The essential ingredients of Financial Debt in the context of IBC consists of disbursal accompanied by consideration for time value of money | Time value of money covers any other form of benefit or value accruing to the creditor as a return for providing money for a long duration – Arunkumar Jayantilal Muchhala Vs. Awaita Properties Pvt. Ltd. and Anr. – NCLAT New Delhi

Hon’ble NCLAT held that:

(i) When a Financial Creditor who has disbursed money to a Corporate Debtor against consideration for time value of money can trigger the insolvency resolution process against the Corporate Debtor.
(ii) The concept of time value of money has nowhere been defined in the IBC. Time value of money is not only a regular or timely return received for the duration for which the amount is disbursed as an amount in addition to the principal, but also covers any other form of benefit or value accruing to the creditor as a return for providing money for a long duration.
(iii) Once the Adjudicating Authority is subjectively satisfied that there is a debt and a default has been committed by the Corporate Debtor and the Section 7 application is complete in all respects, the Adjudicating Authority in the exercise of summary jurisdiction has to admit the Section 7 application. In our considered view, this is a case where all the pre-requisites for filing a Section 7 stood fulfilled and the Adjudicating Authority cannot be held to have committed an error in admitting the Corporate Debtor into CIRP for having defaulted in repaying a financial debt which was above the threshold limit.

The essential ingredients of Financial Debt in the context of IBC consists of disbursal accompanied by consideration for time value of money | Time value of money covers any other form of benefit or value accruing to the creditor as a return for providing money for a long duration – Arunkumar Jayantilal Muchhala Vs. Awaita Properties Pvt. Ltd. and Anr. – NCLAT New Delhi Read Post »