactured by a corporate debtor, only a sum of Rs. 4,000/- per month was made payable to the first respondent. Apart from the sum of Rs. 4,000/....
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....ture of the transaction on a plain reading of the agreements". Pertinently, the Hon'ble Court held the security debt payable to the FC as a financial debt by stating that, "as there is no clause regarding forfeiture of the security deposit or part thereof, the corporate debtor was liable to refund the security deposit..." We are, therefore, inclined to reject the arguments presented by the Appellant on non-applicability of this judgement to the assistance of the Respondent. After going through the submissions of both the parties and also the cited judgment, we find that in the present facts and circumstance of the case, the security deposit was refundable and we cannot agree to dispute that it is a financial debt irrespective of other clauses in the agreement. 87. Appellant contends that that even if INR 13.20 crores is taken as a debt, it is not due and payable as it is refundable only upon completion of the project, as the development contracts for mutual benefit do not amount to financial debt and that the part payment of the Security Deposit is a default on part of the FCs. Per contra Respondent claims that the said contentions have been rejected by this Appellate Tribunal i....
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....oA. It is a well settled proposition of law that interest on loan is not the only binding criterion for determining time value of money. ....Viewed against this backdrop, the contention of the Respondent that the disbursal of the fund was bereft of loan component and hence not in the nature of a financial debt does not have legs to stand on. 26. .... The essential condition which needs to be fulfilled is disbursement against the consideration for time value of money. Since in the present case, the infusion of funds was a transaction which has direct bearing on the business carried out by the Corporate Debtor, raising of the amount through the above agreement has the commercial effect of borrowing. The clauses of the MoA contain clear indication that the infusion of funds was being done with the intent of earning profits and the investments was therefore for consideration for the time value of money. Therefore, this transaction has the contours of a borrowing as contemplated under Section 5(8) of IBC. The investments made by the Appellant-Financial Creditor was with an eye for consideration for time value of money and therefore the transaction had commercial effect of borro....
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....nt has also relied upon Vipul Limited Vs. Solitaire Buildmart Pvt. Ltd, (2020) SCC Online NCLAT 620, wherein it was held that a Section 7 Application by a joint development partner is not maintainable as the amount cannot be construed as 'financial debt' as defined under Section 5(8) of the Code. We note that the agreement between the parties in the present case, cannot be construed to be an agreement wherein the Respondent is a joint development partner. Rather, it is a unique agreement with characteristics of security deposit to act as financial assistance and this form of sharing of profits from the project. Also, security deposit was to be returned. The facts of the present case are distinguishable from the cited case. We find that the respondent is not a joint development partner as is clear from clauses 6 to 9 of the agreement between the two parties. Therefore, the judgment is of no assistance to the Appellant. 92. Appellant claims that FCs themselves described it as advance against property in arbitration and cannot change their stand and relies on Sangramsinh P. Gaekwad (supra). Appellant claims that the Respondents are estopped from shifting their stance in arb....
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....says: "... 29. Therefore, to sum up the procedure, it is clarified that in any proceeding which is pending before the Adjudicating Authority under Section 7 of IB Code, if such petition is admitted upon the Adjudicating Authority recording the satisfaction with regard to the default and the debt being due from the corporate debtor, any application under Section 8 of the Act, 1996 made thereafter will not be maintainable. In a situation where the petition under Section 7 of IB Code is yet to be admitted and, in such proceedings, if an application under Section 8 of the Act, 1996 is filed, the Adjudicating Authority is duty bound to first decide the application under Section 7 of the IB Code by recording a satisfaction with regard to there being default or not, even if the application under Section 8 of Act, 1996 is kept along for consideration. In such event, the natural consequence of the consideration made therein on Section 7 of IB Code application would befall on the application under Section 8 of the Act, 1996." 95. On the contrary, Appellant contends that the Hon'ble Supreme Court in the case of Indus Biotech (supra) has held that at this stage where t....
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....bt. The definition of 'debt' is also expansive and the same includes inter alia financial debt. The definition of 'Financial Debt' in Section 5(8) of IBC does not expressly exclude an interest free loan. 'Financial Debt' would have to be construed to include interest free loans advanced to finance the business operations of a corporate body. 97. On the contrary the Appellant claims that the issue in Orator Marketing Pvt. Ltd. (supra) was whether a term loan granted to a Corporate Debtor without any provision for payment of interest thereon would constitute a financial debt and this judgment does not deal with a case wherein the alleged Financial Creditor had advanced security deposit for development of a project and was a profit sharing partner in the development project. The arguments of the Appellant cannot be accepted in the light of the clarity given by Hon'ble Supreme Court in para 31 wherein the definition of debt is noted to be expansive and does not expressly exclude an interest free loan. We are therefore inclined to agree with the argument of the respondent that the security deposit is an interest free financial debt. 98. Appellant also contends that the entire agre....
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....te that in this judgement para 20 states that "The fact that the corporate debtor has paid TDS on interest payable cannot be considered as acknowledgment in writing of the liability by the corporate debtor and therefore, such TDS payment will not have any effect of being an acknowledgment of said debt". We note that the Corporate Debtor deposited TDS in accordance with Section 194A of the Income Tax Act, 1961 during the FY 2019-2020 and 2020- 2021 towards the interest payable on account of financial assistance granted by the FC No.4. Thus, even as per the Corporate Debtor, financial debt owed by the Corporate Debtor carried consideration for time value of money. Reliance on the judgment of Prayag Polytech Pvt. Ltd. Vs Gem Batteries Pvt. Ltd. in CA(AT)(Ins.) No. 713 of 2019 to submit that mere deduction of TDS would not be sufficient to conclude that there was financial debt may not be the applicable in the present case as in a later case, this Appellate Tribunal in Rahul H Mehta v Gajendra Investment CA (AT) (INS) No. 739 of 2022, has held that, "We have no quarrel with the proposition laid down in Prayag Polytech judgement supra that TDS cannot be the basis of a financial debt, bu....