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2019 (2) TMI 966 - NATIONAL COMPANY LAW TRIBUNAL, NEW DELHIInitiation of Corporate Insolvency Resolution Process - whether the petitioner would be covered by the definition of expression ‘financial creditor’ as per the provisions of Sections 5(7) & (8) of the Code? - Held that:- The definition of expression ‘financial creditor’ as provided by Section 5(7) of the Code which means any person to whom a financial debt is owed and includes a person to whom such financial debt has been legally assigned or transferred. A perusal of the definition given in Section 5(8) of the Code would show that a ‘financial debt’ would mean a debt along with interest which is disbursed against the consideration for the time value of money. The definition must be read in its contemporaneous meaning to cover all such, financial transactions as providers of finance commonly enter into. It appears that the petitioner fulfils the first ingredient of Section 5 (8) of the Code. In the present case it is evident from the perusal of reply to the notice sent by the Corporate Debtor to the Financial Creditor that as per agreements and addendums executed between them, a sum of ₹ 1,85,00,000/- (Rupees One Crore Eighty Five Lakh Only) belonging to the petitioners has been deposited with Trustworthy Gems & Jewellers Private Limited and Logical Jewellers Private Limited towards security of liabilities of K.K. Kohli & Brothers Private Limited (now known as SRS Automotive Components Pvt. Ltd.) for period upto 31.03.2008. It is also asserted by the Corporate Debtor that they have been fulfilling their part of obligation by payment of interest on the aforesaid amount through Trustworthy Gems & Jewellers Private Limited and Logical Jewellers Private Limited. However, the petitioners have remained unable to clear its own liabilities within maximum period of 5 years and alleged to have avoided the clearance of the aforesaid liabilities deliberately knowing fully well that interest and penalty is accruing day-by-day. The amount is to become due and payable on the performance of obligation undertaken by the Financial Creditor but not before that. In the petition a copy of the reply dated 06.12.2017 filed by the Corporate Debtor has been attached but no detailed explanation has been given has to how the Financial Creditor is not liable to perform its obligations. Accordingly, we are of the view that in the absence of performance of its own obligation the amount would not be due and payable to the Financial Creditor. As a sequel to the above discussion we find that the petitioners do not satisfy the requirements of Section 7 (5) of the Code in so far as no default appears to have occurred which is to arise only after fulfilling the obligations on the part of the Financial Creditor. The default would occur only when the amount is due and payable as stated in the above paras. Accordingly, the petition fails and the same is dismissed.
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