If a Petition is filed for realisation of the decretal amount, it cannot be dismissed on the ground that the IBC Section 7 Application should have been taken steps for filing execution case in the Civil Court – Darshan Gandhi Ex-Director, Lok Housing and Constructions Ltd. Vs. USV Pvt. Ltd. – NCLAT New Delhi
NCLAT held that the debt in this case arising out of a decree, is a Financial Debt. Section 5(10) of the Code provides that Creditor means any person to whom a debt is owed and includes a Financial Creditor, Operational Creditor, Secured Creditor, Unsecured Creditor and a Decree Holder. As the definition of the word Creditor in the Code includes a Decree Holder if a Petition is filed for realisation of the decretal amount, it cannot be dismissed on the ground that the Section 7 Application should have been taken steps for filing execution case in the Civil Court. Section 3(11) of the Code defines “debt” as a “liability in respect of a claim, and Section 3(6) of the Code defines term “claim” to mean a right to payment, whether or not such right has been reduced to judgement. Therefore, if the submission on behalf of the Corporate Debtor is accepted, it would mean that a claim is excluded from being a financial debt even if reduced to Judgement by way of a recovery certificate.
