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2018 (8) TMI 2054 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, NEW DELHIScope of Financial Creditors - whether the Respondents, 'Dinesh Chand Jain and two others' come within the meaning of 'Financial Creditors' as defined under Section 5(7) and (8) of the Insolvency and Bankruptcy Code, 2016? - HELD THAT:- It can be said without any amount of ambiguity that the unsecured loan aforestated represented the money borrowed against the payment of interest and in terms of clause (a) sub-section (8) of Section 5 of the I&B Code same tantamount to a debt disbursed against the consideration for the time value of money, which falls within the ambit of 'Financial Debt'. It is apt to notice that the expression 'debt' defined under Section 3(11) means a liability or obligation in respect of a claim which is due from any person and includes a financial debt and operational debt. Non-payment of such debt which has become due and payable and is not repaid by the Debtor or Corporate Debtor falls within the mischief of 'default' defined under Section 3(12) of I&B Code. It would therefore be futile on the part of learned counsel for the Appellant to contend that the unsecured loan aforestated did not fall within the definition of 'Financial Debt'. Admittedly, Respondent No. 1 and 2 were treated as unsecured creditors and in terms of the Share Purchase Agreement they transferred their entire shareholding of 7500 shares in favour of Shri Lalit Modi. They were acknowledged as investors as regards the financial debt qua Shri Lalit Modi and the Corporate Debtor, the money having been borrowed initially and such investment having been made for earning interest. Refund of the investment was linked with the transfer of shareholding by the Respondents. Viewed thus, the Respondents can safely be held to be 'Financial Creditors'. Contention raised to the contrary being devoid of merit is repelled. Appeal dismissed.
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