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2021 (4) TMI 775 - AT - Insolvency and BankruptcyMaintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Service Providers - extortionate credit transaction - Lease Agreement - existence of debt and dispute or not - Lease Agreement’ is a ‘Finance or Capital Lease’ - Service of Demand Notice - HELD THAT:- The Second Respondent/Financial Creditor without prejudice to its rights under law had called by the First Respondent/Corporate Debtor and Another to pay a sum of ₹ 94,81,209/- only within 14 days from the receipt of the ‘Demand Notice’ by any one of them or both of them, failing which the First Respondent/Corporate Debtor and Another were informed that the Second Respondent/financial Creditor would be constrained to proceed against them as per Law, including, but not limited to initiate ‘Insolvency Proceedings’ under the Insolvency & Bankruptcy Code against the First Respondent/Corporate Debtor. It is to be pointed out that in the Rejoinder of the Appellant (filed to the Reply of the Second Respondent/Financial Creditor/Applicant) in paragraph 5 (1), it is mentioned that ‘there is neither a Financial Service provided by the Second Respondent as per section 2(16) of the I B Code, nor a ‘Financial Product’ as per section 2(15) of the I B Code, 2016, but an ordinary lease of furniture and fixtures to the First Respondent Company that are fully owned by the Second Respondent, therefore, the Second Respondent is not a ‘Financial Service Provider’ under section 2(17) of the I B Code, 2016. Section 3(14) (a to d) of the Code defines “Financial Institution’.(including a financial institution as defined in section 45 -I of the Reserve Bank of India Act, 1934 (2 of 1934). Section 50 of the I & B Code, 2016 provides a carve out to a ‘Financial Service Provider’ for its credit facility to be regarded as ‘extortionate’. Likewise, section 167 of the I & B Code, 2016 provides that any debt extended by a person regulated for the provision of ‘Financial Services’ shall not be considered as an ‘extortionate credit transaction’ - As matter of fact, the definition of Corporate Person in section 2(7) of the I & B Code, 2016 excludes any ‘Financial Service Provider’. This Tribunal without any haziness holds that the ‘Lease’ in the instant case, is a ‘Financial Lease’ and comes to an irresistible conclusion that there is ‘Financial Debt’ as per section 5(8) of the Code, 2016 and the default being committed by the First Respondent/Corporate Debtor in terms of the ingredients of section 3(12) of the Code, 2016. Further, that the ‘debt’ in question as per section 3(11) of the Code, 2016 cannot be termed as an ‘Operational Debt’ as per section 5(21) of the Code, 2016 - Application dismissed.
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