NCLAT held that fund infusion by appellant into corporate debtor ...

Fund Infusion Without Interest Clause Qualifies as Financial Debt Under IBC Section 5(8), Commercial Benefits Prove Time Value

February 24, 2025

Case Laws     IBC     AT

NCLAT held that fund infusion by appellant into corporate debtor qualified as financial debt under IBC Section 5(8), despite absence of explicit interest clause. Following Orator judgment, tribunal confirmed that interest-free loans aren't excluded from financial debt definition. Time value of money was evidenced through commercial benefits and enhanced economic prospects expected by appellant. Tribunal found error in lower authority's characterization of transaction as mere business arrangement. Matter remanded to adjudicating authority to determine if default threshold met for Section 7 admission. Key amount claimed in default: Rs.42,47,32,067 including interest on principal loan of Rs.39,84,72,111 advanced as financial assistance.

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