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TMI Blog2018 (3) TMI 233X X X X Extracts X X X X X X X X Extracts X X X X ..... ointed with directions as mentioned therein. 2. The Appellant has challenged the impugned order mainly on the ground that the contesting Respondents do not come within the meaning of 'Financial Creditor' as defined under sub-section (7) of Section 5 as the amount claimed to have been deposited do not come within the meaning of 'Financial Debt' as defined under sub-section (8) of Section 5 of the 'I&B Code'. 3. According to Appellant, the debt of the bank owed by the 'Corporate Debtor' was not legally assigned or transferred in favour of the contesting respondents. 4. It is further submitted that the liability of the guarantee in the books of corporate debtor is in the name of the daughter of the contesting respondents, not in the name of the contesting respondents as admittedly the payment to the bank had been made from the account of the daughter to the lender bank. Therefore, the contesting respondents cannot claim themselves to be the 'Financial Creditor'. 5. According to Appellant, the 'Corporate Debtor' (3rd Respondent) never entered into any understanding with the contesting respondents nor the contesting respondents disbursed any amount against consideration of time valu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the guarantors towards the loans/finance facilities availed by the 'Corporate Debtor'. 9. Further case of the contesting respondents is that the 'Corporate Debtor' has returned a sum of Rs. 27.00 Lakhs along with interest. The 'Corporate Debtor' is additionally liable to pay a sum of Rs. 29,97,000 to the contesting respondents along with interest. This apart, the 'Corporate Debtor' is liable to pay /refund a sum of Rs. 78.00 Lakhs along with interest adjusting the principal amount already paid as due against Rs. 1.05 Crores. 10. We have heard the learned counsel for the parties and perused the record. 11. To determine the question as to whether the contesting respondents come within the meaning of 'Financial Creditor', it is necessary to refer the relevant provisions of the 'I&B Code'. 12. Sub-section (11) of Section 3 defines 'debt' as: "3(11) "debt" means a liability or obligation in respect of a claim which is due from any person and includes a financial debt and operational debt" 13. 'Default' has been defined in sub-section (12) of Section 3, which is as follows: - "3(12) "default" means non-payment of debt when whole or any part or instalment of the amount of debt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... udgement rightly observed: - "12. A perusal of definition of expression 'Financial Creditor' would show that it refers to a person to whom a Financial debt is owed and includes even a person to whom such debt has been legally assigned or transferred to. In order to understand the expression 'Financial Creditor', the requirements of expression 'financial debt' have to be satisfied which is defined in Section 5(8) of the IBC. The opening words of the definition clause would indicate that a financial debt is a debt along with interest which is disbursed against the consideration for the time value of money and it may include any of the events enumerated in sub-clauses (a) to (i). Therefore the first essential requirement of financial debt has to be met viz. that the debt is disbursed against the consideration for the time value of money and which may include the events enumerated in various sub-clauses. A Financial Creditor is a person who has right to a financial debt. The key feature of financial transaction as postulated by section 5(8) is its consideration for time value of money. In other words, the legislature has included such financial transactions i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing noticed the aforesaid provision by judgment dated 22nd December, 2017 held as follows : "29. For coming within the definition of 'Financial Debt' as defined under sub-section (8) of Section 5, the Claimant is required to show that (i) there is a debt alongwith interest, if any, which has been disbursed and (ii) such disbursement has been made against the 'consideration for the time value of money'. Thereby, if the Claimant claims to be 'Financial Creditor' he will have to show that debt is due which he has disbursed against the 'consideration for the time value of money' and that the borrower has raised the amount directly or through other modes like credit facility or its de-materialised equivalent, note purchase facility or the issue of bonds, notes, debentures, loan stock or any other similar instrument. The amount of any liability in respect of any lease or hire purchase contract which is deemed as a finance or capital lease under the Indian Accounting Standards or such other accounting standards can also be referred to by the Creditor to claim that there is a 'financial debt' due to him which has been disbursed against the 'consideration for the time value of money'. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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