Optionally Convertible Debentures(OCDs) are Financial Debt within the meaning of Section 5(8)(c) of IBC – Santosh Kumar Vs. ASK Trusteeship Services Pvt. Ltd. – NCLAT New Delhi
January 12, 2024
In this important judgment, Hon’ble NCLAT observes that:
(i) In IFCI Limited vs. Sutanu Sinha & Ors. (2023) ibclaw.in 149 SC, the Hon’ble Supreme Court noticed Appellant have invested the amount as per compulsorily convertible debentures which has to be treated as equity. Issue was correctly determined that nowhere it is stipulated that investment as Compulsorily Convertible Debentures (CCDs) would partake the character of financial debt.
(ii) In MAIF Investments India Pte. Ltd. Vs. Ind-Barath Energy (Utkal) Ltd. (2019) ibclaw.in 307 NCLAT, this Tribunal held that OCDs are financial debt within the meaning of Section 5(8)(c).