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TMI Blog2023 (11) TMI 1219X X X X Extracts X X X X X X X X Extracts X X X X ..... ning of expression borrow and commercial from Collins English Dictionary. The condition which is essentially required to be fulfilled is disbursement against the consideration for the time value of money. On coming to sub-clause (f), the transaction has to have a commercial effect of a borrowing. It is already noticed the facts and sequence of events of the present case, from which it is clear that Corporate Debtor has time and again acknowledged the debt. It is found that transactions between the parties including the Agreement, Supplementary Agreement and Binding Term Sheet, clearly indicate that there was a debt, due and payable, which debt was in the nature of financial debt . It is further noticed that in the present Appeal, the Appellant has taken several opportunities to make payment to the Corporate Debtor to liquidate his debt, which could not be done by the Appellant. The above is also clear acknowledgement of debt and default on the part of the Corporate Debtor. The Adjudicating Authority has not committed any error in admitting Section 7 Application. There are no good ground to interfere with the impugned order admitting Section 7 Application. The Appeal is dismissed. X X X X Extracts X X X X X X X X Extracts X X X X ..... y the Promoters and they offered the Investors with proposal to develop and to provide exit to the Investors. The Binding Term Sheet was executed in the year 2015 between the Company, Promoters, IIRF Holdings XIV Ltd. and IL&FS Trust Company Limited. Under the Term Sheet an exit was to be provided to the Investors. The exit consideration was to carry an IRR of 17% from March 10th, 2015. (iv) On arising dispute between the parties, reference was made to the Sole Arbitrator, Justice C. K. Thakkar (Retd.). Before the Arbitrator a Consent Term by the parties was filed. On basis of which Consent Terms arbitration proceedings were disposed of by Consent Award dated 19.01.2021. As per Consent Term, a sum of Rs.72,85,71,429/- was agreed to be paid to Respondent Nos. 1 and 2 on or before 25.08.2021 and a further sum of Rs.47,14,28,571/- was agreed to be paid to the Respondent Nos. 1 and 2 on or before expiry of 15 months from 25.11.2020. In terms of the Consent Terms, failure to pay one of the tranches, would render the amount of Rs.120 Crores being payable along with interest at 15% per annum calculated from 25.08.2021 till date of payment. (v) The amount as contemplated under the Cons ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... earned Counsel for the Appellant submits that he shall make a written offer to the Respondents within seven days from today. 4. In view of the aforesaid, we direct this Appeal to be listed again on 29.08.2023. Liberty to mention to both the parties. The statement recorded in the earlier date shall continue till the next date." 4. Subsequently again on 29.08.2023, statement was made that the Appellant has already in dialogue with two investors and term sheet has been given by one investor. Last opportunity of four weeks was granted to the Appellant to submit a proposal for settlement to the CoC. No settlement between the parties can be brought on the record as submitted by learned counsel for the Appellant. The Appeal was heard on 16.10.2023 and thereafter and judgment was reserved on 09.11.2023 after hearing was completed. 5. We have heard Shri Abhinav Vasisht, learned senior counsel and Shri Sanjeev Sen, learned senior counsel for the Appellant, Shri Arun Kathpalia, learned senior counsel and Shri Abhijeet Sinha, learned counsel for Respondent Nos. 1 and 2, Shri Krishnendu Datta, learned senior counsel for the Committee of Creditors and Shri Tishampati Sen, learned coun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rights but terms and condition of the Agreement and even the Consent Terms do not make Respondent No.1 and 2 as Financial Creditors. It is submitted that the Adjudicating Authority has returned contradictory finding. The submission raised by the Corporate Debtor that Corporate Debtor has no obligation to pay in terms of the Agreement has been accepted. When the Adjudicating Authority found that no default has committed by the Corporate Debtor, there was no occasion to admit Section 7 application. The Corporate Debtor cannot be included in the expression 'Promoter'. 7. Learned counsel appearing for the Respondent No.1 and 2 refuting the submission of learned counsel for the Appellant submits that on account of default to provide an exit under the ARSSHA and SSSHA, the Financial Creditor became entitled to an internal rate of return (IRR) to the extent of 15% per annum, compounded annually. The Corporate Debtor has undertaken to indemnify the Financial Creditors for liabilities arising from breach of any undertaking, agreement or covenants and any failure by the Corporate Debtor or the Promoters of the Corporate Debtor to perform their obligations. The Corporate Debtor accep ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ons advanced by learned Counsel for the parties and materials on record, following issues arise for consideration in this Appeal: (I) Whether by investment made by the Financial Creditor in the Corporate Debtor by means of Share Subscription-cum- Shareholders Agreements, Binding Term Sheet as well as Consent Terms dated 25.11.2020, resulting into Consent Award dated 19.01.2021 there was any financial debt in default, entitling the Financial Creditor to file any Application under Section 7 of the IBC? (II) Whether the Adjudicating Authority erred in admitting Section 7 Application filed by the Financial Creditor? 10. Both issues being interconnected, same are being taken together for consideration. 11. The transaction between the parties and the sequence of events are not in dispute. Investment was made in the Corporate Debtor by means of Share subscription and Shareholders Agreement, between the Financial Creditor, Promoters of the Corporate Debtor and the Corporate Debtor - Kakade Estate Developer Private Limited. The Company has been engaged in construction of commercial/ residential buildings/ setting up of residential township project on the land in village Bhugaon, Distr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ompany and may consider partial sale of division or assets of the Company and may consider partial sale of division or assets of the Company to recover the IL&FS Investors Capital Investment and HIREF Investors Capital Investment at the Fair Market Value under this Agreement, and (ii) have lien over the Shares held by the Promoters and their Affiliates. The Promoters hereby irrevocably and by way of security for its obligation contemplated herein appoints one nominee Director of the IL&FS Investors and one nominee Director of the HIREF Investors as their constituted attorney to execute and deliver any documentation and do any act or thing required in connection with creation of lien on the Shares held by the Promoters." 12. Clause-17 dealt with 'Events of Default' and Clause-18 'Consequences of Event of Default'. Clause-19 provided for 'Consequences of Termination of this Agreement Vis-à-vis IL&FS Investors'. Paragraph 19.1 (a) and 19.6(a), which are relevant are as follows: "19.1 Upon the exercise by the IL&FS Investors, of their right to terminate this Agreement pursuant Clause 18, the Non-defaulting Shareholders shall, without prejudic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The company now requires further funding to the extent of Rs.Fifty crores in order to carry out the objectives of the Business Plan i.e. approval of township, and actual execution of the township as per the designs prepared by the Company architects" 15. The Binding Term Sheet was also entered subsequently in 2015 between the Financial Creditor, i.e. Investors, Promoters and the Company (Corporate Debtor). The Binding Term Sheet provided for an Exit Proposal to the Investors. It further provided that Exit Consideration shall carry an IRR of 17%. Clause-3 of the Binding Term Sheet is as follows: "III Exit Proposal The promoters led by Sanjay Kakade have approached IL&FS and HIREF to facilitate an exit with the following proposal (i) IL&FS Investment in KEDPL is valued at Rs.1829.52 MN (IL&FS Exit Consideration) (ii) HIREF's investment in KEDPL is valued at Rs.1,568.16 (HIREF Exit Consideration) (iii) IL&FS Exit Consideration and HIREF Exit Consideration cumulatively is referred to as Exit Consideration (iv) Exit Consideration shall be net of all taxes (v) The Promoters have agreed to purchase or cause the Company to purchase the IL&FS and HIREF investmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uot;Decretal Amount"). The time shall always be of the essence. (ii) The first tranche of the Decretal Amount, being an amount of Rs.1,57,85,71,429/- (Rupees One Hundred Fifty Seven Crores Eighty Five Lakhs Seventy One Thousands Four Hundred Twenty Nine only) ("First Tranche Amount") shall be paid by Promoter Respondents and/or any of its affiliates/ nominees to the Claimants and HIREF Investors on or before expiry of 9 months from the date of execution of these Consent Terms, time being of essence ("First Tranche Due Date") and the second tranche of the Decretal Amount, being an amount of Rs.1,02,14,28,571/- (Rupees One Hundred Two Crores Fourteen Lakh Twenty Eight Thousand Five Hundred Seventy One only) ("Second Tranche Amount") shall be paid by Promoter Respondents and/or any of its affiliates/ nominees to the Claimants and HIREF Investors on or before expiry of 15 months, time being of essence from the date of execution of these Consent Terms ("Second Tranche Due Date"). The proportion in which the First Tranche Amount and the Second Tranche Amount shall be paid to the Claimants and HIREF Investors respectively is set out in Second ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly, against any of their assets. This is without prejudice to other rights of the Claimants and HIREF Investors, whether under contract, law or otherwise. Provided that, if 50% of the First Tranche Amount (along with accrued interest if any) is paid on or before the First Tranche Due Date and there has been no Other Breach, then Claimants and the HIREF Investors shall in writing give a grace period of 90 (ninety) days from the First Tranche Due Date ("First Tranche Grace Period") to the Promoter Respondents to comply with their obligation to jointly and severally pay the remaining 50% of the First Tranche Amount along with the First Tranche Default Interest on the remaining 50% of First Tranche Amount till the payment thereof during the First Tranche Grace Period in the event the Promoter Respondents fail to pay the remaining 50% of the First Tranche Amount along with First Tranche Default Interest to the Claimants and the HIREF Investors on before expiry of the First Tranche Grace Period or there is an Other Breach, as the case may be, the reminder of the Decretal Amount ("Balance Decretal Amount") shall become immediately due and payable and an event of defaul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... but not limited to execution of the present Consent Terms/ Award against the Respondent Nos.1 to 5, jointly and/ or severally, against any of their asset. This is without prejudice to other rights of the Claimants and HIREF Investors, whether under contract, law or otherwise. (xi) It is clarified that notwithstanding the provision for payment of First Tranche Default Interest or any part thereof, as the case may be, and/or Second Tranche Default Interest, the time shall always be of the essence and shall be treated to be so. It is further clarified that if there is a default in payment of the First Tranche Amount, the First Tranche Default Interest, the Second Tranche Amount or the Second Tranche Default Interest, the Claimants and the HIREF Investors shall not be entitled to demand payment of a sum higher than the Default Interest and the Decretal Amount from Respondent 1 to 5 for such default." 19. A Demand Notice dated 27.08.2021 was issued by the Financial Creditor to the Corporate Debtor and Promoters, demanding the payment of amount due under the Consent Award. No payments having been made by the Corporate Debtor, an Application under Section 7 was filed by the Finan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... de, and Kharadi Properties Private Limited and Kakade Retailing Private Limited once again failed to provide an exit under the Term Sheet. The Term Sheet Contemplated an exit consideration of Rs. 156,81,60,000/- (Rupee One Hundred and Fifty Six Crores and Eighty One Lakhs Sixty Thousand only) which carried an IRR of 17% from 10th March 2015 which would increase to 21% in case of a default. A copy of the Term Sheet is annexed hereto and marked as Exhibit "E". The Corporate Debtor had committed several "Defaults" under the ARSSHA and Supplementary SSHA and the Term Sheet. In particular, the Corporate Debtor failed to provide the exit to the Financial Creditors in terms of the ARSSHA read with the Supplementary SSHA Agreement on or before 31st March 2014. As per Clause 16.4(a) read with Clause 19.6(a) of the ARSSHA, the Corporate Debtor inter- alia became liable to pay to the Financial Creditors the amount given under ARSSSHA together with an internal rate of return (IRR) of 15% p.a. compounded annually (or the Fair Market Value, whichever is higher, subject to applicable laws). Thus, the minimum payment due under the ARSSSHA was the amount given plus 15% p.a. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 15 months from the execution of the aforesaid Consent Terms. The First Tranche Amount and Second Tranche Amount are hereinafter collectively referred to as "the Amount". In terms of the Consent Award, upon commission of any default in the payment of the First Tranche Amount, the entirety of "the Amount" (as defined above) fell due immediately. The rights and entitlements of the Financial Creditors under the ARSSSHA and Supplementary SSHA continued to subsist and the ARSSSHA and Supplementary SSHA continued to be valid, subsisting and binding with full force and effect under the Consent terms. Copies of the Consent Award and the Consent Terms are attached hereto and marked as Exhibit "F" and Exhibit "G" respectively. The Corporate Debtor, having failed to pay the First Tranche Amount, the entire amount of Rs.120,00,00,000/- (Rupees One Hundred and Twenty Crores only) along with interest at the rate of 15% p.a. thereon (till payment) under the Consent Award has become due and payable. Thus, total amount of Financial Debt is Rs.133,75,89,041/- (Rupees One Hundred Thirty three Crore Seventy Five Lakh Eight Nine Thousand and Forty One Only) (computed as on 31st ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (iv) Consent Award (Exhibit "F") (v) Consent Terms (Exhibit "G") 22. We having noticed the relevant Clauses of Share Subscription-cum- Shareholders Agreement and Consent Terms, now we come to the issue as to whether the amount invested by the Financial Creditors can be said to be 'financial debt' or not? 23. Section 5, sub-section (8) of the Code defined 'financial debt' in following words: "(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 pursuant to any note purchase facility or the issue of bonds, notes, debentures, loan stock or any similar instrument; (d) the amount of any liability in respect of any lease or hire purchase contract which is deemed as a finance or capital lease under the Indian Accounting Standards or such other accounting standards as may be prescribed; (e) receivables sold or discounted other than any receivables sold on non-recourse bas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce with GAAP, be treated as a balance sheet liability [(other than any liability in respect of a lease or hire purchase contract which would, in accordance with GAAP in force [prior to 1-1-2019]/[prior to []]/[] have been treated as an operating lease)]; (e) receivables sold or discounted (other than any receivables to the extent they are sold on a non- recourse basis); (f) any amount raised under any other transaction (including any forward sale or purchase agreement) of a type not referred to in any other paragraph of this definition having the commercial effect of a borrowing; (g) any derivative transaction entered into in connection with protection against or benefit from fluctuation in any rate or price [and, when calculating the value of any derivative transaction, only the marked to market value (or, if any actual amount is due as a result of the termination or close-out of that derivative transaction, that amount) shall be taken into account]; (h) any counter-indemnity obligation in respect of a guarantee, indemnity, bond, standby or documentary letter of credit or any other instrument issued by a bank or financial institution; and (i) the amount of any liability ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ered by any of the other clauses, would amount to a financial debt if they had the commercial effect of a borrowing. The expression "transaction" is defined by Section 3(33) of the Code as follows: 3. (33) "transaction" includes an agreement or arrangement in writing for the transfer of assets, or funds, goods or services, from or to the corporate debtor; As correctly argued by the learned Additional Solicitor General, the expression "any other transaction" would include an arrangement in writing for the transfer of funds to the corporate debtor and would thus clearly include the kind of financing arrangement by allottees to real estate developers when they pay instalments at various stages of construction, so that they themselves then fund the project either partially or completely. 76. Sub-clause (f) Section 5(8) thus read would subsume within it amounts raised under transactions which are not necessarily loan transactions, so long as they have the commercial effect of a borrowing. We were referred to Collins English Dictionary & Thesaurus (2nd Edn., 2000) for the meaning of the expression "borrow" and the meaning of the expression &q ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Section 5(8)(f) even without adverting to the Explanation introduced by the Amendment Act." 25. The ratio of the judgment of the Hon'ble Supreme Court is that sub- clause (f) of Section 5(8) would subsume within it amounts raised under transactions which are not necessarily loan transactions so long as they have the commercial effect of a borrowing. In paragraph 76, the Hon'ble Supreme Court had quoted with approval the meaning of expression "borrow" and "commercial" from Collins English Dictionary. The condition which is essentially required to be fulfilled is disbursement against the consideration for the time value of money. When we come to sub-clause (f), the transaction has to have a commercial effect of a borrowing. We may further notice subsequent judgment of the Hon'ble Supreme Court in 2022:INSC:630 : (2022) 9 SCC 186 - Kotak Mahindra Bank Limited vs. A Balakrishnan and Anr., where the Hon'ble Supreme Court had again occasion to consider Section 5, sub-section (8). Paragraphs 52, 53, 54 and 55, which are relevant for our purpose are as follows: "52. The three-Judge Bench of this Court in Pioneer Urban Land & Infrastructure L ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y on a "claim" being fructified in a decree, the same would be outside the ambit of clause (8) of Section 5 IBC, is accepted, then it would be inconsistent with the plain language used in the IBC. As already discussed hereinabove, the definition is inclusive and not exhaustive. Taking into consideration the object and purpose of the IBC, the legislature could never have intended to keep a debt, which is crystallised in the form of a decree, outside the ambit of clause (8) of Section 5 IBC. 55. Having held that a liability in respect of a claim arising out of a recovery certificate would be a "financial debt" within the ambit of its definition under clause (8) of Section 5 IBC, as a natural corollary thereof, the holder of such recovery certificate would be a financial creditor within the meaning of clause (7) of Section 5 IBC. As such, such a "person" would be a "person" as provided under Section 6 IBC who would be entitled to initiate the CIRP." 26. What Hon'ble Supreme Court has emphasized in the above judgment is that in the various categories under (a) to (i) of sub-section (8) of Section 5, the legislature has only given inst ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Exit Consideration was carrying IRR of 17%. 27. It is further relevant to notice that Section 7 Application filed by the Financial Creditor was not based only on the Consent Award passed by the Arbitrator on 19.01.2021, but all previous transactions were also basis of the Application. The Application filed under Section 7 cannot be said to be an Application for execution of Consent Decree, rather Section 7 Application was filed on account of default committed by the Company in not honouring its obligation under different Agreements as noted above. 28. We now need to notice certain judgments, which have been relied by learned Counsel for the Appellant in support of his submission that in the Application filed under Section 7, there was no 'financial debt' and the Application deserved to be rejected. The Appellant has relied on judgment of the Hon'ble Supreme Court in 2020:INSC:518 : (2020) 10 SCC 538 - Radha Exports (India) (P) Ltd. vs. K.P. Jayaram. The above case arose out of an Application under Section 7, which was admitted by the Adjudicating Authority. However, Appeal against the same was allowed and the Application filed under Section 7 stood rejected as ba ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ench of NCLT and renumbered TCP/301/(IB)/2017." 29. In the above background, the Hon'ble Supreme Court made observations in paragraph 42, which is relied by the learned Counsel of the Appellant, which is as follows: "42. The definition of "financial debt" in Section 5(8) makes it clear that "financial debt" means a debt along with interest, if any, disbursed against the consideration for time value of money and would include money raised or borrowed against the payment of interest; amount raised by acceptance under any acceptance credit facility or its dematerialised equivalent; amount raised pursuant to any note purchase facility or the issue of bonds, notes, debentures, loan stock or any similar instrument; the amount of any liability in respect of any lease or hire purchase contract which is deemed as a finance or capital lease under the Indian accounting standards or such other accounting standards as may be prescribed; receivables sold or discounted other than any receivables sold on non- recourse basis or any amount raised under any other transaction, including any forward sale or purchase agreement, having the commercial effect of a borro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... plication was dismissed. It is relevant to notice paragraphs 19 and 20 of the judgment, which are to the following effect: "19. Sub-clause (f) of sub-section (8) of Section 5 provides that any amount raised under any other transaction, including any forward sale or purchase agreement, having the commercial effect of a borrowing would fall within the ambit of 'financial debt' and the explanation added to sub- section by Act No. 26 of 2018 provides that any amount raised from an allottee under a Real Estate Project shall be deemed to be an amount having the commercial effect of a borrowing. Thus, the relevant consideration for determination of 'financial debt' would be whether the debt was disbursed against the consideration for the time value of money which may include amount raised from an allottee under a Real Estate Project, the transaction deemed to be amount having the commercial effect of a borrowing. Since the initial transaction was an allotment under a Real Estate Project, there can be no doubt that such transaction has the contours of a borrowing as contemplated under Section 5(8) (f) of the 'I&B Code'. However, the case set up by the Respond ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... roversy in a lis. A 'decreeholder', defined under Section 2(3) of the same Code means any person in whose favour a decree has been passed or an order capable of execution has been made. Order XXI Rule 30 of the CPC lays down the mode of execution of a money decree. According to this provision, a money decree may be executed by the detention of judgment-debtor in civil prison, or by the attachment or sale of his property, or by both. Section 40 of the 'Real Estate (Regulation and Development) Act, 2016' lays down the mode of execution by providing that the RERA may order to recover the amount due under the Recovery Certificate by the concerned Authority as an arrear of land revenue. In the instant case, RERA has conducted the recovery proceedings at the instance of Respondent Nos.1 & 2 against the Corporate Debtor which culminated in issuance of Recovery Certificate and passing of order under Section 40 of the 'Real Estate (Regulation and Development) Act, 2016' directing the concerned Authority to recover amount of Rs.73,35,686.43/- from the Corporate Debtor as an arrear of land revenue. As already stated elsewhere in this Judgment, Respondent Nos.1 & 2 inst ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eks remedies under RERA, and opts for return of money in terms of the order made in her favour, it is not open for her to be treated in the class of home buyer. This Court is unpersuaded by the submission. It is only home buyers that can approach and seek remedies under RERA - no others. In such circumstances, to treat a particular segment of that class differently for the purposes of another enactment, on the ground that one or some of them had elected to take back the deposits together with such interest as ordered by the competent authority, would be highly inequitable. As held in Natwar Agarwal (HUF) (Supra) by the Mumbai Bench of National Company Law Tribunal the underlying claim of an aggrieved party is crystallized in the form of a Court order or decree. That does not alter or disturb the status of the concerned party - in the present case of allottees as financial creditors. Furthermore, Section 238 of the IBC contains a non obstante clause which gives overriding effect to its provisions. Consequently its provisions acquire primacy, and cannot be read as subordinate to the RERA Act. In any case, the distinction made by the R.P. is artificial; it amounts to "hyper class ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... creditors" and "operational creditors". No divisions or classification is made by the statute within this class of decree holders. The inescapable conclusion from the aforesaid discussion is, that the IBC treats decree holders as a separate class, recognized by virtue of the decree held. The IBC does not provide for any malleability or overlap of classes of creditors to enable decree holders to be classified as financial or operational creditors" This view was affirmed by the Hon'ble Supreme Court of India in SLP (C) 6104/2022 wherein the SLP to challenge the above Order was rejected. b. In Sushil Ansal v. Ashok Tripathy CA (AT) Ins. No. 452 of 2020 this Hon'ble Appellate Tribunal has held that an award/decree holder cannot be a Financial Creditor, as there is no disbursement and return under a decree. A decree is merely a settled/adjudicated amount culminating from the resolution of a dispute. This Tribunal held as follows: "The answer to the question whether a decreeholder would fall within the definition of Financial Creditor has to be an emphatic No as the amount claimed under the decree is an adjudicated amount and not a debt disbursed ag ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as follows: "26. We are making it clear that Investment made in SPV/Joint Venture through Share Subscription & Shareholders Agreement will not come within the purview of Section 7 R/w Section 5(8) of the 'Code'. 27. It is also further stated that to get it covered under Section 7 R/w Section 5 (7) & (8) of the Code that there must be disbursal of fund by the Financial Creditor to the Corporate Debtor or in simple term, if there is no disbursal then even 'Financial Debt' will not attract Section 7 of the Code, as it looks from the bare reading of Section 5(8) of the Code in order to qualify under Section 7 of the Code, the following basic ingredients are a requirement to get covered under Section 7 of the Code: a. The Creditor must be a 'Financial Creditor' and be covered by Section 5(7) & (8) of the Code. b. The Financial Debt must be owed by the Corporate Debtor. However, the default may be occurred in respect of that Financial Creditor or any other Financial Creditor. c. Financial Debt to carry interest element and be disbursed against the consideration of time value of money. d. Money borrowed against the payment of interest e. Investm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... JV Company was to carry a coupon rate of 15% per annum. After the amendment, even the debentures issued by JV Company did not provide for any consideration for time value of the debentures." 38. This Tribunal, thus, noticing certain clauses has held that since coupon rate of 15% per annum was deleted, there was no consideration for time value of debentures. We in the present case have noticed the various relevant clauses of the Agreement and Binding Term Sheet, which indicate that the investment made by the Financial Creditor was with an eye for consideration for time value and money and the said condition was fulfilled in the facts of the present case. We have also held that the transaction had commercial effect of borrowing. If the Settlement Agreement or Arbitration Award arises out of transactions, which are 'financial debt', the mere fact that 'financial debt' has crystallized in Decree, cannot result in disentitling the Financial Creditor, the remedy provided under Section 7, as has been held by Hon'ble Supreme Court in Kotak Mahindra Bank case (supra). We, thus, are of the view that judgment of this Tribunal in Raj Singh Gehlot is clearly distingui ..... X X X X Extracts X X X X X X X X Extracts X X X X
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