On the strength of Annul Return, it cannot be held that payment of earnest money deposit(EMD) is Financial Debt – S. Chandriah Vs. Sunil Kumar Agarwal, RP of Digjam Ltd. – NCLAT New Delhi

The disbursement made by the Appellant to the Corporate Debtor was only a payment of Earnest Money which was to be adjusted in sale of the land. The disbursement was not in consideration for the time value of money. We may refer a Judgement of this Tribunal in “Sach Marketing Pvt. Ltd. Vs. Resolution Professioanl of Mount Shivalik Industries Ltd (2021) ibclaw.in 477 NCLAT”. Essential condition for accepting a debt to be financial debt being absent, we are of the view that Adjudicating Authority has not committed any error in rejecting the claim of the Appellant as Financial Creditor. The claim of the Appellant of Earnest Money of Rs. 7 Crores has been admitted by the Resolution Professional as under the category of other creditors. We thus do not find any error in the Order passed by the Adjudicating Authority dated 07.02.2020 and the Company Appeal (AT) Ins. No. 22 of 2022 deserves to be dismissed.

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