Whether advance paid for transfer of ownership of property prior to execution of sale deed constitutes an Operational Debt under Section 5(21) of IBC – Anchor Projects Ltd. Vs. K.I. International Ltd. – NCLT Chennai Bench
The NCLT Chennai Bench observed that the applicant has averted in the application that Applicant had advanced an amount of Rs 7,05,00,000/- for purchase of land for which the respondent intended to execute the sale deed and the respondent has not executed the sale deed for transfer the ownership of the land. Section 5(21) of Insolvency and Bankruptcy Code, 2016 defines operational debt as a claim in respect of goods and services. The applicant has not placed on record any documents to substantiate that the applicant and the respondent were in business terms for rendering goods or service it is averted that the amount which is claimed to defaulted is the advance which is paid by the applicant for transfer of ownership of the property and executing the sale deed.
