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2018 (8) TMI 1786 - Tri - Insolvency and BankruptcyCorporate Insolvency Resolution Process (CIRP) - existence of Financial Debt as defined u/s. 5(8) - Corporate Debtor committed default in making payment invoking the provisions of Section 7 of I & B Code read with Rule 4 of Insolvency & Bankruptcy (AAA) Rules, 2016 - argument advanced by the Counsel for the Corporate Debtor is that since there is no consideration prescribed for the time value of the money and the amount was not borrowed by the Corporate Debtor against the payment of interest, the Applicant cannot be called as a 'Financial Creditor' and hence, there is no Financial Debt as defined u/s. 5(8) HELD THAT:- Since the amount of default as shown in the Exhibit-D and E are admitted and constitute a debt as defined under the Code and hence the same is to be treated as a debt due to the financial Creditor to whom a debt is owed and admitted as per the books of account of the Corporate Debtor. Further to say that the same is a financial Debt, the most important words that are required to be considered in the definition is 'interest, if any' which means a loan or a liability which is required to be payable by the corporate Debtor to the Financial or Operational Creditor, need not bear any interest. That simply means a loan advanced even without interest is a Financial Debt. Now, to call the same as loan advanced/disbursed against consideration for the time value of money, the point to be considered here is that there can be a mutual understanding between the parties to waive the right to receive interest and for the possible growth of the value of shares and to meet business requirement etc. It is a fact that there were certain business obligations between both the parties and the above said amount is arrived at after the parties mutually agreed and then the same is reflected in the books of the Corporate Debtor under the head 'Long Term Borrowings'. So, it cannot be said that the same is not a financial debt just because there is no interest payable nor there is any consideration for the time value of money. As the debt is admitted and is reflected in the books of account of the Corporate Debtor as loan which clearly clinches the case on hand. This Bench having been satisfied with the Petition filed by the Operational Creditor which is in compliance of provisions of sections 8 & 9 of the Insolvency and Bankruptcy Code admits this Application declaring Moratorium thereof.
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