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2022 (10) TMI 290 - Tri - Insolvency and BankruptcySeeking acceptance of claim as Financial Creditor of the Corporate Debtor - Allowing the Applicant to become a member of the Committee of Creditors during the Corporate Insolvency Resolution Process (CIRP) of the Corporate Debtor - HELD THAT:- Under the ‘Obligor Undertaking”, the Corporate Debtor has not promised in the event of RHGL’S default, to perform RHFL’S obligation to pay under the Commercial Papers or discharge RHFL’S liability - The Obligor undertaking ins a merely a contingent contract, whereby the Corporate Debtor had undertaken inter alia that upon the sale of its or its affiliates shares in RNLAM, It would use the proceedings to use tither purchase the Commercial Papers from the Applicant or infuse funds into RHFL o redeem the Commercial Papers issued by RHFL. This undertaking was not premised on RHFL’S default in serving the Commercial Papers, a basic ingredient of a ‘guarantee’. In Phoenix ARC(P) Ltd. V. Ketulbhai R. Patel [2021 (2) TMI 121 - SUPREME COURT], an argument was advanced before the Supreme Court that a Pledge Agreement was a ‘guarantee’. The Supreme Court negated this contention after analysing and applying the definition of ‘guarantee’ under Section 126 of Contract Act. It held that the Pledge Agreement was not guarantee since the Corporate Debtor had not entered into a contract to perform the promise or discharge the liability of a borrower in case of his default - The principals in Phoenix ARC’s case apply here. The ‘Obligor Undertaking’ lacks a covenant/promise to perform in case of RHFL (borrower’s) in servicing the Commercial paper. It is thus not a guarantee, and it does not attract the definition of ‘financial debt’ under Section 5(8) of the Code. In the present case, it is an admitted position that there has been no disbursal to the Corporate Debtor for consideration against the time value of money - On going through the facts and submissions of the Applicant and the Corporate Debtor it is concluded that the Applicant has not established that the money was disbursed to the Corporate Debtor and hence the question of default on the part of the Corporate Debtor does not arise. The Applicant does not owed a ‘Financial Debt’ under the Code. Without proof of disbursement, the said amount cannot be claimed as financial debt, as a disbursement is a sine qua non for any debt to fall within the ambit of the definition of financial debt - Application dismissed.
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