Amount of advance paid for purchase of shares of the Corporate Debtor does not fall under the definition of Financial Debt which is defined u/s 5(8) of IBC – Jushya Realty Pvt. Ltd. Vs. Ninety Properties Pvt. Ltd. – NCLT Mumbai Bench
The Financial Creditor agreed to purchase 100% of share capital of the Corporate Debtor held by its Shareholders/promoters for a lumpsum consideration of Rs.4,50,00,000/- and paid an advance payment of Rs. 1,25,00,000 to the Corporate Debtor towards this transaction on 17.12.2014.
Adjudicating Authority observed that amount of advance paid for purchase of shares of the Corporate Debtor does not fall under the definition of Financial Debt as it was not disbursed against the consideration for the time value of money. It is further noted that such advance also does not fall within the inclusive definition part as contained in clause (a) to (i).