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TMI Blog2021 (11) TMI 606X X X X Extracts X X X X X X X X Extracts X X X X ..... finition of Section 5(f) of IBC, 2016. The petitioner is directed to issue notice upon the Corporate Debtor by all modes as to why the CIR process shall not be initiated against it. List the matter on 29.10.2021 - petition is maintainable. - (IB)-88(ND)/2021 - - - Dated:- 11-10-2021 - Dr. Deepti Mukesh, Member (J) And L.N. Gupta, Member (T) For the Appellant : Gulshan Kr. Sachdev and Aman Gautam, Advs ORDER L. N. Gupta , Member ( T ) 1. The present Petition is filed under the Section 7 of the Insolvency and Bankruptcy Code, 2016 ('IBC, 2016') read with Rule 4 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016 by Mr. Surendra Kanaiyalal Shah through its proprietor of Shah Phot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ainability of the Application under Section 7 of IBC, 2016 and whether the amount claimed by the Applicant in Part IV of the Application is covered under the definition of Financial Debt ? 8. That the following has been stated by the Applicant in the Amended Part IV of the Application, which is reproduced below: 9. In order to establish that the debt claimed in the Part IV of the Application is covered under the ambit of Financial Debt as defined under Section 5(8) of IBC, 2016, the Applicant has filed its written submission and has averred the following: 2. That the Corporate Debtor had appointed the Financial Creditor as Consignment and Freight Agent and for that purpose the parties had executed an Agreement dated 25. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hus what is required under the law is that there has to be debt and it must satisfy the criteria of time value of money . In the present case, it is undisputed fact that the Corporate Debtor had accepted a refundable Deposit of ₹ 70 Lakhs from the Petitioner and has agreed to pay interest thereon. 6. It is most respectfully submitted that an interest bearing refundable deposit squarely falls within the purview of financial debt in view of the clear mandate of Section 5(8)(f) as well as in light of the judicial pronouncements . 10. Through its Written Submissions, the Financial Creditor has contended that by virtue of the Agreement dated 25.03.2019, whereby the Corporate Debtor was appointed the Applicant as Consignment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... med by the applicant in Part IV of the Application is a Financial Debt or not, it is necessary to examine the origin of the transaction. Hence, we refer to the relevant clause of the deposit in the Agreement dated 25.03.2019, contained, scanned copy of which is reproduced below: 13. Here, we also refer to the definition of Financial Debt as defined under Section 5(8) of IBC, 2016: (8) financial debt means a debt alongwith interest, if any, which is disbursed against the consideration for the time value of money and includes- (a) money borrowed against the payment of interest; (b) any amount raised by acceptance under any acceptance credit facility or its dematerialised equivalent; (c) any amount raised pursu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any liability in respect of any of the guarantee or indemnity for any of the items referred to in sub-clause (a) to (h) of this clause; 14. From the conjoint reading of para 12 and 13 above, we find that in the instant case, the amount has been released pursuant to the Agreement dated 25.03.2019 in the form of Security Deposit and the same is interest bearing, which means it is carrying consideration of time value of money having commercial effect of a borrowing. Therefore, in our view the debt claimed is a Financial Debt within the definition of Section 5(f) of IBC, 2016. 15. Accordingly, we find that the Petition is maintainable. Therefore, we direct the petitioner to issue notice upon the Corporate Debtor by all modes as to wh ..... X X X X Extracts X X X X X X X X Extracts X X X X
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