Whether raising of amount through Share Subscription-cum-Shareholders Agreement is a commercial borrowing under IBC- Sanjay D. Kakade Vs. HDFC Ventures Trustee Company Ltd. – NCLAT New Delhi
Hon’ble NCLAT held that:
(i) The ratio of the judgment of the Hon’ble Supreme Court is that sub-clause (f) of Section 5(8) would subsume within it amounts raised under transactions which are not necessarily loan transactions so long as they have the commercial effect of a borrowing. The condition which is essentially required to be fulfilled is disbursement against the consideration for the time value of money.
(ii) Raising of amount by the Company through Share Subscription-cum-Shareholders Agreement was a commercial borrowing, since the said transaction has direct effect with the business, which was carried out by the Corporate Debtor, i.e. construction of building and township.
(iii) The expression ‘time value of money’ encompasses in itself the concept of time value of the disbursement.
