Indemnity obligations under Debenture Subscription Agreement is not a Financial Debt under Section 5(8)(h) of the IBC and if Applicant is neither a bank nor Financial Institution, it cannot be construed as Financial Creditor against the Corporate Debtor – HT Media Ltd. Vs. GHCL Ltd. – NCLT Ahmedabad Bench

Hon’ble NCLT Ahmedabad Bench held that:
(i) The Applicant has claimed himself as Financial Creditor, though the investments by way of convertible debentures were made in Rosebys Interiors India Limited. It is an admitted fact that the said convertible debentures have since been converted to equity shares and that the Rosebys Interiors India Limited is presently under liquidation.
(ii) The Applicant is claiming to be Financial Creditor in terms of Section 5(8)(f), (h) r.w (i) of IBC, 2016. The Respondent/ Corporate Debtor is admittedly indemnifier as per Debenture Subscription Agreement.
(iii) In the present case, the Applicant is neither a bank nor Financial Institution. Hence, the applicant cannot be construed as Financial Creditor against the Respondent/ Corporate Debtor.
(iv) In regard to the above averments and interpretation of the Section 5(8)(f), (h) and (i) this Tribunal is of the view that the debt claimed by the Applicant does not falls under the ambit of the Financial debt provided under the Section 5(8) of IBC, 2016.

Indemnity obligations under Debenture Subscription Agreement is not a Financial Debt under Section 5(8)(h) of the IBC and if Applicant is neither a bank nor Financial Institution, it cannot be construed as Financial Creditor against the Corporate Debtor – HT Media Ltd. Vs. GHCL Ltd. – NCLT Ahmedabad Bench Read Post »