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TMI BlogClassification of a security deposit made by the appellant for a lease deed with the corporate debtor,...Classification of a security deposit made by the appellant for a lease deed with the corporate debtor, as either a financial debt or an operational debt under the Insolvency and Bankruptcy Code (IBC). The key points are: The security deposit is a claim within the meaning of the IBC. To qualify as a financial debt u/s 5(8), there must be a disbursal of money against consideration for the time value of money. However, the security deposit was a refundable corpus amount without interest, not disbursed for time value of money, lacking elements of commercial borrowing. Therefore, it does not satisfy the definition of financial debt. An operational debt u/s 5(21) relates to claims for provision of goods, services, employment, or government dues. ..... ..... X X X X Extracts X X X X X X X X Extracts X X X X
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