Whether financial assistance given by one party to another of JV by way of an Inter-Corporate Deposit (ICD) to develop a real estate project jointly can be construed as a Financial Debt in terms of IBC – Ansal Housing Ltd. Vs. Samyak Projects Pvt. Ltd. – NCLAT New Delhi
Hon’ble NCLAT held that:
(i) Both parties being partners in developing the project together, the purchase and availability of land for the project was an essential ingredient thereof and hence any assistance by the Appellant to the Respondent tantamount to financing the operations of the joint venture.
(ii) The present transaction is in the nature of investment for profit and not disbursement for time value of money and hence does not fall within the canvas of financial debt as defined under Section 5(8) of the IBC.
(iii) The Appellant is not a Financial Creditor in terms of Section 5(7) of IBC and the application under Section 7 at the instance of the Appellant was not maintainable and hence the same has been rightly rejected by the Adjudicating Authority.