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2021 (3) TMI 413 - AT - Insolvency and BankruptcyMaintainability of application - initiation of CIRP - Appellant claimed that there was default in payment of debt on the part of the Corporate Debtor - Loan taken by the Corporate debtor from the sister concern was assigned by the said sister concern to the present applicant - whether the transaction concerned can be treated as a transaction of Financial Debt as defined in Section 5(8) of IBC? - HELD THAT:- It is apparent that there can be debts which do not necessarily fall in the definition of financial debt or operational. Money borrowed against payment of interest comes within the definition financial debt. However, if the money borrowed is not against payment of interest, under the definition of financial debt, the core requirement is to find whether there is “consideration for the time value of money”. The facts of the matter disclose and the Appeal also records that when the Corporate Debtor was unable to get any further loan from the market after having taken loan from M/s. Tata Capital Financial Services Ltd., M/s. Sameer Sales which was related party to the Corporate Debtor, extended interest free unsecured loan to the Corporate Debtor payable on or after 1st February, 2020 and that too upon demand by the lenders. It has been then argued that the Appellant after execution of the Assignment Agreement in its favour, not being related party and having taken the assignment for consideration, the loan extended would have to be treated as a Financial Debt. We are unable to accept such argument - The basic nature of the loan as witnessed from the Loan Agreement (Annexure A-2) will not change. If it was a simple debt extended to the sister concern, merely because the original lender has now assigned the debt to the Appellant will not change the nature of the transaction. There are no error in the findings recorded by the Adjudicating Authority where the Adjudicating Authority found that the transaction is not a transaction of financial debt and thus declined to admit the Application under Section 7 of IBC - appeal dismissed.
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